Tax News Blog

EV Tax Credit

Posted by admin on September 22, 2022
Last modified: September 22, 2022

Like to Save Money on Your Taxes with EV Tax Credit?

The EV tax credit may be just what you need. For the tax year 2022, the credit amount is $2,500 to $7,500, depending on the battery capacity in your electric or alternative motor vehicle. So if you are thinking of going clean and green, this could be a great way to save some money.

Let’s look at the federal EV Tax Credit (or Electric Vehicle Tax Credit), which vehicles qualify, and additional tax credits or incentives that may be available to you.

How do EV Tax Credits Work?

The electric vehicle tax credit applies to all-electric and plug-in vehicles, but the exact amount of the credit can be found on the DOE website fueleconomy.org. This incentive is not a mail-in check you receive after purchasing the car but a $7,500 tax credit you are eligible for. To encourage sales of plug-in electric vehicles, the federal government began providing a federal income tax credit in 2010 for eligible electric vehicles purchased after December 31, 2009.

Until now, buyers of EV electric vehicles and plug-in hybrid vehicles could receive up to $7,500 in federal tax credit if the manufacturer did not sell more than 200,000 qualifying vehicles. However, the federal tax credit begins phasing out for manufacturer vehicles at the start of the 2nd calendar quarter after the automaker has sold 200,000 eligible vehicles since January 1, 2010. So it’s important to check if the car you are about to purchase is suitable for a loan.

ev tax credit
ev tax credit

Updates on the New Clean Vehicle Tax Credit.

However, starting in 2024, taxpayers will have the option to pass credit to the car dealer at the time of buying to directly lower the purchase price of the car by the corresponding loan amount – great news for people who might want to invest in an electric vehicle — but dissuaded by high sticker prices. Under the new tax treaty terms, you can get this credit upfront at the point of sale of your electric vehicle.

The Clean Vehicle Tax Credit is a new tax credit available for purchasing qualifying electric vehicles. The EV tax credit is worth up to $7,500 and can be used to purchase a new EV. However, there are some new eligibility requirements under the Inflation Reduction Act, so be sure to check to confirm if you qualify before applying for the EV tax credit.

How Much is the New Clean Vehicle Tax Credit?

The Clean Vehicle Tax Credit is a great way to save money on purchasing a new or used EV. Depending on your vehicle, the credit could be worth up to $7,500 for a new car, or $4,000 for a used car. Not all EVs and not all taxpayers will qualify for the credit, so be sure to check the requirements carefully before making your purchase.

Electric vehicle tax credits are non-refundable tax credits that result from purchasing a vehicle with a battery-powered propulsion system capable of being powered by an external power source. Please note that this credit is non-refundable, which means you will not receive more credit than you owe in taxes. If your account is less than credited, you will receive the balance as a refund. You cannot carry this loan or balance into the next fiscal year. For example, if your total annual tax bill is $5,500, you can’t claim an EV tax credit over $5,500, even if your car qualifies. Instead, it’s a government policy that allows you to claim a federal income tax credit of up to $7,500 in the year you buy the car. The reward is a fixed credit, which means you only pay the total of $7,500 if your tax bill is at least $7,500.

So are you thinking of buying a new electric vehicle? Then, you may be eligible for a new tax credit!

To claim the new Clean Vehicle Credit, your vehicle must be an “EV” or “clean vehicle” – this includes hydrogen fuel cell cars and plug-in hybrid vehicles with four to seven-kilowatt hours of battery capacity. The credit applies to cars that cost less than $55,000 and vans, SUVs, or pickup trucks that cost less than $80,000.

Your EV must receive final assembly in North America if purchased after August 17, 2022. An eligible manufacturer must also make it. Finally, the modified AGI cannot exceed $300,000 if you are married filing jointly, $225,000 if you are head of household, or $150,000 if you file as single.

Eligibility on a Used Clean Car for Tax Credits?

To qualify for the new Clean Vehicle Credit on a used car, the following criteria must be met:

If you’re looking to get the new Clean Vehicle Credit for a used car, there are a few things you need to know. First, the vehicle can’t cost more than $25,000. Secondly, the modified AGI (adjusted gross income) can’t exceed $150,000 if you are married filing jointly, $112,500 if you are head of household, or $75,000 if you file as a single. And finally, whether you signed a purchase agreement for an electric vehicle manufactured outside the U.S.

Reach out to our Tax Service Professionals to verify your eligibility for the EV tax credit. Then, let us walk you through maximizing your return with an easy and simple online tax filing.

