Federal tax returns get most of the attention during the annual tax season. That's because Uncle Sam's individual income tax laws apply across the country. But state taxes also are demanded of most Americans. For 2021 filings, residents in 42 states and the District of Columbia could face filing requirements. And most of them also offer their own state-specific versions of the federal Free File option. Only 8 total no-tax states: The only states with no personal income tax at all are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. Tax savvy readers probably noticed the increase in... Read more →
March 2022
Photo by Ketut Subiyanto from Pexels The COVID-19 pandemic has reshaped work. Millions who lost earnings when the coronavirus cut their workplace hours filled the fiscal gap with gig jobs. Others left their wage-paying work entirely, opting to start their own businesses. That's meant these entrepreneurs are facing self-employment tax tasks for the first time. It also means many of them are claiming their first home office tax deduction. And that tax-saving break itself means one more tax decision. Are you going to use the regular home office deduction, or go with the simplified method? As with most things tax,... Read more →
You need to follow your doctors' practice of keeping track of your medical records. Your documentation of your health care treatments and costs could pay off as valuable tax deductions. It's been a crazy couple of months for the hubby and me. In February, we headed to our local hospital's emergency room after he sustained a head injury. A month later, I apparently was too aggressive of a walker, ending up with a fracture of one of my toes. We're both healing, not as quickly as we'd like, but thankful that things weren't worse. Good podiatrist news: MRI showed fracture... Read more →
President Joe Biden's fiscal year 2023 budget proposal of a minimum tax on the wealthiest Americans, as well as a levy on unrealized gains on assets (including stock holdings), is getting the most attention. Biden's plan to collect at least a 20 percent tax on U.S. households worth more than $100 million would apply to about 20,000 households, but more than half the revenue would come from households worth more than $1 billion, according to White House estimates. It also would, says the administration, help reduce the nation's budget deficit by $1 trillion over the next decade. Wish list only:... Read more →
Did you turn 72 in the last half of 2021? Happy belated birthday, from me and the Internal Revenue Service. My late wishes are because I'm a nice person. The IRS' greetings, which also might be as sincere, also are because your septuagenarian milestone could mean money for the U.S. Treasury. That birthday is the deadline for taking a required minimum distribution, or RMD, from certain tax-deferred retirement savings accounts. And if you celebrated that momentous day in the last half of last year, but didn't take an RMD in 2021, then you have just a few more days to... Read more →
No-cost help fulfilling our annual tax-filing obligations has always been a better slogan than a reality. We are just about three weeks away from Tax Day 2022. This is our third consecutive coronavirus-tinge tax filing season, but things seem (fingers crossed!) to be going relatively well. As of March 18, the Internal Revenue Service had received more than 72 million returns. Almost 70 million of those 1040s arrived electronically. The IRS doesn't break out in its regular filing season statistics how many of the e-filings were submitted by users of its Free File option. That number, however, is likely to... Read more →
It's that time of filing season again. The Internal Revenue Service is reminding millions of people that they've left collective billions of dollars unrefunded. Yep, for a variety of reasons, every year people who are due tax refunds don't file the necessary tax paperwork to get their money. The U.S. Treasury holds on to it, but just for three years. If the due tax refunds aren't claimed within that time frame, Uncle Sam gets to keep the money. Forever. That means the claiming clock is ticking down for an estimated 1.5 million individuals who didn't file 2018 tax year returns... Read more →
The iconic Hollywood sign is still there, but films no longer are limited to Los Angeles backlots. They're made across the United States (and world), with film makers choosing locations based in many instances on available tax breaks. (Photo by Dmitry Rogozhin via Wikimedia Commons) You haven't been to a movie theater in years. You don't pay for streaming services. But chances are you have been covering the production costs for recent movies and television shows. That's because 33 states and the District of Columbia offer tax breaks to movie makers and more. The only states that currently don't offer... Read more →
One of the big selling points of taking your taxes electronic is that the Internal Revenue Service's turnaround is quicker. The tax agency has long touted that when taxpayers e-file and have their refunds direct deposited, the tax cash usually shows up within 21 days. Usually. The only thing certain about taxes is that they'll find a way to frustrate you. That's the case when e-filed refunds take longer. Here are six reasons, from the IRS and tax community, as to why your refund may be delayed. 1. Math errors: Yes, taxes are complicated. That's why most of us use... Read more →
Tax payments have come a long way since this 1939 painted window suggestion. (New York Public Library image) Tax Day 2022 is less than a month away. Most of us think of it as the day our tax returns must be filed, and that's true. But it's also the day that any tax you owe must be paid. If you miss either task, the Internal Revenue Service will slap penalties and interest onto your tax bill. The easiest way to do both is electronically. Here are five ways the IRS will accept your e-payment. 1. Electronic Federal Tax Payment System... Read more →
