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income tax

Missing a W2? Here’s What to Do…

So – you’re all set to do your taxes.  And then… you realize you’re missing something.  One of your W2’s hasn’t shown up in the mail.  Maybe it was a short-term or a part-time gig, or maybe the business changed hands – or maybe it just got lost in the mail. Whatever the reason, you’re missing one of the documents that you need in order to prepare your tax return.  So what do you do? What Do You Do? Your employer is required to send your W2 earnings statement to you by February 1 for the prior year’s earnings. But sometimes things go awry, and you don’t receive the form. There are four steps to follow to retrieve the required information… Contact your employer – inquire if and when the W2 forms were mailed out.  It’s possible that the postal service returned it to your employer due to an incorrect […]

Taxation of Income, Capital Gains, and Interest

When you receive income, it’s likely going to be subject to taxation. However, the type of income will determine the specific tax treatment, and ultimately determine how much you get to keep. We can break income down into three basic types: ordinary income, capital gains income, and interest income. Here’s a breakdown of each. Ordinary Income – Ordinary income (OI) is income received that is subject to ordinary income tax rates. These tax rates are the rates individuals pay on incremental amounts of income. Rates can be as low as 10% and as high as 37%. Income typically subject to OI rates is income from your wages (W2, self-employment), taxable bond interest, taxable retirement income, and annuity income. Capital Gains Income – Capital gains income occurs from the sale of assets such as stocks, bonds, mutual funds, ETFs, real estate*, and other assets. Depending on how long the assets were […]

2018 Form 1040: Say hello to my little friend

Have you seen the 2018 Form 1040? It’s not quite the post-card we were promised, but it’s half the size of the old one. Not much has changed, though.

You can’t deduct IRA losses any more

Prior to 2018, you had the ability to deduct IRA losses from your income via Schedule A. As of the passage of TCJA, this deduction is no longer available.

Why are Social Security benefits taxed?

Why are Social Security benefits taxed? This article explores the history behind this seemingly “tax on tax” situation and provides some clarity.

Don’t Forget the Saver’s Credit on Your Tax Return

The IRS provides a way to make your saving activities pay off more for you, by way of the Saver’s Credit. If you are eligible, it’s a great benefit.

The 1040X – 15 Facts About Amending Your Tax Return

Do you understand all of the rules for amending your tax return? It’s important to get this right, or you might end up having to amend again or pay up.

Tax-Efficient Charitable Giving from your IRA

Illustrated example of charitable giving using an IRA and the qualified charitable distribution (QCD) option. Only available to folks over age 70½.

Time for your paycheck checkup!

This time of year is a perfect time for a paycheck checkup to make sure that you are having enough tax withheld from your pay. Do it soon!

Who should do a mid-year tax checkup?

There are certain groups of people who really need to do a mid-year withholding checkup, according to this notice from the IRS.

Mid-year estimated payments checkup

It’s a good idea to do a mid-year estimated payments checkup to make certain you are having enough tax withheld throughout the year.

Mid-year withholding checkup

It’s a good idea to do a withholding checkup early in the tax year to make sure that you’re having the proper amount of tax withheld from your paychecks.

Exemptions and Dependents for 2017 Tax Returns

It’s important to know the rules regarding dependents and exemptions for your 2017 tax return. The determinations can be complicated.

Best and Worst States for Retirement Finances

Where you live in retirement can make a big difference. Learn which are the best and worst states to retire to. You may be surprised!

Taxpayer Bill of Rights – Do You Know Your Rights?

Do you know your rights as a taxpayer? There’s a Taxpayer Bill of Rights, and you should become familiar with it. Know your rights!

Traveling for Charity? You may have deductions

If your volunteering activities find you traveling for charity, you may be able to take valuable tax deductions for your travel expenses.

What to do When You Owe Taxes

If you have found yourself in a situation where you owe taxes to the IRS, there are ways to arrange a payment plan with the IRS. Here’s how.

IRS’ Offer in Compromise

The IRS has a process to provide a compromise when you owe taxes and penalties and you have no capacity to pay. The compromise is a reduction in the tax.

The Sharing Economy and Taxes

If you rent out a room to others using airbnb or drive your car for Uber to take part in the sharing economy, the money you earn may be taxable.

Tax Bill Too High? Try This Trick

Some individuals get the nice surprise of a big tax refund every tax year (if this is you, don’t be too happy – you’ve been lending Uncle Sam money interest free). Other folks get the unpleasant surprise of having to write a big check to Uncle Sam. For the latter individuals, there may be a way to lower their tax bill and save more for retirement. Let’s look at an example. Assume an individual has a tax bill of $4,000 and they want to reduce this. Naturally, there are other deductions they may qualify for, but in this case, they’ve exhausted all other options except this one: saving to their 401k. Let’s also assume this individual’s marginal tax rate is 25%. The individual can take their tax rate and divide it into their tax liability for the year – in this case $4,000 divided by 25%. This comes to $16,000. […]