Two enterprising women packing up items they sold for shipping. (Photo by Kampus Production) A major contributor to the Tax Gap is unreported taxable income. The Internal Revenue Service thought it was going to be able to collect more when Congress new reporting rules were included in American Rescue Plan Act (ARPA) of 2021. ARPA dramatically reduced the income level at which third-party, e-commerce payment platforms — such as eBay, PayPal, Etsy, CashApp, and Venmo, — must issue 1099-K forms to sellers who got money through them. It was set to drop from $20,000 to $600 beginning in 2023. That... Read more →
Recordkeeping
Spring is the traditional time to clean out all the junk you've accumulated. Our neighborhood has a community yard sale the first weekend in May. Some of what doesn't get sold ends up going to local charities. That's a good way to dispose of clothing and household goods that are in good condition and, if you itemize, claim a tax deduction. Follow donation rules: The state of the donated goods is just one of the conditions you must take into consideration, especially if you're planning to deduct their value as an itemized charitable gift. The other key donation deduction factor... Read more →
Coastal flooding in a Florida community. (Photo by Barry Bahler via Wikipedia Commons) They may be more than 3,100 miles apart, but residents of counties in California and Florida now have a couple of things in common. They recently were pummeled by major disasters. They now have an Aug. 15 deadline to meet certain federal tax responsibilities. Florida flooding: The Internal Revenue Service is offering relief to those who live or have businesses in the Federal Emergency Management Agency (FEMA) disaster designation are of South Florida that endured tornadoes, severe storms, and flooding from April 12 to April 14. The... Read more →
Homemade Gifts Made Easy May. A short word with many meanings. It's the name of the fifth month of the year. Here in the Norther Hemisphere, it's when springtime comes in fully. That's fitting, since its name comes from Maia, the Greek goddess of spring and growth. The Oxford English Dictionary also says the word is a verb that expresses possibility, as in "that may be true," or permission, as in "may I ask a few questions?" When it comes to taxes, I like to combine the meanings. May is a time of growth and renewal and the possibility of... Read more →
Photo by Sharon Waldron on Unsplash Every year after Tax Day, I get emails from my financial institutions and local office supply stores about upcoming shredding days. On these dates, I and all my neighbors and fellow customers can bring our documents we would like turned into confetti to prevent identity thieves from using any of the information. That's a welcome service. But there are some documents, especially tax-related ones, that you need to hang onto for a while. Here's an overview of the tax material you need to keep and for how long. Your 1040: The main record everyone... Read more →
Photo by Lachlan Ross Procrastinating taxpayers are rushing to file their returns this Tax Day 2023. Some, however, have extra time. Unfortunately for them, the reason for the delayed filing deadline is not one any of us want. They live or have businesses in areas that were declared major disaster areas. Indiana residents are the latest to join this later Tax Day club. Today, the Internal Revenue Service announced that Hoosier storm victims now have until July 31 to file various federal individual and business tax returns and make tax payments. Yeah, I know getting the word out that Tax... Read more →
The IRS' tax relief for tornado-stricken Tennessee residents and business owners is welcome. But that's just one part of picking up the pieces after a major disaster. Keep reading after the Volunteer State tax specifics for tips that all of us can use to recover, financially and physically, if we ever must cope with a catastrophe. Damage caused by an EF3 tornado that touched down southwest of Covington, Tennessee. Covington is the county seat of Tipton County, one of 10 counties in the Volunteer State that the Internal Revenue Service granted tax relief following the March 31-April 1 tornado and... Read more →
Click image to read full indictment. April 4, 2023, is one of those "where were you when…" days. Many of us were in front of our televisions or computer screens watching the formal criminal arraignment of a former U.S. president. Donald J. Trump pleaded not guilty today to 34 felony counts of falsifying business records. "True and accurate business records are important everywhere, to be sure. They are all the more important in Manhattan, the financial center of the world," said Manhattan District Attorney Alvin Bragg at an afternoon press conference in which he discussed why his office brought the... Read more →
Photo by Pixabay We haven't filed our 2022 tax return because we're missing one 1099 form. OK, that's just one reason we (and by we, I mean I) haven't yet filed. But it's one of them, and we're not alone. Lots of taxpayers every filing season must wait for tax documents so they can correctly complete their returns. We did, however, get a letter today explaining why this tax statement was late. It also promised the form's arrival soon, and definitely in time to meet the April filing deadline. We shall see. Fingers 🤞 crossed. The wait has been annoying,... 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 →
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 →
