The law that created coronavirus stimulus payments just took effect yesterday and we're weeks at best from getting actual money. But tax planners have been thinking about COVID-19 tax intricacies since the illness exploded in the middle of this tax season. These payments just add a new tax filing wrinkle, since what we put on our 2019 returns could be a key part in the relief amount's ultimate dollar calculation. Tony Nitti, a CPA and tax partner with RubinBrown in Aspen, Colorado, has a good preview of what our tax filing actions now could mean to our potential coronavirus payments... Read more →
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We're a third of the way to coronavirus relief checks. Last night (March 25), the Senate approved the massive measure, which includes in its 880 pages payments of $1,200 per person and $500 per dependent child. (More on this in a minute.) The bill, known as the Coronavirus Aid, Relief and Economic Security (CARES) Act, now goes to the House for approval. There may be some procedural stumbling blocks, but it's expected to pass there, probably by voice vote to avoid the congregating caused by a roll call on the chamber's floor. That probably will happen Friday. Then it heads... Read more →
The Family Handyman Millions of Americans are at home now, sheltering in place in order to slow down spread of the coronavirus. One of the side effects of spending more than normal time in your house is that you discover issues. And one of those issues might be, depending on where you live, that your heating or air conditioning system is not in the greatest shape. Maybe you need a completely new unit. I feel your pain. We've had to replace AC systems and it sucks, from both the cost and inconvenience perspectives. Or perhaps you can get by with... Read more →
The House-passed H.R. 6201, Families First Coronavirus Response Act does not — I repeat, does NOT — include a change in the upcoming federal tax filing and payment deadline. That did happen, but separately, as detailed in my April 15 Tax Day deadline and delay Q&A post. There's also no change to the payroll taxes that come out of our paychecks. So right now, expect your regular pay to remain the same. And keep working on those federal tax forms with April 15 as your deadline. What we do know, however, is that legislation to deal with coronavirus' health and... Read more →
Friday the 13th scares a lot of folks, but there are some tax breaks that are almost as cuddly as this ebony kitten. It's another Friday the 13th, but the last thing we need in March 2020 is more stuff to worry about. So what's better help take our minds off the very scary COVID-19 pandemic and all its ramifications — like no sports to divert our attention! — than taxes? Yes, taxes. Really. There's no word yet as to whether the April 15 filing deadline and any due tax payments will be extended. But there still are a lot... Read more →
With the latest stock market dive, investors feel like the frontiersman confronting a bear in this "rough and tumble with a grizzley" illustration by H. Bullock Webster. (Image via Wikipedia Commons) Investors are in the third week of watching in horror as their nest eggs crack. The fiscal horror show began with the realization on Feb. 24 that the coronavirus was a global health risk. It got worse on Black Monday March 9 in the wake of the Russia-Saudi oil price war. Today, stocks are plunging again at rates not seen in more than a decade when were mired in... Read more →
Volunteer tax preparers help Florida taxpayers complete and file their taxes. (Photo courtesy United Way of the Big Bend) You checked out Free File, but you're just not comfortable relying on the tax software alone. But when you looked into hiring a tax preparer, the fees put too much pressure on your already stretched budget. Good news! There are tax-savvy volunteers across the United States ready to help lower-income and older taxpayers fulfill their annual filing responsibilities. These folks are at Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) locations nationwide. They are members of your... Read more →
To make sure you, not the U.S. Treasury, gets more of these, don't overlook possible tax deductions and credits. At tax time, filers are always searching for ways to reduce their final tax bill. You can claim deductions, either by itemizing if that gives you more than your standard deduction amount or by claiming some income adjustments, still referred to (by me, at least!) as above-the-line deductions that reduce the amount of income that's taxed. There also are tax credits, which are even better because the directly reduce what you owe Uncle Sam dollar-for-dollar and in some cases could produce... Read more →
Newark On Reddit via Twitter The Academy Awards is tonight and although I'm a big film fan, I'll probably skip it. The early awards shows have already spoiled it for me. Sorry, ABC. If Antonio Banderas somehow takes the Oscars statuette from Joaquin Phoenix, which is what I'd love to see, then I'll catch the replay on YouTube tomorrow. Some folks in New Jersey, however, will be closely watching this year's ceremony and pulling for the "Joker" actor. The street where Phoenix's disturbed Arthur Fleck character gets jumped early in the movie is in Newark. Tax breaks, of course, played... Read more →
What would you do with an extra $2,504? That's the average amount received by taxpayers who claimed the Earned Income Tax Credit (EITC) in 2019. Overall, the Internal Revenue Service says that across the country last year, 25 million taxpayers received more than $61 billion from this tax break for lower-and middle-income workers. Every tax year, however, folks who qualify for the Earned Income Tax Credit don't claim it. Many don't know about the tax break. Others don't realize that changes in their marital, parental or financial status means they now qualify. That's why for more than a decade, the... Read more →
