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 …
Taxes
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 …
How do you rank as a taxpayer?
It’s a presidential election year in the US, but you probably knew that already.A perennial issue each election is taxes.We are subject to many different tax levies.Today we are going to talk about Federal income taxes. The 16th amendment to the Constitution was ratified in 1913, allowing Congress to levy an income tax and the US has had an income tax ever since. The instructions for the very first Form 1040 in 1913 took up one page. In 2019 the instructions for Form 1040 is 108 pages long. I believe every US taxpayer should know their Federal income tax liability.(Hint: Your tax refund is not your tax liability). So dig up your 2019 tax return. (go ahead I’ll wait). If your 2019 return is …
