The tax reform law enacted back in 2017 did fulfill one of its promises. It made filing easier for millions, mainly folks who no longer itemize deductions because the standard claim amounts are so much larger. But some of the associated tax return mechanics also could mean some taxpayers might miss some tax breaks. Tax law and form changes: When the Tax Cuts and Jobs Act became law, the Internal Revenue Service also revised tax return forms. Most notably, it dramatically shrank Form 1040, beginning with the 2018 version. It wasn't quite the postcard-sized tax return long touted by Republicans... Read more →
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… and yes, there is a tax connection beyond winning wagers being taxable income. Photo by Scott Webb As is usual each Super Bowl Sunday, bets are getting a lot of attention. There are the big-dollar wagers on the game. Two seven-figure bets were placed last week on the Philadelphia Eagles to defeat the Kansas City Chiefs in today's Super Bowl LVII championship game. Then there are the prop bets, many of which have nothing to do with National Football League plays on the field. For any of those bets that pay off, the winners will owe taxes to the... Read more →
Image via California Franchise Tax Board Individuals who got special tax or inflation relief payments from their states last year won't have to worry about handing over a portion to the U.S. Treasury. The Internal Revenue Service announced late Friday, Feb. 10, afternoon, that, "in the interest of sound tax administration and other factors," recipients of the payments won't have to report the amounts on their 2022 tax returns that are now being filed. Disaster and general welfare exemptions: The IRS said that it will not challenge the taxability of payments related to general welfare and disaster relief. This means... Read more →
It's never fun having to re-do your taxes. But if it means you'll get a refund, or a larger amount than with your original filing, it's worth it. And now amended filers can have that refund amount sent straight to a financial account. The Internal Revenue Service announced today that people who e-file a Form 1040-X, Amended U.S. Individual Income Tax Return, now will be able to select direct deposit as the money's delivery method. More X filing going electronic: The IRS began accepting e-filed 1040-X forms in 2020. Most tax software programs have added the amended filing option to... Read more →
Free File 2023 has been open for almost a month. Have you tried it out yet? This partnership between Uncle Sam and the private tax software industry has been around since 2003. Free File's original mandate was to make electronic tax help available to taxpayers who might not be able to pay a tax professional or even afford tax software. However, the program hasn't really caught on as much as the Internal Revenue Service had hoped. Some of the lack of Free File enthusiasm might be attributed to roadblocks the program has encountered in recent years. Free File problems: Some... Read more →
UPDATE, February 10, 2023: There's good federal tax news for residents in 21 states who last year got some financial relief from their states. The Internal Revenue Service has determined that the stimulus/tax refund payment amounts are not subject to federal tax. Remember back in January when I listed 6 reasons why you should wait to file your federal tax return? The Internal Revenue Service has come up with a new one for taxpayers in several states. Specifically, the IRS is telling individuals who last year received special state-issued payments to help offset higher inflation costs to wait before submitting... Read more →
Photo by RODNAE Productions Last year, as the country started emerging from COVID-19 closures, the Internal Revenue Service joined the resocialization. It opened some of its Taxpayer Assistance Centers (TACs) across the country so individuals could get some face-to-face tax help, no appointments needed. That resumption of more-normal taxpayer interaction was such a success, the agency is doing it again this 2023 filing season. For one Saturday a month, beginning in February and continuing through May, TACs in 46 states, the District of Columbia, and Puerto Rico will be open on four upcoming Saturdays, from 9 a.m. to 4 p.m.... Read more →
Photo by Nataliya Vaitkevich You tried doing your own taxes last week when the 2023 filing season officially opened, with tried being the operative word. It didn't take long to realize that you need more help. You didn't feel quite comfortable with the tax software you tried. And your tax circumstances are a bit more complex than those typically handled by the various tax preparation chains. So now you're looking for more professional, personal tax assistance. Be ready to wait: Good for you for admitting that your taxes are too important and confusing for you to deal with on your... Read more →
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 →
If you dabbled, or more, in innovative financial assets like crypto in 2022, then one of the most important lines on your 2022 tax return shows up early. The section just below where you enter your (and, if married filing jointly, your spouse's) name, the Internal Revenue Service asks: At any time during 2022, did you: (a) receive (as a reward, award, or payment for property or services); or (b) sell, exchange, gift, or otherwise dispose of a digital asset (or a financial interest in a digital asset)? (See instructions.) See more tax forms and more about them at 2022's... Read more →
