• Home
  • Table of Contents
  • Tax Tips
  • Credits
  • Deductions
  • Refunds
  • State Taxes
  • Politics/Laws
  • Tax Terms
  • Archives

Don't Mess With Taxes

Translating taxes into money-saving English

Home Table of Contents Tax Tips Credits Deductions Refunds State Taxes Politics/Laws Tax Terms Archives

Daily Tax Tips April 2014

It's finally here. April. The month that you must file your 1040 or Form 4868 to get six more months to finish the paperwork.Tax_tip_icon_pencil_point

Either way, if you owe Uncle Sam, you must send that amount or a close estimate of it by April 15. If you don't, you'll end up with a bigger bill thanks to penalties and interest.

To ensure you don't run into that or other problems, check out these April 2014 Daily Tax Tips.

And if you've already finished your 2013 filing duties -- I am sooooo jealous! -- you'll also find some tax planning moves to help you cut your 2014 tax bill.

One administrative note. While the January, February and March tax tips list featured a piece of tax advice each day, including weekends, of those months, the April tips will end on the 15th.

But don't worry. I know that tax considerations continue year round. But we're going to catch our breath a bit and switch to weekly tax tips from mid-April through the end of December.

Again, many of the April tips will be from  Bankrate's annual tax guide. Others are original Don't Mess With Taxes advice.

Regardless of the source, and when we switch to weekly tips, you'll find a featured tip in the upper right corner of the the ol' blog.

Or you can bookmark this page, where you can catch up with the Daily Tax Tips for April2014 at your leisure, as well as follow the links at the end of the page to the filing season's earlier advice.

