WOLCOTT — The Main Street of Wolcott presented coupons and gift cards to new local business and building owners during their recently monthly meeting.
Q. This strange carved chair was in my late grandparents’ apartment. It was the first thing we saw when we opened the front door. I have seen similar chairs at antiques shows described as “Ren…
Windmills have a long history. For a few thousand years, from the Romans and later throughout much of Europe, folks created devices to harness wind power.
Taxpayers tend to shy away from taking the home office deduction, assuming that they will be targeted for increased scrutiny from the IRS. That is certainly possible, especially if your deductions are unusually large – but if you truly were entitled to the deduction, why wouldn't you take it?
You may feel that you have less incentive to itemize as the Tax Cuts and Jobs Act (TCJA) did away with many itemized deductions and nearly doubled the standard deduction. However, many self-employment deductions remain in place.
Assuming you reviewed IRS Publication 587, "Business Use of Your Home," and determined that you qualify, what are the home office expenses you can write off? They are covered in IRS Form 8829, "
Few things are more frightening than opening your mailbox and finding a letter from the Internal Revenue Service. You may wrack your brain wondering what you've done to receive an IRS notice. But there’s no need to pretend it didn't arrive or go on the lam.
Relax. The IRS sends out millions of letters each year for a variety of reasons. An IRS letter does not necessarily carry bad news – and if it does, ignoring it is not going to make the situation any better. Take a deep breath, resist the urge to panic, and follow these tips to help you get past your initial shock.
1. Read the Letter Promptly – Putting off opening the letter won't help you, and delaying can even cause you harm. In many cases, the IRS is simply seeking more information or clarification of some aspect of your tax return, which makes it time-sensitive by definition.
2. Check for Incorrect Information – Review the notice for any errors such as a misspel...
Since 2010, the Internal Revenue Service (IRS) budget has been cut by roughly 20%, and it now has 22% fewer employees than it did in 2010, making IRS customer service challenging, to say the least. The IRS subjected 8.8 million taxpayers to "courtesy disconnects" through the 2015 tax-filing season that ended in mid-2016. "Courtesy disconnects" are a euphemism for hanging up on taxpayers after a prolonged hold time. In the previous tax year, there were “only” 544,000 courtesy disconnects.
Even if a taxpayer managed to get through, he or she wasted lots of precious time just waiting to speak to an IRS representative. In the 2020 fiscal year, IRS received more than 100 million calls on its toll-free telephone lines, but only about 24 million were answered by IRS employees. Taxpayers who got through had to wait an average of 18 minutes on hold. A report from the office of the National Taxpayer Advocate blamed budget cuts, outdated information technology, and insufficient staff...
Are you planning on joining the gig economy and becoming self-employed? Are you embarking on retirement after years with a traditional employer? We wish you the best, and, along with the IRS, we remind you to pay your quarterly income taxes.
Without an employer to submit payments regularly out of your paycheck, you are now responsible for paying your own taxes in increments to fulfill America's pay-as-you-go tax requirements. You must make quarterly estimated tax payments if you expect to owe taxes of at least $1,000 for the year.
Underpayment of estimated taxes is on the increase, according to analysis of IRS data. The IRS found that the number of taxpayers incurring penalties related to estimated taxes jumped from 7.2 million in 2010 to 10 million in 2017, an increase of nearly 40%. Making matters worse, the Wall Street Journal reports that the potential number of filers owing penalties may be greater than the overall number of taxpayers filing estimated taxes ...
Claiming dependents on your taxes is usually a fairly straightforward procedure, but in some cases, more than one person (or couple filing jointly) will claim someone as a dependent, muddying the process. The most common example is when divorced or separated parents both want to claim their children as dependents for tax purposes.
Dependents can have a large impact on taxes — not just from the ability to claim Head of Household filing status, but also through tax credits such as the Child Tax Credit, the Child and Dependent Care Tax Credit, and the Earned Income Tax Credit. Both the qualification and the amount of potential credit are affected by the dependents that you can claim.
Although the Tax Cuts and Jobs Act (TCJA) removed the personal exemption, it retained the Dependent Care Credit and d...
Your smartphone is probably full of fun apps, but we have one more app to add to help you deal with a painful task: your taxes. Did you know that the IRS has a free smartphone app to help taxpayers handle basic tax-related functions? They do, and it has been in existence since 2011.
The IRS2Go mobile app can be downloaded from Amazon, Google Play, or the Apple App Store. The latest version, IRS2Go 5.4.7, is available for Amazon and Android 7.0 or up operating systems, and on iPhone and iPad devices running iOS10.0 or later.
Why would you want to be able to access IRS information on your smartphone? You can perform a variety of useful tasks and seek tax information anywhere that your mobile phone has access to a signal. Here are a few examples of the available IRS services.
- Check Your Refund – Once the IRS has acknowledged receipt of your e-filed return, you can start checking the status of your refund 24 hours after th...
Are you tired of working for others? Being your own boss can be very rewarding both financially and spiritually, but there are challenges associated with freelance work. Taxes are one of the most difficult aspects because self-employment brings a special set of tests.
Freelancers work as independent contractors and those who employ them are not required to withhold payroll taxes (such as Medicare and Social Security contributions). As both employer and employee (technically, you employ yourself), you must contribute both sets of taxes — the normal income tax that you would pay on your income as an employee and the "self-employment tax" that covers Medicare and Social Security contributions.
You must estimate and pay this tax quarterly to approximate the monthly flow of payroll taxes that the government would receive from an employer. Estimated taxe...
