June - 2022

Jun 30

Natural Disasters Tax Relief

Tax deadlines are stressful enough, even under the ideal circumstances. Tax payment and filing deadlines can add stress to a situation that is already emotionally and financially taxing when a disaster strikes in your area. How Do I Qualify For Tax Relief? The Federal Emergency Management Agency (FEMA) must declare a major disaster designation as directed by the US president before the IRS can provide any tax assistance to taxpayers impacted by a natural catastrophe. The IRS

Jun 29

Tax Planning For Parents Of College Students

It can be difficult to file taxes on your own as a student, especially with all the intricate forms and technicalities. Along with all of your other responsibilities as a college student, whether it's schoolwork or a part-time job, filing taxes can be troublesome so we've put together this guide to help you file your taxes as a student. Look Into Your College Student's Dependency Status You are able to claim your college student as a dependent until they turn 19, but if your

Jun 28

Is Head Of Household The Right Filing Status For You?

Standard deductions, qualifications, and tax brackets differ depending on whether you file as a single person or as the head of household. If you're single and unmarried, you qualify as single, whereas if you have a qualifying child or relative living with you and pay more than half of the costs of your home, you qualify as head of household. Your filing status is the backbone of your tax return and ticking the wrong box can be costly. Despite this, many filers continue to mi

Jun 27

Net Investment Income Tax (NIIT): The Basics

Before taxes, investment assets such as bonds, equities, mutual funds, loans, and other investments generate income known as net investment income tax (NIIT). Whether net investment income consists of capital gains, dividends, or interest will affect the individual tax rate. Net Investment Income Tax (NIIT) Explained An IRS tax on certain people, estates, and trusts' net investment income is known as the net investment income tax or NIIT. More specifically, this applies if yo

Jun 24

What Is A Consumption Tax?

A consumption tax is a tax on the purchase of a good or service. A consumption tax is charged when consumers spend money, while an income tax is assessed on earned money. Understanding A Consumption Tax A taxing system in which people are assessed according to how much they spend rather than how much they contribute to the economy is known as a consumption tax. Retail sales taxes, excise taxes, value-added taxes, use taxes, taxes on gross business earnings, and import tariffs

Jun 23

Key Differences: W-2 vs. 1099 vs. W-4

The main difference between W-2 and 1099 workers is that a W-2 is a payroll employee and 1099 is a non-payroll worker. The names “W-2 employee” and “1099 worker” come from their respective tax forms. The W-4, also known as the employee’s withholding allowance certificate, tells employers how much income tax to withhold from an employee’s pay. What You Need To Know About W-2s The W-2 form must be sent to every employee who works for your business at the beginning of the year.

Jun 22

Health Insurance Coverage May Or May Not Affect Your Taxes And Here's Why

Buying health insurance affects your taxes, as well as not buying it. Where you buy your health insurance can also make a big difference in its effect on your tax return. It's critical to understand how health insurance affects taxes so you can submit your taxes more efficiently. What Is Health Insurance Tax? The Affordable Care Act's purpose was to expand the number of people with health insurance in the United States. The act attempted to accomplish this in part by penalizi

Jun 21

IRS Raises Interest Rates On July 1

The Internal Revenue Service announced about a month ago on May 20, 2022, that interest rates will be increasing for the calendar quarter beginning July 1, 2022, which is coming around the corner rather soon here, for overpayments and underpayments of quarterly taxes. IRS Reveals New Increased Interest Rates The new rates will be: 5% for overpayments 4% in the case of a corporation 2.5% for the portion of a corporate overpayment exceeding $10,000. 5% for underpayments. 7% for

Jun 20

What Is FICA Tax?

Are you doing taxes for the first time? There are a couple of different types of payroll taxes such as income taxes, unemployment taxes, and FICA taxes. Social Security and Medicare taxes are the two types of taxes that fall under the umbrella of FICA taxes. We'll go over what FICA taxes are, how they're calculated, and who is liable and responsible for paying them in this article. Understanding FICA Tax and Who Pays? FICA, which stands for Federal Insurance Contributions Act

Jun 17

How Can I Avoid Penalties When I Withdraw From My 401(K)?

When you take a 401(k) distribution, you will have to pay taxes if you have a traditional 401(k). Ordinary income tax applies to the money in your 401(k). The amount you pay is determined by your tax rate, plus a 10% early withdrawal penalty if you're under the age of 59 1/2. This could push you into the top tax bracket of 37%. Try To Stay In A Lower Tax Bracket To reduce your tax burden, attempt to keep your taxable income at a lower tax rate when taking 401(k) withdrawals.

Jun 16

Afraid Of Identity Theft? Get An Identity Protection PIN Now!