Imgur-Finextra Organized crowdfunding has been around for 25 years. It's helped people make ends meet, cover emergency expenses, make movies, support others in need. It's taken on a new life due to recent catastrophic events. During the first seven months of the COVID-19 pandemic in 2020, more than 175,000 GoFundMe campaigns were established in the United States for coronavirus-related needs. Now, as Ukrainians fight off Russian invaders, direct online contributions are flooding into efforts to aid the country's resistance and humanitarian efforts. Such expansion of financial transactions means, of course, that here in the United States, the Internal Revenue Service... Read more →
Does your tax bill seem too big? You are not alone in thinking that, according to a recent survey. Every filing season, a lot of taxpayers discover that, at least from their point of view, they are paying too much in taxes. That's still true, even though we've now had four full years of the Tax Cuts and Jobs Act (TCJA) changes. This major tax reform bill was supposed to simplify filings, and it did for millions by expanding the standard deduction amounts and shifting folks from itemizing. It also, according to the Republican lawmakers who crafted it, was supposed... Read more →
Photo by Anna Shvets from Pexels Inflation is the biggest domestic, and political, concern right now. And after months of waiting, the Federal Reserve's expected reaction to rising prices came last week. The board members of the United States' central bank raised interest rates on Wednesday, March 16, for the first time since 2018. The bump of a quarter percentage point to its benchmark rate is the first of expected increases to combat the country's highest inflation in four decades. When all is said and done, most financial observers say the previously near-zero interest rates to be near 2 percent... Read more →
Homeowners know that keeping a residence in shape is a continual effort. Most of the time, we're just trying to keep things running. That maintenance is necessary, but it doesn't do much for us when it comes to taxes. But if you decide that instead of just fixing that cranky old furnace, it's time to go greener, you could get a tax break. Geothermal heat pumps are just one of the home upgrades that qualify for the renewable energy tax credits. If you took advantage of any of them in 2021, be sure to claim them on the tax return... Read more →
Tax Day 2022 is a month away. That means lot of us are finally getting serious about filling out our 2021 tax returns. A lot of us also are making a disturbing discovery. Our refunds aren't as big as we expected. Even worse, in some cases we owe tax. There are several reasons your refund could be smaller or you must send Uncle Sam a check. You can check them out in my previous post, 5 reasons your tax refund this year might be smaller. But here's a preview of one of the reasons. You didn't have enough withheld. Or,... Read more →
Volodymyr Zelenskyy, president of Ukraine, made an emotional plea to U.S. lawmakers for more help as his country battles Russian aggression. Screenshot of the address from C-SPAN broadcast. Ukrainian President Volodymyr Zelenskyy spoke directly to members of the U.S. Congress this morning, urging them to do more to protect help his country's efforts to fight Russian invaders. At one point in the virtual speech, delivered remotely from his country's war-torn capital Kyiv, Zelenskyy called on President Joe Biden to be the world's "leader of peace." Hours after the emotional plea, Biden responded. He thanked Zelenskyy for his address, and pledged... Read more →
March Madness, the name of the annual NCAA men's basketball tournament, begins today. The betting on the games began Sunday, as soon as the 68 teams filling the brackets were announced. I'm not a big college sports fan, basketball included, so all I know about this year's tourney is that my alma mater is attending the Big Dance. Texas Tech's impressive roundball team, with its AP Big 12 Coach of the Year Mark Adams, will play its first game scheduled for Friday, March 18, afternoon. I'm rooting for the Tech team. However, I am not betting on the guys. No... Read more →
Since the Tax Cuts and Jobs Act (TCJA) of 2017 nearly doubled the standard deduction amounts, even more people have chosen to use that filing method. IRS data indicate that close to 90 percent of us have opted not to mess with itemizing. But dumping the Schedule A doesn't mean you give up all deductions. On tax year 2021 returns, you can claim some of your cash charitable deductions directly on Form 1040. And if you take a look at Schedule 1, one of the documents that the Internal Revenue Service created to accompany Form 1040 when the TCJA took... Read more →
IRS office in New York City. (Photo by Matthew Bisanz via Wikipedia Commons) Almost six months into Uncle Sam's current fiscal year, Congress finally agreed to fund it fulltime. Representatives and Senators last week sent the $1.5 trillion appropriations package to the White House. Before that, they also signed off on yet another short-term continuing resolution that will keep government offices open until March 15. That should give President Joe Biden time to sign the fiscal 2022 spending measure into law before a government shutdown is triggered. The measure, H.R. 2471, got bipartisan support in both chambers. The House passed... Read more →
Ready to take a break from your 2021 taxes? I have just the diversion. You can read all about the tax legislation that was enacted during the 116th Congress. Wait! Come back. It's a good timeline look at recent tax breaks and changes, some of which still affect our 2021 tax returns. During that session of Congress, which began on Jan. 3, 2019, and ended on Jan. 3, 2021, the House and Senate sent 344 bills to the White House that were signed into law. Since this is a tax blog, our attention is on those bills/laws that had an... Read more →