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Category: Tax Deductions and Credits, Tax Tips and Tricks
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Filing Freelance Taxes for Fiverr or Upwork Gig Workers

Posted by admin on September 14, 2022
Last modified: September 15, 2022

The Gig Workers Guide to 1099 Taxes

As a freelancer taxes or filing 1099 online can feel like an impossible challenge. But with the proper guidance from our Tax Service Professionals, it doesn’t have to be so daunting. This freelancer taxes guide outlines everything you need to know to file your 1099 freelancer income taxes quickly and minimize your tax bill as much as possible.

How to file your Fiverr or Upwork taxes or other freelance taxes as 1099 income?

As a freelancer, it is important to know that you are responsible for your taxes. This means that you will need to pay federal and state income taxes and self-employment taxes. Your exact amount will depend on your income and tax bracket. You can use our PriorTax.com income tax calculator to get an estimate of what you will owe. Alternatively, you can use the IRS Schedule SE Self Employment Tax form to calculate your freelance taxes.

There are a few things to keep in mind when it comes to paying your taxes as a freelancer. First and foremost, gig platforms such as Fiverr or Upwork do not withhold any taxes for you. This means that you have the responsibility to pay your taxes to the Internal Revenue Service (IRS).

You, as a freelancer, are responsible for three main types of taxes: federal and state income taxes and self-employment tax. The exact rate you have to pay for each of these taxes depends on your income and which state you live in. For example, federal income tax rates range from 10% to 37%, while state income tax rates can be anywhere from 0% to 13.3%.

Again, you can use our free income tax calculator to figure out the exact percentages you need to save for all of your taxes. Alternatively, if you want to do the calculations, you can use the IRS Schedule SE Self Employment Tax form.

When working as a freelancer, you are also responsible for paying your self-employment taxes. This includes Medicare and Social Security taxes, known as FICA taxes. The Medicare tax rate is 1.45%, while the Social Security tax rate is 6.2%. Together, these two taxes total 7.65%.

Since you are clearly classified as an independent contractor by the IRS, you are considered both the business and the employee. This means that you must pay a total of 15.5% in self-employment taxes. However, you may be able to write off the employer portion of FICA taxes as a business expense.

freelance taxes
freelance taxes

Tax Deduction on your Freelance Taxes from Business Expenses

As a freelancer, it’s important to keep track of all your business expenses in order to lower your tax bill. One way to do this is using a 1099 expense tracking with PriorTax, which can automatically categorize your transactions. In addition, PriorTax.com makes it easier to focus on getting more tax deductions from freelance gigs.

Another helpful way to keep track of deductible expenses is by using a separate business credit card and bank account. This can be a bit more hassle, but it may be worth it come tax time.

Once you have organized all your tax deductible expenses in one place, you can begin filling out your tax form Schedule C Profit or Loss from Business. This tax form will include all your income information and expenses, so you can get the most deductions possible. Although filing freelancer 1099 tax forms online can be time-consuming, they’re worth it if it means saving money on taxes.

Filing Freelance Taxes Online

No one likes doing their taxes, especially if you’re self-employed. It can feel like an impossible task, but this guide will help make it as easy as possible. From understanding exactly what you need to do, to file your taxes with ease, this guide has everything you need. Lowering your tax bill as much as humanly possible is the goal here, and by the end of this article, you’ll know exactly how to do that.

PriorTax step-by-step systems can help you file your taxes quickly and efficiently.

As a sole proprietor, small business owner, or self-employed freelancer, you might think that doing your taxes is daunting. After all, keeping track of all the paperwork can be a hassle, and mailing in your taxes can take forever. But it doesn’t have to be that way! Reach out to our Tax Service Professionals for free. Simple, The best way to file freelance taxes online for maximum return and simple tax filing is with PriorTax.com.

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Category: Tax Deductions and Credits, Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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Updates on Student Loan Forgiveness

Posted by admin on September 9, 2022
Last modified: September 15, 2022

As higher education costs continue rising, many students struggle to repay their loans. The Biden-Harris administration proposes a new income-based repayment and Student Loan Forgiveness plan to make the lending process more manageable for future borrowers.

The Biden-Harris Administration recently has committed to providing relief for student debtors. Under the new Student Loan Forgiveness plan, borrowers can receive up to $20,000 in debt forgiveness, depending on some factors regarding their loans, income, and other financial aid they’ve received.

student loan forgiveness
student loan forgiveness

The government’s moves to “cancel” the debt and extend the student loans pause are just two parts of a larger Student Loan Forgiveness plan that could turn out to be the most costly executive plan in the history of higher education. The Biden-Harris administration and the U.S. Department of Education (DOE) have developed a three-part plan to help federal student loan borrowers return to regular repayment schedules and prevent unnecessary delinquencies or defaults. The updates also complement previously announced changes, including ending the amnesty for government service loans and the Fresh Start program for insolvent borrowers.

