Photo by Ahsanjaya You just got your federal tax refund it was not what you were expecting. In fact, it’s much less than the amount your Form 1040 calculations showed. What the heck happened? There are several reason why a refund amount could be less that amount on your filing. The most common smaller refund situations involve math errors in computing your tax bill, or the claiming of incorrect credits or deductions. In these cases, you should have heard from the Internal Revenue Service via a notice about the discrepancy. But another common reason your tax refund is much smaller... Read more →
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A scenic overlook is always worth a stop when traveling. But when it comes to taxes, you definitely don't want to overlook tax breaks that could save you money. (Photo by Gary Yost on Unsplash) There are two ways to reduce your tax bill. You can take deductions, which reduce the amount of your money that's taxable. You also can claim tax credits, which cut any tax you owe dollar-for-dollar, and in a few cases get you refund. The options are not mutually exclusive. But they don't do you any good if you don't claim the ones to which you're... Read more →
Photo by Kampus Production Our neighborhood has been full of kids recently. Last week was our local school district's spring break. Monday was an added day off for the youngsters, as teachers only returned to their schools for a special work day. It also was a six days of parents juggling child care and their jobs. I got a close up of this from our new next-door neighbors. Mom and dad alternated days off from their jobs so one of them could stay home with their two children, a pre-teen and a young teenager. Child care is a major challenge... Read more →
The Recovery Rebate Credit also is available until April 15, 2025, for unclaimed 2021 tax year amounts. Economic impact payments, or EIPs, issued in 2020 and 2021 helped millions deal with the financial damage caused by the COVID-19 pandemic. However, some people didn't get the coronavirus stimulus money to which they were entitled. These eligible individuals still have a chance to collect the cash by claiming the Recovery Rebate Credit. But time is running out. The Internal Revenue Service is alerting those who didn't file a 2020 tax return need to complete that form and claim the COVID funds by... Read more →
March's arrival means it's time to start stalking some tax savings. (Photo via Unsplash+ in collaboration with Getty Images) While the saying that March comes in like and goes out like a lamb usually is a reference to this month's weather transition from winter to spring (or, here in Central Texas, to summer already), feline aggressiveness could come in handy at tax filing time. There are plenty of tax moves you can make during this final full month before Tax Day, which is this year is the normal April 15 due date. Here are five tax matters to consider in... Read more →
Unsplash+ in collaboration with Getty Images Most taxpayers claim the standard deduction. Those who opt to itemize do so because they have enough tax deductible expenses to exceed their filing status' standard amount. In most cases, those expenses are medical. Generally, you can claim allowable medical costs for yourself, your spouse, and dependents as long as the treatments were prescribed by a physician as necessary to diagnose, ease, or prevent a physical or mental illness. The amount of these medical costs that exceed 7.5 percent of your adjusted gross income count on your Schedule A, the form where you detail... Read more →
Photo by Ozan Safak on Unsplash Higher income taxpayers tend to take the most advantage of tax breaks. That's no surprise. They can afford to hire tax professionals, who keep track of all the benefits they qualify for and claim them on the well-to-do taxpayers' returns. But there are some valuable tax breaks for the rest of us who are far from wealthy. And while higher-income households do enjoy greater per dollar benefits tax benefits, the breaks available to us tax plebeian are more beneficial when they are measured as a share of our income. Tax credits provide the most... Read more →
Unsplash+ in collaboration with Meg Aghamyan First comes love. Then comes marriage. Then comes filing your taxes together in one package. 💘💕💗💕💘 Or not. OK, I pushed it trying to rhyme marriage and package. Now it's clear why I stick to prose instead of poetry And that "or not" stanza is a bit counterintuitive on Valentine's Day, a time when we traditionally celebrate love and inseparability. But we are talking taxes on this heart day, so there's always an exception. Married filing options: It's true that most of the time, it's better to file one return jointly. Not only is... Read more →
Unsplash+ in collaboration with Getty Images Tax season 2024 officially starts Monday, Jan. 29. Lots of taxpayers have already filled out their 1040 forms and are just waiting for the Internal Revenue Service to start processing them next week. Most of these early filers are expecting tax refunds. They also likely have relatively simple tax lives. Lucky them. Others, however, have more complicated tax and financial circumstances. These folks have more tax documents with details that must be transferred to their return forms and schedules. They also need to consider how their situations might affect their tax returns. Below is... Read more →
IRS Commissioner Danny Werfel speaking at an EITC Awareness Day event in Baltimore sponsored by the CASH (Creating Assets, Savings and Hope) Campaign of Maryland. (Photo courtesy CASH/IRS via X/Twitter) It's the Friday before the annual tax season kick off on Monday, Jan. 29. That means today is Earned Income Tax Credit (EITC) Awareness Day. For the past 18 years, the Internal Revenue Service and community organizations, state and local government officials, schools, employers, and other groups have spent EITC Day getting the word out on this valuable, but too often overlooked, tax credit. Today, IRS Commissioner Danny Werfel headed... Read more →