Identities can be stolen just about anywhere nowadays. Workplaces, nursing homes, local police stations, and hospitals are just some to name a few. Anyone with a social security number is at risk. The Identity Protected PIN (IP PIN) is a personal identification number issued by the IRS each year to ensure that you are the one filing your return and not a scammer attempting to swipe some refunds. How To Get An IP PIN Using the online Get An IP PIN tool on IRS.gov is the quicke

Jun 15

How Does Tax Evasion Differ From Tax Avoidance?

Tax evasion and tax avoidance are two distinct concepts with two very different consequences. While tax avoidance uses legal measures to reduce a taxpayer's liabilities, tax evasion requires the use of illegal methods to conceal income or information from the IRS. Tax Avoidance Tax avoidance is legal and it entails all available tax credits, deductions, and other adjustments to income that you are eligible for. Tax avoidance can help you lower your tax bill while increasing a

Jun 14

Important Things You Need To Know About Amended Tax Returns

Everybody makes mistakes, even on tax returns. Filing an amended return isn't necessarily difficult but there are a couple of steps that you should be aware of before you begin the process. Form 1040-X, the Amended U.S. Individual Income Tax Return will be the main form that is used to file amended returns. Make sure the IRS has already processed your tax return before you update and file your amended return. That way, you can be sure the IRS won't mix up your original and am

Jun 13

Last Of The "Dirty Dozen" Annual List Of 2022: Tax Avoidance Methods Warnings Part 5

The IRS wrapped up the 2022 annual list of the "Dirty Dozen" tax scams on Friday, June 10, 2022, with a warning to taxpayers to avoid being deceived into using bogus tax avoidance strategies. The IRS's publication of the Dirty Dozen is part of a larger effort to educate taxpayers. People should avoid being duped into engaging in well-worn oppressive agreements with excessive fees, as well as the other Dirty Dozen nefarious schemes. Concealing Assets in Offshore Accounts and I

Jun 10

IRS Warns Taxpayers With "Dirty Dozen" 8th Tax Scam With Spear Phishing Part 4

Spear phishing is the eighth item on the IRS's "Dirty Dozen" scams warning list for 2022 and it is a severe problem since it may be adapted to attack and steal the computer system credentials of any small business with a client database, such as tax professionals' firms. Spear Phishing Scams Spear phishing is an email fraud that tries to acquire the software preparation credentials of a tax professional. In order to file fraudulent tax returns for refunds, these scammers aim

Jun 9

"Dirty Dozen" 7th Tax Scam Newly Added To The 2022 Annual List Part 3

Identity thieves have continued to use suspicious communications for years to trick, surprise, or scare taxpayers into revealing personal and financial information to file false tax returns and among other schemes. Criminals are able to quickly file a fake tax return using a stolen SSN in hopes that the SSN hasn't shown up on another filed tax return. This remains easily one of the biggest threats to taxpayers and tax professionals who do not occasionally protect their SSN an

Jun 8

The IRS Released 5th & 6th Items Of "Dirty Dozen" Tax Scams To Alert Taxpayers Part 2

At the beginning of the week, the IRS released the 5th and 6th items from the annual list of the 'Dirty Dozen' tax scams to help bring awareness to taxpayers when filing their federal tax returns. The IRS continues to construct an annual list of tax scams for more than 20 years as a way to alert taxpayers and the tax community to be aware of the schemes and scams that scammers go out of their way to do. Being cautious and aware are taxpayers' best line of defense at the momen

Jun 7

IRS Reveals The First Four "Dirty Dozen" Scams For 2022 Part 1

Because most individual taxpayers face a lot of scams while they're filing their tax returns, the IRS compiled the twelve most prevalent tax scams in 2022 for taxpayers to avoid. These potentially dangerous arrangements can help taxpayers avoid running into unexpected trouble. Transactions using charitable remainder annuity trust (CRAT), Maltese pension arrangements, foreign captive insurance, and monetized installment sales are the first four nefarious schemes and scam entri

Jun 6

How Much Money Do I Need To Make To File Taxes In 2022?

Filing taxes may be very overwhelming for new taxpayers, especially if they don't know if they're within the income threshold to be filing taxes or not. Are there tax refunds or tax credits waiting to be claimed? What Is The Minimum Income Threshold To File? It's very simple, if your income is below a specific threshold, you may not be required to file a tax return with the IRS. Here's how much money you need to make to file taxes in 2022 (for the tax year 2021). Age, filing

Jun 3

Standard Deduction vs. Itemized Deduction: Which One Should I Choose?

You can either claim the standard deduction or the itemized deduction, but there's no way you can do both. Itemized deductions are deductions that taxpayers can calculate on their own using the various deductions the IRS offers whereas the standard deduction is a set number the IRS publishes every year. When you compare the two methods, it'll make it easier for you to understand and choose which option provides you with the greatest tax benefit. Is Standard Deduction For Me?

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