The birth of the Rev. Dr. Martin Luther King, Jr. has been officially celebrated as a federal holiday on the third Monday of January for more than three decades. For 25 of those years, it's also been a Day of Service, during which we're all challenged to transform the King Holiday into a day of citizen action volunteer service in honor of the slain civil rights leader. There are various ways to honor Dr. King on his holiday. One recommended by the Corporation for National and Community Service is to volunteer on #MLKDay and beyond as a tutor or mentor... Read more →
You just read my post on tax filing requirements (thanks!) and discovered you don't have to file a Form 1040 this year. So, as fictional television attorney (though not a tax specialist) Jimmy McGill might say, "'S'all good, man." Right? Not necessarily. Sometimes even if you don't have to file a federal tax return, it's to your benefit to do so. Here are 10 situations when you should send the Internal Revenue Service a return: You're due a refund. This often is the case if you had federal income tax withheld. The only way to get any of that prepaid... Read more →
The 2020 filing season starts on Jan. 27 and millions of taxpayers already are ready to send their 1040s to the Internal Revenue Service on that day. Most of these folks are expecting refunds. But that's just one reason to file your taxes early. Here are six reasons to finish up your Form 1040 and get it to the IRS ASAP. 1. To get your refund sooner. Yes, a tax refund is always the top reason to file your taxes as early as you can. I could go on (and on and on) about how it's better to adjust your... Read more →
The individual tax filing season doesn't officially open until Jan. 27, but you're ready to file your taxes. Or are you? Tax filing, whether you do it yourself via tax software that you buy, use online or access via Free File or hand off the annual task to a tax pro, requires its own specific preparation. You've got to have all your tax-related documentation before you can start filling out that Form 1040. Here's a checklist of forms and documents you'll need to complete your taxes, as well as a look at tax situations you need to consider before filing.... Read more →
Photo by Kristina Paukshtite from Pexels A staple feature each New Year's Day is the fixation on babies born just after the clocked clicked past midnight. For the families, it's usually a joyous event, with their new bundles of joy being showered with first baby themed gifts from local merchants. Tax professionals, even those with families, however tend to see such celebrations as a tad misplaced. Or, as Jerry Gaddis, an Enrolled Agent in Florida, describes it, "bad tax planning." Am I the only one who sees this and thinks "bad tax planning"? #EnrolledAgent — Jerry Gaddis. EA, MBA (@TropicalTax)... Read more →
Congress played Santa this week, averting a government shutdown and approving a wide variety of anticipated tax breaks. Merry Christmas U.S. taxpayers. H.R. 1865, the Further Consolidated Appropriations Act, 2020, is now law. In a surprise move earlier this month, House and Senate negotiators cobbled together a massive bill that not only, as the name indicates, assures that the federal government stays open, but which also included some long-awaited (at least by those who will benefit) expired tax provisions. In addition, lawmakers corrected — and by corrected, I mean repealed — some obvious — and by obvious, I mean universally... Read more →
December is, for the most part, a festive month. The holidays and all that accompanies them, from songs to movies to the joy of youngsters and young at heart, bring out the best in most of us. But things aren't quite so bright and jolly for everyone. Despite an economic recovery that's lifted people out of poverty in most areas of the country, poverty increased in at least one county in every state between 2016 and 2018. The poverty rate — defined as the percentage of people in households earning less than the current $25,750 threshold for a family of... Read more →
These carolers, dressed in Dickensian attire, are no doubt singing traditional Christmas tunes, not my reworked and tax-themed "O Tannenbaum." (Photo by Chris Waits via Flickr CC) O Tax Year-End (O Tax Year Moves) O Tax Year-End, O Tax Year-End, How are thy days so nearing! O Tax Year Moves, O Tax Year Moves, How are thy days so wearing! Not only in the wintertime, But even in young spring is thy prime. O Tax Year-End, O Tax Year Moves, How are thy days so nearing! Yes, that's my attempt at tax lyrics to the tune "O Tannenbaum," known here... Read more →
Current state and local taxes deduction limit on federal Form 1040 Schedule A. We're wrapping up the second full year of living with the Tax Cuts and Jobs Act (TCJA) but some things still feel unfinished. Treasury and the Internal Revenue Service continue to issue guidance on various provisions, tax forms still are being tweaked, economists can't agree on the tax bill's economic effects and a key legal battle is still raging. The courtroom drama is about, you guessed it, TCJA's $10,000 limit on state and local taxes itemized federal deductions. Fighting a low-SALT tax diet: In July 2018, New... Read more →
Today I'd rather be in the Midwest, say northern Ohio or Michigan, at least as far as the weather. Yeah, it's chillier than I like, but at least it's not so dang windy. As the screen shot above of the live wind map wind shows, the rest of the country is dealing with some strong gusts. Locally, we're at around 13 mile per hour sustained wind, with gusts up to 30 mph. Where wind pays: You'd think I'd be used to the wind. I did, after all, grow up in West Texas, where the wide-open spaces are perfect to spin... Read more →