Hello, February! Yeah, I know my regular monthly tax moves post is late. But February started off here in Central Texas with a nasty ice storm that knocked out our power for four days, and I'm still catching up on delayed blog (and real life) tasks. I appreciate your patience and understanding. So, since we're already on this shortest month's fifth day, and nobody wants to hear my continued whining about the storm and our local electric company, let's get right to some fun stuff. Like February Tax Moves! Here are three to consider this month. 1. Collect your tax... Read more →
Credits
The Earned Income Tax Credit, or EITC, is one of the most beneficial tax breaks for lower- and moderate-income workers. It's also one of the most under-claimed. The reasons are many, starting with its complexity. You have to work to be able to claim the EITC. But if you make too much money, you're ineligible. Your marital status comes in the calculation of the final credit, as does the size of your family. And many single people ignore the EITC because they think it's only available to filers with dependent children. "This is an extremely important tax credit that helps... Read more →
Photo by Dewang Gupta on Unsplash In 2019, the Internal Revenue Service received nearly 156 million tax returns. Then came the COVID-19 pandemic. In 2022, the number of 1040s filed hit 169.7 million. The increase continued in 2021 with the IRS receiving 169.1 million returns, and into 2022, when 164.3 returns were sent to the tax agency. The main reason for the 2020-2022 filing spikes was the coronavirus-related financial help — economic impact payments and increased advance Child Tax Credit amounts — that the IRS was tasked with delivering. Many, OK most, of those millions who hadn't filed before 2020... Read more →
Photo by Michael Burrows Millions of Americans send tax return to the Internal Revenue Service every year. It's a good bet that a lot of them are first-time filers. Dealing with the IRS, even in a routine manner like sending in a completed Form 1040, can be intimidating, even for veteran taxpayers. For newbies, the task also can be overwhelming. But it doesn't have to be. These eight steps can help a novice taxpayer successfully make it through their first filing season, and maybe even get a bit of money back. 1. Get organized. This is a habit that will... Read more →
Every filing season, eager taxpayers, most of them expecting a refund, send their returns to the Internal Revenue Service as soon as they can. For most it works out OK. Others, however, discover on their own, or learn from the IRS, something just not quite right, and costly, on their Form 1040. It works the other way, too. In some instances, folks submit a return without claiming a tax break that would have saved them dollars. The IRS isn't going to tell you about that! The best way to make sure you enter all the data that the IRS wants,... Read more →
Unemployment benefits can be a godsend when you lose your job. They also can be a god-awful problem at tax time. That money you get to help tide you over until you find another job is taxable income. In certain situations, however, lawmakers have provided unemployment compensation, or UC (and yes, that's its official name, so the compensation moniker explains the taxing), have exempted some of the government money from federal tax. COVID UC exemption: That was the case during the height of the COVID-19 pandemic. The extraordinary circumstances of so many people losing their jobs at the same time... Read more →
Lyriq photo courtesy Cadillac Sometimes the obvious is, well, obvious. Until it isn't. Back in 1964, Supreme Court Justice Potter Stewart's famous intuitive declaration about knowing pornographic material when he saw it made things clear. Then on Jan. 11, 2015, we Dallas Cowboys fans, then belatedly the NFL, knew that Dez Bryant's touchdown catch was definitely a catch. Now General Motors (GM) and Uncle Sam are fighting over what, for most of us, is pretty clear, specifically what counts as an SUV. The government's final answer will affect the new Inflation Reduction Act tax credit for electric versions of sports... Read more →
The tax code is like a car. A big, old, clunky car that just keeps chugging along. But every now and then you need to tune it up and change the tires. Here are some tweaks to the 2023 filing season model. (Photo by Andrea Piacquadio) Tax filing rolls around every year. But every year, there also are a few changes that make the process slightly different from prior filings. We didn't have any major tax law changes in 2022. But some old rules come into play, as does the expiration of some tax breaks that many folks had enjoyed... Read more →
The tax year is over. Long live the tax year. Taxes are, if nothing else, persistent. Sure, there are a few (or more) changes every year, even if it's only inflation adjustments. But even in years when the changes are negligible, they are back, starting to add up on the first of every January. That's why 2023 is the first By the Numbers honoree of this new year. The transition from an old to a new tax year is also the focus of this post. It's a look at six tax matters that affected or at least fascinated us in... Read more →
Don't miss out on any tax breaks as you put together your retirement plan. That includes claiming the Saver's Credit if you're eligible. Some retirement savers got an early Christmas present. On Dec. 23, President Joe Biden signed into law the $1.7 trillion omnibus package that keeps the federal government running and more. Among the more was a revision of retirement provisions known as the Setting Every Community Up for Retirement Enhancement (SECURE) Act. And one of those changes is the eventual conversion of the Saver's Credit into a matching contribution tied to workplace plans and IRAs. That's a good... Read more →