Here’s a look at the various initiatives involved with the plan, who qualifies, and how to go about claiming the relief. With this new plan in place, students can focus on their education without the burden of oppressive debt weighing them down.

Student Loan Forgiveness: When Do Student Loans Resume?

As of December 31st, 2022, the automatic pause on student loans repayments has been extended once again. This means you will not have to make any loan payments until later. Don’t hesitate to get in touch with your lender for more information if you have any questions about your loan or repayment status.

The Department of Education proposes a new income-based repayment plan to protect more low-income borrowers from repayment and cap monthly college loan repayments to 5% of borrowers’ discretionary income, which is half the rate borrowers currently have to pay in most cases.

In addition, there are plans to write off up to $10,000 of federal student loans debt for borrowers making less than $125,000 with relief of up to $20,000 for those who received a Pell Scholarship and qualify for borrowers.

How to Apply for Student Loan Forgiveness in 2022?

There are a few things to consider if you want to have your student loans forgiven. The first is whether or not you qualify for relief. The relief is most heavily targeted to low and middle-income families, so if you come from a family that falls into either of those categories, you may be eligible for more forgiveness than others.

Individuals with income under $125,000 or households with under $250,000 in total annual income are eligible as follows:

Pell Grant recipients with loans held by the U.S. Department of Education will have up to $20,000 in student debt canceled. Non-Pell Grant recipients with loans held by the U.S.

The Department of Education (DOE) is still working out the details of how to forgive debt for students who took out loans from private lenders. We will continue to provide updates here as they are announced. In the meantime, it is encouraged to apply for relief as soon as possible to receive it before the repayment pause expiration (end of the year).

What do you need to know about Public Service Loan Forgiveness Program (PSLF)?

Are you struggling to pay off your student loans? Then, you may be eligible for the Public Service Loan Forgiveness (PSLF) program.

The Public Service Loan Forgiveness (PSLF) program may forgive the remaining loan balance on your Direct Loans after you make 120 monthly qualifying payments while working full-time for a qualifying employer.

To qualify, you must be employed by a government organization, non-profit organization, or another qualifying employer when you apply for student loan forgiveness and during loan repayment.

Overall, according to an analysis provided by the Department of Education, student loan forgiveness will eliminate student debt for about 20 million people and cut monthly payments by an average of $250 for borrowers with residual balances who have payment plans.

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Category: Tax and Life Changes, Tax Deductions and Credits, Tax News, Tax Tips and Tricks
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E-file Hawaii Tax Online for a Simple and Easy Tax Filing

Posted by admin on August 30, 2022
Last modified: August 30, 2022

PriorTax is committed to providing the latest tax forms and schedules in conjunction with the Hawaii Department of Revenue. Our Hawaii tax online experts work diligently year-round to stay up-to-date on the latest Hawaii Tax Laws so that we can help lower your state tax burden. In addition, filing your taxes online has never been easier – when you prepare your federal return with PriorTax, we make it quick and easy to complete any resident or non-resident state tax returns for Hawaii. Plus, we’re proud to offer efile and direct deposit for all states with these capabilities.

Reach out to our Tax Service Professionals for Hawaii Tax Online Return

Contact our Tax Service Professionals to check if you need to file a Hawaii tax return for the current or prior year with the State of Hawaii. If you are not eligible for auto-renewal, ensure you get your Hawaii tax return as soon as possible to avoid excessive penalties. This article reviews the most important current state reporting and Hawaii tax return requirements from Single filers in Hawaii to Hawaii LLC Enterprise.

Hawaii tax online
Hawaii Tax Onlinne

Hawaii Tax Rate

The state of Hawaii imposes different tax rates for residents and non-residents.