  1. Zero capital gains tax for some investors -- This is not an April Fools Day joke. Some investors will not owe the Internal Revenue Service a cent of tax when they sell their assets. But, as usually is the case in the tax world, there are some limits. First, the 0 percent capital gains tax rate applies only to long-term assets. These are the ones owned for more than a year. Short-term sales remain taxed at your ordinary tax rate. Second, this no-tax rule has an earnings limit. It applies only to the two lowest tax brackets, 10 percent and 15 percent. Because of the progressive system of the tax code and the specifics of the no-capital-gains-tax law, some higher earners still might benefit from this provision. So check it out. Any time there's a chance you won't owe Uncle Sam anything, it's worth looking into. No joke. (April 1, 2014)
  2. Roth rules -- Roth rules as a retirement account as long as you follow the tax rules. The annual maximum contributions, both regular and catch-up, are the same for a Roth IRA as a traditional IRA. You also have until the April 15 filing deadline to put in money for the prior tax year. But after that, the Roth rules change. The major appeal of a Roth account is that it provides tax-free retirement money. This is in exchange for no immediate tax deduction of your contributions. You also won't face any required minimum distributions on a Roth. And you can keep contributing to it regardless of your age as long as you're earning income. (April 2, 2014)
  3. Tax advantages of traditional IRA -- Many people still use this type of IRA, primarily because it offers them an immediate tax deduction. The deduction doesn't require itemizing; it's one of the above-the-line deductions found on both the 1040 and 1040A forms. And you can open a traditional IRA for the prior tax year or contribute to one you already have as late as the April 15 filing deadline. Note, however, that if you or your spouse has a retirement account at work, you might not be able to take a full deduction. The work sheet in the tax form instructions will help you figure out how much of your traditional IRA contribution you can deduct. (April 3, 2014)
  4. Tax reward for retirement savings -- The tax code offers lots of incentives to encourage individuals to save for retirement, but one that can directly cut your current tax bill often is overlooked. The saver's credit, formally known as the Retirement Savings Contributions Credit, could net eligible taxpayers $1,000 at filing time. But it's not for everyone. The credit was created for moderate- and lower-income taxpayers; it's phased out as a saver's income increases. And only $2,000 of your contributions count in figuring your credit amount, with half that amount being the maximum possible credit available. Still, it is a tax credit, meaning any amount reduces your tax bill dollar for dollar. So check it out. (April 4, 2014)
  5. Energy efficient home improvement tax break might be renewed -- The tax credit for making some relatively easy upgrades to your residence's energy efficient expired at the end of 2013. But it was been added to the package of extenders, those tax provisions that expire periodically and must be approved again by Congress, that passed the Senate Finance Committee on April 3. The provisions in the most recent version are extended through 2015 and again would allow for a lifetime maximum credit of $500. But the new version also expands the types of energy efficient roofing material that would be eligible for the credit. (April 5, 2014)
  6. The value of refundable tax credits -- Refundable tax credits not only reduce your tax bill dollar for dollar, when you zero out what your owe Uncle Sam you get the excess credit as, per the name, a tax refund. Three popular refundable tax credits are the Earned Income Tax Credit, the Additional Child Tax Credit and the American Opportunity education tax credit. There's no doubt that many people, especially during the recent U.S. economic travails, have depended greatly on the help from these refundable credits. But many people still question whether from a wider perspective they are worthwhile. Look for the issue to be part of any serious tax reform talks. (April 6, 2014)
  7. Don't miss miscellaneous deductions -- Life is full of things that aren't easily pigeonholed. Taxes are like that, too. That's why there's a place for expenses that don't fit into usual tax categories. They are deductible as miscellaneous expenses on Schedule A. The problem with this group is that before you can deduct the expenses, they must exceed 2 percent of your adjusted gross income. If your AGI is $30,000 then you need more than $600 in miscellaneous deductions before they do you any tax good. And note the "more than" requirement. If you have $650 in miscellaneous expenses, only $50 counts on Schedule A. To get over that hurdle, you can count a variety of unreimbursed employee expenses, investment related fees and even what you paid last year to have your taxes done. (April 7, 2014)
  8. Red flags that tempt the tax auditor -- The IRS is auditing fewer returns, but the chances of your 1040 being more closely examined are higher if you have one of these red flags. Small business get extra attention because there are fewer third-party verifications of earnings and payments, making it easier for the filer to report less taxable income. Returns of richer individuals, already getting whacked by added taxes, also get closer IRS attention because they present the better opportunity for additional collection. And if your itemized deductions deviate from the average amounts for your income range, what the agency calls its discriminant information function, or DIF, will likely get your return pulled for audit. (April 8, 2014)
  9. Choosing between Schedule C and C-EZ -- As a sole proprietor, you get a choice of which form on which to report your self-employment earnings. As the name indicates, the C-EZ is a streamlined version of the more-detailed Schedule C. So when can -- should -- you use one form over the other? Check the full name of the C-EZ: "Net Profit from Business." If your business has a loss, then you must use the long form, known officially as "Profit or Loss From Business (Sole Proprietorship)." You also can't have a lot of expenses; the maximum for C-EZ filing is $5,000 or less in company expenditures. While it's longer and, yes, more complicated, the longer Schedule C might be a better choice. In addition to counting more company expenditures, you're able to depreciate business property and can claim your home office, either using the more detailed original version or the new simplified home office deduction claim. If you have a choice between the C or C-EZ check them both out to make sure you use the form that gives you the best tax result for your business. (April 9, 2014)
  10. Don't deduct that! -- Deductions, either itemized or above-the-line, are a handy way to reduce your taxable income. Less income generally means a smaller tax bill. But if you claim one of these 10 deductions, you could end up paying more in penalties and interest on these bad claims. They include your homeowner's hazard insurance policy, your home phone and commuting costs. But there are some related deductions that you can claim. You might be able to deduct private mortgage insurance, your business phone calls and get a tax break from your employer to help cover some costs of getting to and from work. Check out all 10 "almost" deductions you don't dare deduct and the ones in that tax area that are OK to claim. (April 10, 2014)
  11. Online tax-paying options -- You've gone totally 21st century paperless, no longer writing paper checks. That's not a problem when it comes to paying your tax bill. The Internal Revenue Service gladly accepts a variety of electronic tax payments. You can use a credit or debit card by going to IRS-approved vendors Official Payments, Link2Gov and WorldPay. You can pay via electronic funds withdrawal, or EFW. This essentially is the reverse of the direct deposit that the IRS recommends for those getting refunds. Or you can go to the Electronic Federal Tax Payment System, known as EFTPS, website to pay your April 15 and other tax bills year-round. But check the e-pay options carefully. Most involve some sort of charge in addition to your tax bill. (April 11, 2014)
  12. State e-filing is popular, too -- The Internal Revenue Service's success at getting us to electronically file our federal returns is being replicated at the state level. Around 93 percent of state individual income tax filings this season have been e-filed. That's up 4 percent over last year as of mid-March. A key reason for the growth of e-filing at the state level is that so many states make it so easy. They also make it free, either via direct filing at the states' tax departments or through partnerships with private tax preparation software manufacturers. Check your state's tax department website to see what e-file options are available for you there. And make sure you don't miss the filing deadline, which in most states also is April 15. (April 12, 2014)
  13. Getting more time to file your tax returns -- Millions of taxpayers every year just can't get their returns done by the April 15 filing deadline. No problem, says the Internal Revenue Service. All you have to do is file Form 4868. That will give tax procrastinators six more months, until Oct. 15, to finish their tax paperwork. Most states that require returns from their residents also follow the April 15 deadline and apply the federal request for more time automatically to the state deadline. But remember, the extension is only to file the forms. Both state and federal tax collectors demand that you pay any tax you owe by the due date. (April 13, 2014)
  14. Ways to pay a big tax bill -- Can't come up with the money to pay your huge tax bill? Don't worry. The Internal Revenue Service offers several different ways to pay. If you have a big enough credit card line, you can pay with plastic -- the IRS You can use a credit has approved Official Payments, Link2Gov and WorldPay to take credit (and debit) payments -- and then pay off that account's bill over time. You can set up a installment plan directly with the IRS. Or if you just can't pay off your full tax bill even over time, you can try to convince the IRS to take less via an offer in compromise. All of these routes, however, will cost you more. There's the interest charges on credit card balances or a payment plan with Uncle Sam. And installment plans and offers to pay less require upfront application fees. (April 14, 2014)
  15. It's Tax Day! Time to file something -- April 15 is finally here. You must file your 1040 or an extension request or you could end up owing the Internal Revenue Service even more money. The IRS considers your return as filed on time as long as, if you snail mail it, it has an April 15 postmark. If you plan to e-file, you have until midnight your local time to hit the send button. If you can't do either of those things in the next few hours, then you need to get Form 4868 en route to the IRS today. This extension request is automatic and will give you six more months to file your paperwork. But note that the IRS will give you added time to file your return only. You must pay any tax you owe or the meter starts running on penalties and interest. And remember that if your state income tax is due today, too, the same filing and extension rules likely apply to that return. (April 15, 2014)