Kris Kringle, portrayed by Edmund Gwenn in the 1947 classic movie "Miracle on 34th Street." (via Giphy) I'm a Christmas traditionalist. OK, so I expand the traditional holiday season. We, at my urging, put up holiday decorations right after Halloween. We have a lot of them, so it takes time. Plus, I'm a fan and nonresident celebrant of Canada's Thanksgiving. Our neighbors to the north's celebration of the harvest and other blessings of the past year falls on the second Monday of October, following a more North American seasonal shift. Even better, it provides a welcome space between Turkey Day... Read more →
A heat pump's outdoor unit is pulling what warmth it can out of the air in freezing conditions. (Photo by Peter Eastern via Wikipedia Commons) North winds are gusting up to 30 mph right now here in suburban Austin, Texas. By sunset, we'll be at freezing, with temperatures in the area tonight expected to drop to between 10 and 15 degrees. Despite my alternately freaking out thanks to memories of 2021's snow, ice, and prolonged freezing temperatures that led to extended electric and water utility outages across most of Texas, ranting, and stuffing old hand towels into every new window... Read more →
To ensure your golden years truly shine, you need to save now. Changes in the SECURE Act 2.0, which has been added to crucial year-end legislation, could help. (Photo by 401k2012 via Flickr CC) You might have noticed that as 2022 has been winding down, there's been an unofficial theme for the ol' blog's posts. Many of them have focused on tax laws' effects, good and bad, on retirement savings. Part of that is personal. I like what I do for a living, but with each passing day, I (and the hubby) think increasingly about retirement. We're in good shape,... Read more →
Photo by Guneet Jassal on Unsplash It's December! Are you ready for all the decorating and shopping and cooking and parties and tax moves to make? Yep, tax actions need to be added to your already very long holiday to-do list. You only have 31 days to take advantage of some Internal Revenue Code provisions that could save you money. That's always a welcome gift from Uncle Sam, but especially at this time of year. Plus, if you take relevant tax steps sooner in the month, you'll also free up time for more traditional festivities. So let's get to it.... Read more →
Tom and Tillie Turkey take care of their youngsters, like these three young Bourbon Red poults. But poultry and the rest of the animal world doesn't have to send their offspring to college. (Photo by Jennifer Kleffner via Flickr CC) A recurring phrase uttered at holiday season family gatherings is "you've grown so much since I last saw you!" What that usually means for many parents of those youngsters is that they will soon be heading off to college. And that move to campus means that mom and dad will have to come up with big bucks. The best way... Read more →
Updated Wednesday, Nov. 16, 2022 You still have time to electronically claim the benefits, but not much. The deadline to e-file is Thursday, Nov. 17. If you missed out on the special COVID-19 relief payments, notably the enhanced Child Tax Credit (CTC), then head to the Internal Revenue Service's Free File website. The IRS is keeping Free File operating through Nov. 17 so eligible nonfilers can e-file a Form 1040 to claim their eligible COVID benefits at, as the name says, no cost. In addition to the CTC, eligible taxpayers may be able to claim some or all of the... Read more →
Getting your tax ducks in a row takes on a different meaning in November. But whatever bird you choose for the metaphor, make some time this month to complete tasks that will prevent tax turkeys. (Photo by Mohan Nannapaneni) November, the eleventh and penultimate month of the year, is like everything else in life. As a deadline nears, the end of 2022 in this case, the number of tasks to tackle grows. A lot. During these next 30 days we have holidays, both official like Thanksgiving and Veterans Day, and unofficial like National Doughnut Appreciation Day on 11/5, and which... Read more →
Very few of us share the same tax circumstances. However, there is one thing every taxpayer can agree on. We all want to pay the least amount of federal tax as possible. Deductions, like the standard amounts discussed in Part 2 of the ol' blogs annual tax inflation series, are a major way of reducing our annual tax bill. But wait. There's more. There are the adjustments to income, listed on Form 1040 Schedule 1 and still known as above-the-line deductions. You can claim all of these 25 tax breaks regardless of whether you itemize or take the standard deduction.... Read more →
With some tax planning now, along with some help from tax-favored accounts, you can ensure your retirement is full of smiles, love, and flowers. (Photo by RODNAE Productions) It's always a good time to start saving for your eventual retirement. The U.S. tax code helps via a variety of tax favored retirement options. And the Internal Revenue Service helps every year by making cost-of-living (COLA) adjustments that boost the amounts you can put into your post-work accounts. The tax agency today announced how much you can stash in 2023 in tax-deferred — or tax-free — retirement accounts and pension plans.... Read more →
It's Tax Day for most procrastinators who earlier this year got six more months to file their 2021 tax returns. But not for all. Due to extraordinary circumstances, taxpayers across (and outside) the United States have more time to complete and submit their 2021 tax year forms. Some of these affected filers (and nonfilers) need to mark Nov. 15, Nov. 17, or Feb. 14, 2023, on their calendars as the absolutely final day to submit last year's tax return. Disasters, danger, and more: If you're spending today struggling to fill out your Form 1040 and associated schedules, you might be... Read more →