For single filers, the Hawaii tax rate is

  • 1.4% on the first $2,400 of taxable Hawaii income
  • 3.2% on Hawaii income between $2,401 and $4,800
  • 5.5% on Hawaii income between $4,801 and $9,600,
  • 6.4% on Hawaii income between $9,601 and $14,400
  • 6.8% on Hawaii income between $14,401 and $19,200
  • 7.2% on Hawaii income between $19,201 and $24,000

Different tax rates apply to different income levels in Hawaii. For example,

  • Hawaii income between $24,001 to $36,000 are taxed at 7.6%
  • Hawaii income of $36,001 to $48,000 are taxed at 7.9%
  • Hawaii income that fall between $48,001 to $150,000 are taxed at 8.25%
  • Hawaii income that range from $150,001 to $175,000 are taxed at 9%
  • Hawaii income that range from $175,001 to $200,000 are taxed at 10%
  • Hawaii income move than $200,000 are taxed at the rate of 11%

These Hawaii tax rates remain the same for people filing jointly as married; however the income levels are doubled for those individuals.

Filing a Hawaii Tax Extension

Instead of the traditional April 15 deadline, taxpayers in Hawaii have until April 20 to file their returns. The state of Hawaii has different income tax rates for different income levels.

Generally, your tax refunds are issued within 8 weeks of filing your tax return with the Hawaii Department of Taxation. However, suppose you make the wrong choice and are better suited to file more frequently than indicated on your GE tax license application. In that case, the Hawaii Department of Taxes will adjust your filing frequency accordingly and send you written notice. If your adjusted gross income in Hawaii for the tax year was less than $30,000 and you paid more than $1,000 in rent, you may be eligible for a $50 tax credit for each qualifying tax exemption in your household.

Registration in Hawaii may remain in a “Pending” state for a little longer than registration in other states because we also need to request third party access to your Hawaii tax online account to automatically archive your returns. For Hawaii, we may not automatically archive returns until we have third-party access to your Hawaii Tax Online account. Reconciliation can be done online if you have an online account registered for your GE tax license (registration on the Hawaii E-File website is available here), or simply reach out to our PriorTax Tax Service Professionals for Live Tax Support.

How often you need to file GE Hawaii tax forms generally depends on the amount of GE tax you owe during the year. For example, if you pay a total of more than $4,000 in GE tax in Hawaii during the year, you may need to file Form G-45 monthly. Generally, only real estate valued over $5,490,000 is required to file a tax return in the State of Hawaii. The State of Hawaii requires taxes if you are a resident or non-resident and receive income from a Hawaiian source. Anyone doing business in Hawaii must file a state tax return, regardless of whether the individual earns taxable income from the business.

Business Tax and LLC Online Tax filing in Hawaii

Companies in Hawaii usually impose an excise tax on their customers, but this may not be mandatory. Hawaii requires companies to levy an excise tax on the sale of digital goods or services. Out-of-State Sales Hawaiian companies only have to pay out-of-state sales tax if they have connections in other states. If your LLC is going to sell goods to customers in Hawaii, you will need to collect and pay a General Excise Duty (GET; essentially a sales tax).

Now that you have signed up for a Hawaii sales permit and know how to collect the correct sales tax amount from all of your customers, you are ready to file your tax return. But, first, submit your Hawaiian General Excise Tax Return. This can be done with the help of the PriorTax Tax Service Professionals; in addition to Form G-45, Hawaiian general excise taxpayers must complete Form G-49 (Annual Report and Reconciliation of General Excise/Use Tax Declaration) annually.

How to File Hawaii Tax for Businesses?

Business online tax filing in Hawaii requires companies to file general excise returns and file excise payments online. Suppose you subscribe to certain payment services (POS), such as Square or Clover in Hawaii. In that case, you must be registered with the Hawaii Department of Taxes and the Hawaii Department of Labor and Industrial Relations for us to pay and file Hawaii state taxes.

Tax Filing Deadlines for all Hawaii Excise tax filing are on the 20th day of the month unless it is a weekend or federal holiday, in which case the deadline is moved to the next business day.

At PriorTax, we understand how important it is to stay up-to-date on the latest tax laws. So we work with the Hawaii Department of Revenue to ensure our clients access the most recent forms and schedules. As a result, filing taxes online in Hawaii doesn’t have to be complicated or time-consuming – our team of experts can help you every step of the way. Plus, we offer efile and direct deposit for all states that provide these services. So why wait? Let PriorTax help you today!

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Category: Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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Education Tax Deduction and Tax Credit

Posted by admin on August 23, 2022
Last modified: August 22, 2022

In our guide to education tax deduction and student loan tax deduction tips, you can learn more about the conditions of this education tax deduction for student loan interest. For example, the student loan interest tax deduction can be claimed as an income adjustment, and you do not need to itemize your tax deductions to qualify for the tax credit.