Do you plan to "retire in place" and stay in your current area, or are you interested in retiring in a different state? In either case, you may want to consult an annual study by WalletHub if retirement is imminent.
The study ranked all 50 states using 41 statistical metrics that were weighted and grouped into three major categories important to retirees: affordability, quality of life, and healthcare. You may be surprised at some of the states in both the best and worst categories. Let's start with the top five.
1. Florida – You knew it had to be high on the list, didn't you? In terms of affordability, Florida came fourth, dropping from last year's second place. Florida also placed sixth in terms of quality of life, overcoming its 28th-ranked healthcare rating.
2. Colorado – Holding second place ove...
You probably know about potential IRA tax traps related to withdrawals, rollovers, and estate planning that can saddle you with penalties and surprise tax bills. Did you know that the type of investments you hold could also hand you a surprise tax bill and potentially ruin your IRA status?
The most common of the traps results in tax bills through Unrelated Business Taxable Income (UBTI). The sources of business income from stocks, bonds, and funds such as interest income, capital gains and dividends are exempt from UBTI and the corresponding tax (unsurprisingly called the Unrelated Business Income Tax or UBIT). IRAs that operate a business, have certain types of rental income, or receive income through certain partnerships, are subject to taxation once the total UBTI exceeds $1,000. The purpose is to prevent tax-exempt entities from gaining an unfair advantage on regularly taxed bu...
The Premium Tax Credit (PTC) may sound like it is a credit only available to top-tier incomes, but it is actually quite the opposite. "Premium" in this case refers to health care premiums, and the PTC is a way to help those with relatively low incomes to afford health insurance premiums and avoid the potential penalties (and health hazards) of having no health insurance at all. The Tax Cuts and Jobs Act removed the penalty for not having insurance (aka the individual mandate), beginning in tax year 2019; you will not be charged a penalty for failure to provide proof of health insurance for the last tax year.
Eligibility for the Premium Tax Credit
If you purchased your health insurance through the federal Health Insurance Marketplace or anyone else included on your federal tax return did so, then you may qualify for the PTC. "Credits are, in general, more valuable than deductions, because they reduce your taxes dollar for dollar," says Betterment Head of Tax Eri...
When people think of tax shelters, they sometimes think of Swiss bank accounts, shady overseas investments, or fraudulent or questionable activities by wealthy but unscrupulous businessmen. That is an unfair characterization.
The TurboTax website sums it up nicely – "A tax shelter is any legal strategy (that) you employ to reduce the amount of income taxes you owe." Obviously, anything that falls outside the legal boundaries is an illegal tax shelter and not something you want to pursue – but there are plenty of legal tax shelter options available to you.
Simply itemizing and taking all the deductions that you qualify for is a form of tax sheltering. People get into trouble by stretching the qualification rules – for example, claiming a home office deduction when the space is used for work but not exclusively for work – but if you follow the rules that the IRS outlines, you should be in fine shape. If you cannot decipher the rules and are not sure your proposed s...
"I love paying my property taxes! I wish I could pay even more!" — said no one, ever.
Property taxes are one of the necessary but unpleasant side effects of home ownership. Personal Finance Expert and Author Jordan Goodman notes that new homeowners often underestimate the amount of property taxes, along with other running expenses such as insurance and maintenance required for homeownership. They end up in a stage where, as Goodman puts it, "The house owns you. You don't own the house." MoneyTips is happy to help you get free mortgage and refinance quotes from top lenders.
The amount of property tax that you pay depends on its assessed value. If that assessment overestimates the value of your home, you are paying too much in propert...
Failure to plan is planning to fail. That phrase applies to many aspects of life, including taxes. Avoid tax-time failure with adequate planning while watching out for these twelve pitfalls.
1. Disorganization – If you have the stereotypical shoebox full of wadded-up receipts — or worse, if you don't keep track of receipts and tax documents at all, we wish you good luck with your filing. You're going to need it.
Keep your important tax documents and receipts filed throughout the year and avoid the potential for missing out on deductions or incurring penalties for not having the documents that you need to file a proper return.
It's bad enough that you have to give a chunk of your income to Uncle Sam, but it's even worse when you also have to give a chunk of money to a tax preparer who fails to spot savings for you or makes mistakes that land you in hot water with the IRS. Good tax preparers will save you as much money as possible while charging a reasonable price for their services.
How do you find the best tax preparer for your needs? Consider these points as you search.
- Complexity – The complexity of your taxes may make a big difference in your choice. Chains such as H&R Block and Jackson Hewitt may suffice for less complex tax returns, or you may decide to go with tax preparation software and do it yourself.
Betterment Head of Tax Eric Bronnenkant confirms that there is no "one size fits all" answer to whether you should prepare your own return or hire a pro. "I t...
If you are over age 65 or are retired due to a disability, you may be eligible for a separate tax credit designed to help the nation's seniors and disabled. Even better than a deduction, the Tax Credit for the Elderly or Disabled could take up to $7,500 directly off of your tax bill. (Deductions can only reduce your tax bill in proportion to your tax rate.)
To qualify for the credit this year, you must meet two sets of criteria:
Age/Disability Criteria – You are at least age 65 or meet these three conditions: you are retired due to a disability, accepted taxable disability income for the 2020 tax year, and had not reached the mandatory retirement age for your employer by January 1st of 2020.
To be qualified under the disability criteria, you must have a signed statement from a physician certifying that you can't "engage in substantial gainful act...