Check out

January 2014 Daily Tax Tips

February 2014 Daily Tax Tips

March 2014 Daily Tax Tips

Want more? Check out the rest of the news and advice at Bankrate's Tax Guide, as well as Don't Mess With Taxes' ever-growing collection of year-round tax tips and money moves.

Today's Tax Tip

  • Tax software enhances sign-on security — When you log on to your tax software this filing season, expect it to take a tad longer. Many tax software programs now are requiring multifactor authentication. (Jan. 16, 2021)

  • Tax Tip; click pencil for all tax tip links

  • The 2021 Tax Tips offer ways to file your annual return, along with post-filing advice, important tax news and, of course, ways to cut your current tax year bill. You'll find the monthly assemblages on their own respective pages: January, February, March, April, May, June, July, August, September, October, November and December. While we're waiting for the 2021 calendar pages to flip and fill up with timely tax tidbits, check out 2020 (and earlier) tax years' advice.

COVID-19 & Taxes

  • COVID-19
    Coronavirus has wreaked havoc
    on the 2020 tax season.
    These three Coronavirus (COVID-19) and Taxes pages have details:
    March-July 2020,
    August-December 2020, and
    January-… 2021

All About Kay

  • OK, some about Kay
    Open sign
    Kay Bell — Native Texan (the blog title totally makes sense now, right?). Professional journalist. Tax geek.

My Other Accounts

Sponsored Links

Tick ... Tick ... Tick

  • Tax Season 2021 is here!
    Happy New Tax Year! Are you ready to file your 2020 tax return? Me neither. With all the delays last year due to COVID-19, it seems like that prior tax season just finished. But time and taxes wait for no taxpayer. The Internal Revenue Service, which started 2021 by delivering more coronavirus economic relief payments, says it will be ready for our returns. So let's get prepared, too. The monthly tips and reminders a little further down this column should help us focus on our taxes and make the filing of them by go more smoothly. Also keep an eye on the countdown clock just below. It will help us keep track of how much time we have until Tax Day on April 15, just in case some of us want to put things off until the final hours. .
    Note: I'm in the Central Time Zone, so adjust accordingly for where you live.


Time for Tax Tasks


  • monthly tax moves

  • Oh, 2021. I cannot tell you how happy we are to see you. You will be better than 2020, right? Right?!?

    via GIPHY

    And just so there's no confusion, that's a question New Year 2021, not a challenge. So don't you dare try to outdo the just-past Year of COVID-19 and its many, many complications, including in the tax world.

    Jan. 1: While there's some good news with vaccines going out to fight the coronavirus pandemic, we'll still be dealing with it for a while. The Internal Revenue Service is delivering the second round of relief payments and the commissioner promises that the agency will start the 2021 filing season as usual later this month. I hope that's correct, but we shall see.

