… 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 →
Image courtesy NFL The 57th Super Bowl is Sunday. Millions will watch the National Football League championship game to root for their Kansas City Chiefs or Philadelphia Eagles. For most, the attention will be because of pure fandom. But millions also will pay attention to the events at State Farm Field in Glendale, Arizona, because they've got money riding on the game. Growth of sports betting: Gambling on sporting events is no longer taboo. After the U.S. Supreme Court's 2018 ruling allowed states to decide whether to legalize sports betting within their borders, most states and Washington, D.C., have done... 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 →
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 →
Photo by Kay Bell All things considered, we got through last week's Central Texas ice storm pretty well. Yes, I whined about no power, hence no heat for 3½ days, but we piled on enough clothes to mimic the Michelin Man, and used our grill to cook previously frozen food before it spoiled. As for our property, our oldest and biggest tree, a live oak, lost just three limbs. Two, shown above, fell in our backyard; the other snapped on the other side of the fence and fell into our neighbor's yard. The neighbor had a clean-up crew over at... Read more →
If you've missed me, it's because the hubby and I are among the 150,000 households without electricity. Then our cell service went all wonky and I couldn't hotspot. Plus, it seems really cold temps do a number on all types of batteries. I don't want to waste either computer or phone batteries, but I was able to update the ol' blog's February tax moves sidebar, over there to the right. More on this short month's tax task and, well, more tax stuff, as soon as we get full power restored. And my fingers thaw. For others in our same frigid... Read more →
The Internal Revenue Service has its own Groundhog Day, but it's not limited to just one specific 24-hour period. Most often, this re-do of a tax return is when you find you made a mistake on your original Form 1040. The do-over is accomplished by filing Form 1040-X, an excerpt of which is shown below. See more tax forms and more about them at 2022's Talking Tax Forms and Tax Forms 2023. Fix errors: Nobody's perfect, and the annual filing season underscores that for many of us. When we do make a mistake on our taxes, filing an amended return... Read more →
Ice image by Scott Rodgerson via UNSPLASH No, not the slamming of Austin government and utility officials noted in the Tweet below, although the local newspaper did that. What happened was that the hubby and I were among the 170,000+/- Austin Energy customers who lost power. For almost four and a half days. In a rare front-page editorial, @statesman sharply criticizes the city and Austin Energy response to this week’s ice storm. “Public transparency during a massive power outage allows people to make potentially life-saving decisions.”https://t.co/thMtIN8rUW pic.twitter.com/IRySYh1F9o — Tony Plohetski (@tplohetski) February 3, 2023 During the Texas grid collapse and... Read more →
Photo by Brett Sayles Tax refunds are one of the main ways the Internal Revenue Service uses to encourage more of us taxpayers to go digital. For years, the IRS has said that if you e-file your tax return and include bank information, your refund can be directly deposited in less than 21 days. There are, of course, a few caveats connected to this promise of a three-week refund turnaround. First, your return must not have any iffy entries that prompt Uncle Sam's tax collector to take a closer look, and possibly send out follow-up communications. Second, there isn't a... 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 first week of the 2023 tax filing season is in the books. But there are lots of other tax dates to look forward to, or at least be aware of, this year. As happens every year, there are the normal conflicts that delay some of them a bit. They are the traditional deadline shift the Internal Revenue Service institutes when tax due dates fall on weekends or federal holidays. The original date gets bumped to the next business day. The legal holidays in 2023 that could affect tax deadlines are — January 2, New Year's Day (observed) January 16,... 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 →
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 →