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 →
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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 →
Companies could qualify for a tax break if they help former military members, as well as other specific groups of job seekers, transition to civilian workforces. But the hiring businesses need to act quickly. Hiring extra employees during the holiday season — which we're smack dab in the middle of it in case you've missed the touting of Thanksgiving specials, early Black Friday deals and, yes, Christmas decorations already — is a time-honored business tradition. Most of the time, these workers are temporary. In some cases, however, those seasonal jobs turn into longer-term positions once the holiday paraphernalia is stored.... Read more →
Welcome to Part 4 of the ol' blog's 2020 series on tax inflation adjustments. We started on Nov. 6 with a look at next year's income tax brackets and rates. Today we look at changes to tax credit, deduction and income exclusion amounts. Note: The 2020 figures in this post apply to 2020 returns to be filed in 2021. For comparison purposes, you'll also find 2019 amounts to be used in filing 2019 returns due April 15, 2020. The hubby has a chant he breaks into every year when I start working on our annual tax return: "Deduct! Deduct! Deduct!"... Read more →
Welcome to Part 3 of the ol' blog's 2020 series on tax inflation adjustments. We started on Nov. 6 with a look at next year's income tax brackets and rates. Today we look at allowable annual retirement plan contributions amounts, and, for some taxpayers, tax deduction options and limitations. Note: The 2020 figures in this post apply to 2020 returns to be filed in 2021. For comparison purposes, you'll also find 2019 amounts to be used in filing 2019 returns due April 15, 2020. Contributing as much as you can, and as much as the tax laws say you can,... Read more →
Welcome to Part 2 of the ol' blog's 2020 series on tax inflation adjustments. We started on Nov. 6 with a look at next year's income tax brackets and rates. Today we look at standard and itemized deductions, certain limitations on some Schedule A claims and the sort-of still around personal exemption amount. Note: The 2020 figures in this post apply to 2020 returns to be filed in 2021. For comparison purposes, you'll also find 2019 amounts to be used in filing 2019 returns due April 15, 2020. Historically, around 70 percent of filers have claimed the standard deduction on... Read more →
More than a dozen states now provide marketplace options to health care shoppers. And although the federal enrollment mandate and penalty is gone, some states still require their residents to get coverage or pay a price. Plus, federal tax help remains for some seeking medical insurance on their own. The annual employee benefits enrollment period, usually referred to as open season, is underway or about to begin across the country. During these weeks, workers choose from an array of employer-provided and usually tax-favored benefits. I'll be writing more on this shortly. You can read more on the annual benefits selection... Read more →
Teslas are the most popular electric vehicles (EVs) in the United States. Creator Elon Musk, however, isn't riding on his EV's laurels. The space exploration and auto impresario says some unusual custom horn sounds are coming. That's right, the honk of your high-dollar Tesla soon could replicate fart and goat noises. That should spark more potential owner interest, although the biggest market for this change, 9-year-old boys, can't drive. Still, Musk knows he needs to do something to keep interest in Teslas high since the EVs no longer qualify for the federal tax credit. Worse, a new report from an... Read more →
You've now got one week, until next Tuesday, Oct. 15, to file your 2018 Form 1040 that you extended earlier this year. During these next seven days, you need to at least get a start on that return. The deadline will be here before you know it. And this time, there's no more time. Here are 9 tips and reminders to help you get that 1040 on its way to the IRS by next week. 1. Gather all your tax material. By now you should have every document you need to file your taxes. Double check. Now. There's no give... Read more →
This is a regular spread in our kitchen, not just on Taco Tuesday or today's National Taco Day. (Kay Bell photo) Today is National Taco Day, which raises a big question here in Texas. Why is there just one specific day celebrating taco consumption? (Corollary question: why isn't it on an alliterative Tuesday?) We Lone Star State residents consume vast quantities of soft and crispy/crunchy tacos multiple times every day, starting with the most important meal of the day, the breakfast taco. Various foodstuffs, various taxes: The day commemorating a Tex-Mex favorite also raises the question among tax geeks about... Read more →
A new tax credit for dependents offers a break for extended family members and even non-relatives. My mom is a fiercely independent octogenarian, but she still depends on me. Like today, when I'm taking her to have some dental surgery. She is not, however, a tax dependent. That means the hubby and I can't claim her on our tax returns in order to get the $500 Credit for Other Dependents. This tax break, newly-created by the Tax Cuts and Jobs Act (TJCA), also has been dubbed the Family Tax Credit or Non-Child Tax Credit. It's an add-on to the Child... Read more →
August is here, but few of us have put out the welcome mat. The eighth month of the year tends to be one of the hottest of the year. Most of the summer's fun events have come and gone. And school is about to start. OK, that last point is a positive for many parents who are running out of patience with the kids being underfoot all the time. Those moms, dads and all other shoppers in 13 states at least will get some state sales tax holidays to make this muggy month a bit more tolerable. Those tax-free events... Read more →
The Earned Income Tax Credit (EITC) was created more than 40 years ago as a way to give lower-earning workers a tax break. But from the get-go, the EITC has been problematic. Now, just weeks before the National Taxpayer Advocate retires, her office has offered Congress some suggestions on how to improve the tax credit, as well as how it can be more effectively administered. Some tax credit history: The way we got to today's EITC is almost as complicated and intricate as the tax break itself. When created in 1975, the EITC was supposed to be a temporary tax... Read more →