    Jan. 4: If your job made it through the tough last year, good for you and your company and welcome to the New Year's first work week. It's the perfect time to refine your payroll withholding. This is particularly applicable true for federal employees, including members of the military and even IRS personnel, whose withholding was suspended that last few months of 2020. That money must be paid to Uncle Sam, but a new late-year law says the repayment isn't due until the end of 2021. Adjustment withholding now will give you 52 weeks to spread it across, making the per-paycheck bite less painful.

    Jan. 7: The IRS' online withholding assistant or your tax pro can help you with your withholding amount and other tax numbers, but it's also a good idea going into a New Year to have an idea of your tax bracket and income tax rate. The rates tend to hold steady (until Congress starts fiddling!), but the brackets are adjusted annually for inflation. You can check out the 2021 income brackets (and 2020's for comparison) in the first post in the ol' blog's annual inflation series. At the end of that item, you'll find a directly to the other nine inflation items.

    Jan. 11: Continuing coronavirus precautions mean some restaurants are still closed for in-house dining. Other eateries are managing with take-out meals and deliveries. Whether you're able to enjoy table service in or getting food brought to your house, remember to tip your server or delivery person.

    restaurant check tip iStock
    If a tip isn't included in your food delivery charge, click the image above to calculate how much to tip the person who brought it to you.

    As for servers who are still on the job, remember that your tips are taxable income. If you at least $20 in job-related gratuities last December, you need to account for them today by using Form 4070 to report your tips today to your employer.

    Jan. 13: Did some of those tips come from a side hustle? That's just one of the tax matters to think about when you are part of the gig economy. In these freelance or contractor situations, you'll need to pay estimated taxes.

    Jan. 15: The final estimated tax payment for the prior year, 2020 in this case, is due today. The other three payments are for earnings in 2021 that aren't subject to withholding and are due on April 15, June 15 and Sept. 15. And be sure to account for your self-employment tax in figuring your estimated amounts.

    Jan. 18: Many people spend
    Martin Luther King Jr. Day each year as a day of service.

     MLK Day 2020 logo
    Click image to find out ways
    you can volunteer on MLK Day.

    Taking time on Dr. King's holiday to volunteer at a charity isn't tax deductible, but some costs associated with volunteering could help reduce your tax bill if you itemize. Most filers, however, claim the standard deduction and a new tax law gives them a tax break, too. On your 2020 return, you can claim up to $300 in donations directly on your Form 1040. In 2021, the $300 amount remains, but is doubled for couples who file jointly.

    Jan. 21: If the IRS meets its usual timetable, the annual tax-filing season will start soon. If you can get your tax material together, then there are several good reasons to file your return early.

    Jan. 25: Millions of filers find electronic tax options are great ways to get returns to the IRS as soon as possible. The tax agency agrees. In fact, for almost two decades, the IRS has partnered with the Free File Alliance to offer eligible taxpayers access to online tax software and e-filing through the aptly named Free File site at IRS.gov.

    IRS Free File; click image for details

    Free File companies started preparing returns for eligible filers on Jan. 15. This filing season, that's taxpayers with adjusted gross income of $72,000 or less, regardless of filing status. While the nine participating tax software companies will help you complete your 2020 return starting in mid-January, they will hold the returns for actual filing until the IRS officially starts accepting the 1040s on Feb. 12.

    Jan. 29: Of course, regardless of how you file your taxes, you can't do so until you all the necessary documents, such as W-2 and 1099 forms. Employers have until the end of the month (or Feb. 1 this year since Jan. 31 falls on Sunday) to get the to you, so be on the lookout for all the documents you need to file.

    Small Business Tax Calendar: Important filing, deposit and record keeping dates throughout the year that your company needs to know. You can get more tax calendar information at the IRS' online calendar page and view the full year's important business and individual tax dates in IRS Pub. 509.

State Tax Help

  • Don't forget your state taxes!
    Forty-three states and D.C. collect personal income taxes. But even if you live in of the seven states without an income levy, you still face other state (and local) taxes.

    State Tax Departments provides links to your state's Web page. The companion page, Tax Tidbits, is the compilation of blurbs about each state's tax laws. And for more state tax news, check out all our state tax bloggings.

Tax Forms

  • Tax Forms
    Thanks to our increased use of tax preparers and computer software, many of us don't see our tax forms until we sign and file them. But knowing what's on these documents, either in paper or digital form, and why the IRS wants it is key to understanding our tax system. And knowledge definitely is power, especially when it comes to tax savings. Find this valuable information in the ol' blog's special Tax Forms Fiesta! page.

