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Archive for the ‘Tax Tips’ Category

forgiven debt and taxes

Forgiven Debt and Taxes

October 07, 2021

Being in debt is not pleasant, but when a debt is forgiven, it can be a huge weight off your shoulders. Although it’s a great relief to no longer owe the debt, you may find that you now owe the IRS. The tax implications of debt forgiveness or cancellation, however, will depend on your individual facts and circumstances. Form 1099-C, Cancellation of Debt When a creditor ...

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rental income and taxes

Rental Income and Taxes

June 03, 2016

If you receive rental income, you are required to report it to the IRS. Any income received from the use or occupation of your property is considered rental income. There are two methods of accounting: the cash method and the accrual method. If you use the cash method, you report your gross rental income on your return for the year in which you receive it (not when it was earned). If you use the accrual ...

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Household Employees

Household Employees and Employment Taxes

May 06, 2016  |   Last modified on May 14, 2021

Household workers can either be employees or self-employed. If they are considered employees, their employers must pay employment taxes. Examples of household employees include cooks, housekeepers, nannies, private nurses, and chauffeurs. If you have workers providing their services at your home, you need to determine if they are technically your employees and what taxes you are responsible for paying. Is Your Worker an Employee? For tax purposes, a household worker is an employee if you control what ...

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alternative minimum tax

What is The Alternative Minimum Tax?

April 22, 2016

High-income taxpayers often use tax breaks and loopholes in the tax code to significantly reduce their tax liability. The alternative minimum tax (AMT) is applied to high-income taxpayers to ensure that they at least pay the minimum amount of tax. It does not as allow many deductions that other taxpayers use to reduce taxes. The AMT was introduced after the government found that several high-income taxpayers were legally reducing their tax bill, sometimes to zero. The ...

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how not to spend your tax refund

How Not to Spend Your Tax Refund

April 19, 2016

The average refund amount for the 2016 filing season is $2,798. This may seem like free money from the Treasury Department, but this amount represents the excess taxes you paid the previous year. How you use your tax refund really depends on your financial situation and your immediate needs. However, there may also be a temptation to spend your extra money on non-essential items. Bankrate shares how you should not spend your tax ...

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IRS myths

Common IRS Myths

March 28, 2016

Myths about taxes abound, but they can become dangerous if followed. A taxpayer believing false information about the IRS, taxes, audits, or back taxes may make the wrong decisions. Here are seven of the most common IRS myths that are currently making the rounds. Taxes are Voluntary - #1 IRS Myth! Believing that paying taxes is voluntary is a myth that often leads taxpayers to face the IRS in court. It is considered a frivolous argument by ...

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Are You Taking Out Too Much or Too Little in Taxes From Your Paycheck?

March 18, 2016

Income earned from wages is taxable if it exceeds a certain amount. If the income earned is from wages, your employer will withhold taxes from your paycheck and transfer it to the IRS. The amount your employer withholds depends upon how much you earn and the information you provided on IRS Form W-4. How Inaccurate Withholding Affects You If you have a single source of income, i.e. from your job, then your tax liability might not have ...

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tax breaks

3 Tax Breaks For Families with Children

February 16, 2016  |   Last modified on May 10, 2021

Parents can save a significant amount in taxes by using tax breaks geared towards families. The Child Tax Credit, Earned Income Tax Credit, Adoption Credit, Child and Dependent Care Credit, and Education Tax Credits are all essential tax credits worth exploring. At this time, however, we are going to take a deeper dive into the top three (3) tax breaks for families with children. Earned Income Tax Credit

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home office deduction

Qualifying For The Home Office Deduction

February 09, 2016

If you use a part of your home exclusively for business purposes, you might be eligible for the home office deduction. Available for homeowners and renters, this deduction is applied to all types of homes. Generally, you cannot deduct items related to your homes, such as mortgage interest, real estate taxes, utilities, maintenance, rent, depreciation, or property insurance, as business expenses. You may deduct expenses, however, that are exclusively for business purposes. The home office deduction is ...

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updating your address with the irs

The Importance of Keeping Your Address Current With The IRS

December 18, 2015

The IRS sends letters and notices to taxpayers throughout the year. If you move, it is important to inform the IRS of your address change to receive communications and/or your tax refund. The IRS typically sends notices to: Inform of changes they made on your tax return Inform of back taxes owed Verify identity Request further information Inform of delays in processing your return If you miss communication with the IRS, it may complicate matters, especially if you are required to ...

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