We're just a couple of weeks into this new year, and I've received three 1099s and a donation thank-you letter. I am not alone. Official tax forms and statements are filtering into mail boxes, both curbside and electronic, across the country. The exact tax-related documents differ from taxpayer to taxpayer, but we all share one thing. We need them in order to accurately fill out annual tax returns. They include W-2 forms for folks with wage-paying jobs, 1099-NECs for freelancers, and 1099-MISC and DIV documents for those who have investment earnings. It is, after all, called an income tax. But... Read more →
Photo by Hassan OUAJBIR The first work week of 2023 is in the books. How many miles did you drive for business purposes? If you're using your personal vehicle to conduct business you need to know. And if the number is to satisfy an Internal Revenue Service examiner's question about your mileage deduction, you need to be exact. The IRS can disallow questionable guesstimates, meaning your tax deduction could end up being zero. The U.S. Tax Court has backed up the agency when taxpayers don't keep adequate records. To help you avoid that unwanted tax reversal, here are some do's... Read more →
Image by Pintera Studio from Pixabay We're two days into the New Year. Feel any different? Aside from thinking it's a Sunday instead of Monday, me neither. But some things, in addition to flipping calendar pages, have changed. From a tax standpoint, you'll see some differences, starting with those calendars. Weekends and holidays will shift some regular tax deadlines to new days. You also could see some differences on your 2022 Form 1040, thanks in part to tax breaks that no longer apply. Those changes are just a few things to note as we head into the 2023 tax year.... Read more →
Small businesses and the companies that handle their electronic transactions are not the only ones upset at a new law requiring more tax reporting. So are the people who use sites like Facebook Marketplace or eBay to occasionally sell a few items. These casual sellers are concerned that their not-for-profit transactions might end up in the Internal Revenue Service database, forcing them into unwanted additional dealings with the tax collector. New transaction trigger trouble: The problem is the new $600 per sale trigger that replaced the previous 200 transactions or $20,000 in aggregate sales. Now third-party agents who handle these... Read more →
The Tuesday after Thanksgiving has become a popular donation day. The charitable boosting effort, dubbed Giving Tuesday when it was initiated in 2012, is now the unofficial kick-off of the annual end-of-year charitable season. Most people don't give to good causes because they get tax breaks. Thank goodness for that, since the 2017 tax reform bill made it more difficult to claim a charitable deduction for donations. And that brings us to the first of this post's six charitable donation tax tips. 1. Itemizing required: The only way to get a tax deduction for your donations is to claim them... Read more →
Records, tax and financial, are often among the property damaged or destroyed in a natural disaster. If you're lucky, you might be able, like this woman, to salvage some of the documents. If not, you'll need to recreate them to take advantage of tax-related storm relief. (Image courtesy Louisiana Law Blog) It looks like Florida is about to be hit by another hurricane. Current Subtropical Storm Nicole is expected to accelerate from a subtropical system into a hurricane before it makes landfall along the Sunshine State's Atlantic coast. That's terrible news for Florida residents still dealing with the aftermath of... Read more →
I loved this couch, but it was starting to wear so we donated it away while it was still in good shape. Some folks, however, would have sold the sofa. Now, such transactions could trigger a confusing tax situation. With inflation still squeezing budgets, some people have taken to selling old items. Garage sales are the traditional route, but if your neighborhood limits when you can put old items out for sale (dang those HoAs), then there's always the internet. A tax law change, however, could mean a tax hassle for infrequent, small-time online sellers. They could get a tax... Read more →
Satellite image of Hurricane Fiona's landfall on the southwestern corner of Puerto Rico at 3:35 p.m. Atlantic Standard Time on Sunday, Sept. 18. (National Oceanic and Atmospheric Administration photo) Fiona, the first major hurricane of the 2022 tropical season, not only wiped out power to most of Puerto Rico, it also was responsible for four deaths on the island. Hurricane Fiona made landfall at the southwestern edge of Puerto Rico the afternoon of Sunday, Sept. 18, but was big and strong enough to wreak havoc across the entire U.S. island territory. The strike came almost exactly five years after Hurricane... Read more →
U.S. Army Corps of Engineers (USACE) Vicksburg District engineers at the O.B. Curtis Water Treatment Plant in Jackson, Mississippi, after flooding led to a water crisis in the state's capital city. The pumping system is getting back online. In the meantime, a couple of Uncle Sam's agencies are offering residents relief. (USACE photo by Sabrina Dalton via Wikipedia Commons) Thursday, Sept. 15, is the deadline for most taxpayers who must make third quarter estimated tax payments. Some Mississippi filer, however, get until next February. But the reason for the extension is not one they, or anyone, would want. Heavy rains... Read more →