What are you looking for?

  • Looking for something in particular? Start with the Table of Contents.
    Or check out the Archives, where you can review posts by month and category. Or enter specific keywords in the box below to search
    Don't Mess With Taxes.

Search

Subscribe:
E-mail, RSS or both!

  • Enter your Email


    Powered by FeedBlitz
  • RSS

Advertisements

Mapping Your Tax Route

  • Do you get lost doing your taxes? Check out the Taxpayer Advocate Service's Taxpayer Roadmap.

    Taxpayer Advocate Taxpayer Maps 2019

    This publication, designed along the lines of a subway map, shows the many routes and detours of a taxpayer's journey through our elaborate Internal Revenue Code and the Internal Revenue Service's enforcement of our tax collection system.

Sponsored Links

  • The Truth
    About Paying Fewer Taxes
  • Are you a tax geek? Got tax geek friends? Do you or they just want to make sure you don't overpay the IRS? Then my book, "The Truth About Paying Fewer Taxes," is for all y'all.

    Look for it on bookstore shelves
    or order a copy (or two!) from
    Amazon or Barnes & Noble.

  • TruthAboutTaxes
  • Find out more about my book and excerpted chapters at the FT Press
    Truth About Paying
    Fewer Taxes
    Web page
    .

  • You can read more
    of Kay's tax insights in ...


  • Kay Bell helps you build
    a solid tax foundation in
    "Personal Finance: An Encyclopedia
    of Modern Money Management"




    Kay Bell breaks down taxes and
    estate planning for millennials in
    "Future Millionaires' Guidebook"



    A collection of Kay Bell stories
    is included in
    "The Gambler's Guide to Taxes:
    How to Keep More
    of What You Win"




  • Tax Reading Room

    You also might enjoy these other tax tips from some of my tax-writing colleagues:




  • Don't Mess With Taxes
    is an Amazon Affiliate.
    If you click on the product links above and/or buy the items,
    I will be compensated.

0, 1, 2, 3, 4, 5, 6, 7, 8, 9 ...

  • Numbers
    Taxes are all about the numbers.
    Check out these (mostly) weekly
    By the Numbers figures.

Sponsored Content

Kudos Et Cetera

  • Association for Women Clarion Award Winner
    National Association
    for Women in Communications

    Winner, Best Personal Blog
    2012, 2014 & 2017

  • Plutus Award Winner
    Plutus Financial Bloggers Awards
    Celebrating the Best
    in Personal Finance

    Winner, Best Tax Blog
    2011 and 2013
    Lifetime Achievement Nominee 2020


I gotta tell ya ...

  • AKA Disclaimer:
    I am a professional journalist who has been covering tax issues since 1999.
    I am not a professional tax preparer.
    The content on Don't Mess With Taxes is my personal opinion based on my study and understanding of tax laws, policies and regulations. It is provided for your private, noncommercial, educational and informational purposes only. It is not a recommendation of any specific tax action(s) you should or should not take. Similarly, mentions of products or services are not endorsements. In other words, my ramblings on the ol' blog are free advice and you know what they say about getting what you pay for. That's why when it comes to filing your taxes, I urge you to get additional, professional, paid-for guidance from an accountant, Enrolled Agent or other qualified tax preparer who is familiar with your individual tax circumstances.

©©©©© & ®®®®®

  • Don't Mess With Taxes®
    is a registered trademark
    of S. Kay Bell.

    All content on this site is
    © 2005-2021 S. Kay Bell
    dba Write Here, a division of
    SKB Editorial Services, LLC

  • And a bit of housekeeping.
  • Note 1: Some of the links on this site
    are affiliate links. That means that
    if you click through from
    a Don't Mess With Taxes link
    and then buy the product,
    I receive a commission.

    Note 2: Links to outside content
    might become inactive due to changes
    at the copy's originating website.
    If you discover dead links, please e-mail me the details. Thanks.

    Note 3: The banner art for the ol' blog
    is courtesy Pictures of Money
    via Flickr Creative Commons.

Privacy Policy

  • Wondering what happens to your information once you subscribe? Don't worry. Don't Mess With Taxes respects your wish not to be a mere data source. Check the ol' blog's privacy policy at the Table of Contents page, as well as on the separate Privacy Policy page.
Blog powered by Typepad
Member since 11/2005

January 2021

Sun Mon Tue Wed Thu Fri Sat
          1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31            

..................................................



  • .................................................................


  • Don't Mess With Taxes •
  • Powered by Typepad
Top