A client once asked if there is an upper age limit for paying taxes. Answer: No, there is no upper age limit on paying taxes. If you have enough taxable income you must file and pay even if you are a 100 years old. In fact, it’s likely that someone will still be dealing with your tax concerns after you pass away. Death and taxes – two of life’s certainties. After retirement, many people are not sure how taxes will work. Nothing in the tax code is simple, but I hope to shed a little light on post-retirement taxes. Today, I am focusing on Federal taxes. Your state might tax none/some/all of your retirement income. First, let’s take a look …
Taxes
Have You Ever Really Looked At Your W-2 Form?
Tax season is over and I am grateful my office coffee maker waited until April 20th to stop working. I enjoy coffee year round, but especially during tax season. You may find this strange, but I actually enjoy looking at tax forms so while it’s fresh in my mind I’d like to review one of the most common ones, the W-2.If you are employed, you receive a W-2 each year from your employer. The IRS and, if applicable, your state taxing authority also receive the form. Some taxpayers briefly contemplate their W-2 to prepare their own taxes. For those who outsource their tax prep, it gets thrown onto the pile of forms to give their preparer. Many don’t even take it …
Give to Charity and get a Small Tax Break – even if you don’t itemize!
I’m talking to a lot of clients this month about charitable giving and how to give in the most tax-efficient way possible. Since Tax Reform took effect in 2018 fewer taxpayers are getting a deduction for their charitable contributions. Donations to charity are deducted when a taxpayer itemizes deductions.After Tax Reform far fewer people itemize. Only about 10% of taxpayers now itemize. The other ≈90% take the standard deduction. But in 2020 Congress addedanew tax break for charitable contributions made by taxpayers taking the standard deduction. In 2020 these taxpayers got to deduct $300 in charitable donations. This year, 2021, single tax filers can …
Good News For Most Families With Children, Your Tax Bill Is Going Down!
The American Rescue Plan, signed into law March 2021 includes a temporary one year enhancement to the Child Tax Credit for 2021. In 2020 the Child Tax Credit was $2000 per eligible child under age 17. Look on line 19 of your 2020 Form 1040 to see if you received this credit: This client has two children, ages 12 and 9: For 2021 the Child Tax Credit is increased to: $3,000 for children ages 6 to 17previously 17 year olds were not eligible, this year they are$3,600 for children age 5 and underThese amounts are based on the child’s age on 12/31/21 Also new for 2021 -- 50% of the credit will be paid in advance in 6 monthly installments from July 2021-December …
Everybody loves a tax refund but….
Like many taxpayers, you might get a refund each year when you file your taxes. Last year ≈74% of individual tax returns resulted in refunds. The average refund was $2,476. It’s no secret that taxpayers use the tax withholding system as a form of savings. Too much tax is withheld from your paycheck throughout the year and then refunded back to you after you file your return. It seems like a windfall, but of course it isn’t. It’s really YOUR money the government has been holding for you. One argument against getting a refund -- you are giving an interest free loan to the government. However in today’s interest rate environment that’s not much of an …