Photo by Waldemar on Unsplash The major challenge for Congress right now is finalizing funding so the federal government won't shut down in March. But some members also are, as noted in yesterday's post, trying to get a mini tax extenders measure passed. And that's not the only tax bill on some lawmakers' minds. A bill to eliminate the federal estate tax was introduced just as the larger bipartisan House/Senate tax bill was clearing the House Ways and Means Committee. Estate tax elimination effort. Again: Some cynical Washington, D.C., watchers might say this bill was introduced primarily for political purposes.... Read more →
Members of the House and Senate tax-writing committees who approved bipartisan legislation last week hope the eventual outcome of their effort will be as sunny as this view of the U.S. Capitol during warmer times. (Photo: Wikipedia) Congress actually accomplished something last week. Representatives and Senators kicked the can down the legislative road agreed to measures that eliminated the immediate threat of a government shutdown. Even more surprising was another bipartisan deal. While the stop-gap government deal was being brokered, the Democratic Senate Finance Committee chair and his Republican counterpart leading the House Ways and Means Committee signed off on... Read more →
Tax season 2024 officially starts on Jan. 29, and millions of taxpayers are getting ready to deliver their returns that day to the Internal Revenue Service. Some, however, are asking a more basic question. Do I have to file a Form 1040 at all? The answer probably is yes. If you're asking the question, you likely made some money, and the Internal Revenue Code doesn't exempt much from taxation. But as with all things tax, there are exceptions. In some situations, Uncle Sam doesn't demand individuals file. Here's a look at whether you might be able to join that group... Read more →
Photo by olia danilevich Millions will celebrate the end of 2023 on Sunday, Dec. 31. But the last day of the year isn't just for partying. Dec. 31 also is an important tax day. It's the deadline to take care of some tasks that could affect your 2023 tax bill. Other things that happen on the year's final day also have tax implications. Here are five common end-of-year situations that have Dec. 31 tax timing implications. 1. Getting married: If you say "I do" on 12/31, then the Internal Revenue Service considers you married for the whole year. That means... Read more →
Individuals who didn't automatically receive an Economic Impact Payment or claim a Recovery Rebate Credit during the COVID-19 pandemic get a second chance at the money. Economic Impact Payments helped many U.S. families financially during the COVID-19 pandemic. But some eligible filers didn't get the stimulus money directly, and didn't claim it later as a Recovery Rebate Credit when they filed. Now they get another shot at the tax relief. Remember Economic Impact Payments? These funds, also referred to as stimulus payments, were issued during the height of the COVID-19 pandemic. The Internal Revenue Service sent most of the payments... Read more →
Plus, a look at how a higher cost of living affects gifts before you go, youngsters' investment earnings, and more. Photo by Lance Reis on Unsplash What we would do with our wealth may differ, but most of us want to be rich. And even if the Internal Revenue Service is successful in its recently announced effort to crack down on higher income tax evaders, having money is always preferable. In fact, if you've got beaucoup cash, you don't really have to try to slip one past Uncle Sam. Many of the current wealth-related provisions in the Internal Revenue Code... Read more →
Unsplash+ in collaboration with Getty Images If you've been to a doctor recently, refilled a subscription, had to go to an emergency room, or just bought over-the-counter medications, you know that all these treatments cost a lot more than in previous years. It's enough to make you sick, or at least nudge up your blood pressure a bit. However, the tax code might have an Rx that can help. There are a variety of medical tax breaks that can help lower your federal tax bill. Several of them are adjusted each year to account for inflation. Here, in Part 5... Read more →
Taking advantage of these inflation-adjusted tax breaks could put more money in your pocket instead of Uncle Sam's bank account. (Photo by Sasun Bughdaryan on Unsplash) Each of our tax situations is unique. But every taxpayer can agree on one thing. We all want to pay the least amount of tax as possible. That universal goal can be reached by taking advantage of tax deductions, tax credits, and income exclusions. Deductions, like the standard amounts discussed in Part 2 of the ol' blogs annual tax inflation series, are a relatively easy, and popular, way to reduce a tax bill. Deductions... Read more →
Taxes are all about numbers, but generally speaking, we taxpayers are not big math fans. That's why we hire tax professionals or use tax software. That aversion to doing more calculations is why most of us have chosen, year-in and year-out, to claim the standard deduction. Sure, I know, we should use the tax deduction method, either standard or itemizing, that gives up the better tax due result. Still, I know some folks who use the standard deduction method without even comparing because, as noted, it's easier. There are no receipts to save, no additional adding, subtracting, and figuring percentages.... Read more →
Unsplash+ in collaboration with Getty Images Every year, families gather at Thanksgiving. In many cases, it's a chance for relatives and friends who haven't seen each other for a while to reconnect. Some families, however, are much closer proximity-wise. They see each other all the time. And in some of those cases, family members are caregivers. That's why November is a good choice as National Family Caregivers Month. It is formal recognition, as noted in President Joe Biden's proclamation, that millions of Americans provide crucial care and assistance to parents, children, siblings, and other loved ones. Many of these caregivers... Read more →