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 →
Tax Tip
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 →
Photo by Jon Tyson on Unsplash Yes, it's that day that millions of refund ready taxpayers have been anxiously awaiting. The Internal Revenue Service today begins processing 2022 tax year returns. I don't want to interrupt your calculating, but I ran across the Elaine May and Mike Nichols video below where the improv duo discusses filing taxes. The vignettes were public service announcement commissioned by The National and State Organizations of Certified Public Accountants, and now are part of the Academy Film Archive. Being a fan of the legendary comedy couple (and their later, separate film work), I had to... Read more →
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 the time. (Image via Wikipedia; click here to see radar loop) Tax season 2023 starts today, but some more filers won't have to worry about meeting the April Tax Day deadline because Mother Nature continues to wreak havoc across the United States. Her Mommy Dearest outbursts earlier this month resulted in major natural disaster declarations in Alabama and Georgia. That, in... 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 →
Photo by Polina Zimmerman While millions are debating when to file their tax return, others are asking a more elemental question. Do I have to file a 1040 at all? It's a good question. The short answer is probably. But there are some situations where the Internal Revenue Service doesn't demand individuals file. Here's a look at just who is off the tax filing hook. Filing requirements for most of us: Generally, if you are a U.S. citizen or resident you must consider three things when determining whether you have to file a tax return: your age, your filing status,... 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 →
Every filing season, eager taxpayers, most of them expecting a refund, send their returns to the Internal Revenue Service as soon as they can. For most it works out OK. Others, however, discover on their own, or learn from the IRS, something just not quite right, and costly, on their Form 1040. It works the other way, too. In some instances, folks submit a return without claiming a tax break that would have saved them dollars. The IRS isn't going to tell you about that! The best way to make sure you enter all the data that the IRS wants,... 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 →
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 →