The companies that are supposed to issue my 1099 forms are being particularly slow this filing season. I've only received five. I'm still waiting for about double that to show up in my snail mail box (yeah, that's still happening) or as an email notice that they're available for download. The Internal Revenue Service realizes that millions of taxpayers eagerly await these documents. The agency also is aware of the burden their issuance places on companies, particularly smaller firms. Businesses must get the documents, notably Form W-2 wage statements and myriad 1099 forms that go to freelance, contract, and third-party... Read more →
UPDATE, Feb. 27, 2023: Since damages are so severe, and additional areas subsequently were designated by FEMA, the IRS has decided to further extend the tax deadline for victims of Alabama's and Georgia's major disasters first declared in January. Affected Yellowhammer and Peach state taxpayers now have until Oct. 16 to take care of multiple tax responsibilities. Details in this post. National Weather Service radar of a quasi-linear convective system (QLCS) and supercells, along with severe warnings in the southeastern United States during the afternoon of Jan. 12, 2023. The Autauga County, Alabama, EF3 tornado was on the ground at... Read more →
Photo by RODNAE Productions Welcome to the continuation of the ol' blog's Tax Crime Weekend! Yesterday's post featured efforts to end abusive tax schemes and bring their promoters to justice. Today's post expands on the legal reckoning theme. The Internal Revenue Service's Criminal Investigation division, known as IRS-CI, recently revealed its top 10 cases of 2022. Wide variety of schemes, one outcome: The tax evasion attempts included Ponzi pyramid schemes, fake businesses, COVID-19 fraud, bogus tax credit, and even a reality TV couple. And more. Despite the diversity of their criminal tax acts, they shared one thing. They got caught.... Read more →
Photo by Nataliya Vaitkevich One of the reasons to file early is to beat tax identity thieves to the punch. Even though the Internal Revenue Service has slowed such tax crimes a bit in recent years, they're still out there. In fact, I've been getting a lot of scam span in recent weeks, both texts and email, like the one below I got this morning. While this poorly faked attempt — a Gmail address for the U.S. Agency for International Development's grant office; really? — isn't a specific tax hack attempt, some of the information the crooks want from me... Read more →
Being a bit pokey can sometimes pay off at tax filing time. (Photo by Kay Bell) My husband and I have a lot in common. We also are a lot different. I tend to obsessiveness, wanting to take care of things as soon as I can. The hubby, on the other hand, is more deliberative. Unless it absolutely has to be done immediately, he's OK with waiting. And waiting and waiting. We've managed to make out differing approaches work. And I must admit that sometimes, he's right to put off projects. Not always, but sometimes. Situations change, making moot what... Read more →
Photo by Kay Bell The Internal Revenue Service won't start processing 2022 tax year returns until Jan. 23, but you can file before then. A lot of folks are doing just that. The most common and obvious motive for filing early is to get the refund you're expecting. But there are some other reasons you might want to get your return to the IRS as soon as possible. 1. To beat tax ID thieves to the punch. The IRS and its Security Summit partners have made good progress in recent years in reducing tax identity theft and refund fraud. One... 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 →
One of the forms in the long list of tax documents you need to file your 2022 return is the 1099-K. This form has been used for years for third-party payment processors — for example, PayPal, Amazon, eBay, Facebook Marketplace, rideshare companies, and many more — to report to fund recipients the money they got during the year. The Internal Revenue Service also gets a copy so it can check the amounts that the earners report on their tax returns. Taxpayers have been getting 1099-K forms since 2012, with this initial reporting coving third-party amounts in 2011. The factors that... Read more →
The Internal Revenue Service won't start processing 2022 tax returns until Jan. 23, but you still can file before then. And if your adjusted gross income last year was $73,000 or less you can file for free at Free File. If you use a search engine to find free tax filing, you'll likely discover other options. You'll also probably get such offers in your email box. But the only official, IRS-sanctioned Free File option is the one on its website. To get there, type Free File in the search box at the upper right of IRS.gov. That search result will... Read more →
It's official. The Internal Revenue Service today announced that it will begin accepting and processing 2022 tax year individual returns on Monday, Jan. 23. The IRS also has a date for taxpayers eligible to use its Free File service. It opens for no-cost business tomorrow, Friday, Jan. 13. Seven companies are participating this year. With the announcement of these tax season 2023 dates, the official filing kickoff calendar is complete. Today, Jan. 12, is the start of the agency's business e-filing season. On hold for just a little longer: Word on the official processing date also is good news for... Read more →