In addition, by claiming this education tax deduction, a taxpayer may write off the interest paid on student loans and other types of credits, like revolving credit lines (for example, credit cards used to pay qualified educational expenses). In some cases, including amounts from scholarships or grants as income, thus increasing qualified education expenses eligible for credit, provides more of a tax benefit than does not include scholarships or grants in the income.

The tax credit amount is 20% of the first $10,000 spent for qualified education expenses or up to $2,000 per tax return. The credit may be stacked for multiple students at a home who are attending college simultaneously. For example, a taxpayer with a modified adjusted gross income of $80,000 ($160,000 or less for joint filers) may claim a credit for qualified expenses for one qualified student. Single filers who have adjusted gross incomes of $80,000 to $90,000 may take the credits, as may joint filers who have adjusted gross incomes between $160,000 and $180,000. You can get up to $2,500 in credit annually for each student, 100% of the first $2,000 in qualified expenses, plus 25% of expenses over $2,000.

Let’s dive into the details.

education tax deduction
education tax deduction

Who Should Claim an Education Tax Deduction, the Parent or the Student?  

If you are a college student and no one claims you as a dependent, you can claim the credit. But if you are the parent of a college student you claim as a dependent, you will take the tax credit for yourself.

Whoever claims the credit will need a Form 1098-T from the school that shows how much was paid for tuition and qualified expenses. If you don’t have a 1098-T, you can always request one, but not all schools are required to provide them. If your institution doesn’t send you a 1098-T, you will still need an enrollment record and what was paid for tuition and expenses.

How can I claim an Education Tax Deduction?

If you’re looking to file your taxes and claim your education tax credit, PriorTax is the way to go. Our Online Tax program will guide you through all the necessary steps for claiming your credit, and if you’re a college student filing a simple return, you may even qualify for free filing. In addition, with PriorTax, there’s no need to worry about leaving out important details like your education credits or the student loan interest deduction – we’ll make sure everything is accounted for.

Can I claim American Opportunity Tax Credit?

If you are a college student, the American Opportunity Tax Credit (AOTC) can help you offset the cost of tuition and related expenses. The AOTC is a tax credit worth up to $2,500 per year for an eligible college student. It is refundable up to $1,000, meaning you can get money back even if you don’t owe any taxes. You can claim this credit a maximum of four times. So if you are facing rising tuition costs, be sure to take advantage of this valuable tax credit.

How Can claim the AOTC? 

There are several requirements that a college student must meet in order to qualify for the AOTC tax credit. First, the student must be enrolled in an eligible educational institution and pursuing a degree or other recognized education credential. The student must also be enrolled in eligible institutions at least half-time for an academic period during the tax year. Additionally, the student cannot have finished the first four years of college at the beginning of the tax year and cannot have already claimed the AOTC on four prior tax returns. Finally, the student cannot have a felony drug conviction at the end of the tax year.

Note that there is an income threshold for the AOTC. To receive the full amount of credit, you need your modified adjusted gross income (MAGI) to be below $80,000 or $160,000 when married filing jointly. If your MAGI is more than $80,000, you get a reduced amount; if it is more than $90,000, you cannot claim the credit.

How can I claim Lifetime Learning Credit?

Nonrefundable credits of up to $2,000 a year are available for qualifying students. You may take the credit yourself if nobody claims you as a dependent. You may claim this credit an unlimited number of times.

The lifetime learning credit is up to $2,000 per year per qualifying student. In addition, there is no limit on how many years you may take advantage of the credit, and no minimum number of courses must be taken in order to be eligible for the Lifetime Learning Credit. In other words, you do not have to enroll in classes full-time to be eligible.

If you are a college student and nobody claims you as a dependent, you are free to file a return and claim that credit. If you are a parent of a student who is claimed as a dependent, you may take this credit on your individual income tax return.

What is Student Loan Interest Tax Deduction?

The Student Loan Interest Deduction allows you to deduct up to $2,500 in student loan interest from your taxes. If you paid $600 or more in interest on your student loans during the tax year, you should receive a Student Loan Interest Statement (Form 1098-E) from your lender. You can claim this deduction in addition to one of the other education credits or deductions for which you may be eligible.

How Much Can I Tax Deduct for Student Loan Interest? 

The student loan interest deduction can be a great way to save money on your taxes. If you meet all these requirements, you may be able to deduct up to $2,500 in interest paid on your student loans. The tax deduction can be taken in addition to an education tax credit, so it’s definitely worth looking into if you’re a college student or parent paying for college. Reach out to our Tax Experts to learn more about the student loan interest tax deduction and how it can benefit you

What Education Expenses Qualify for a Tax Deduction?

A few additional education tax credits are available, each with its requirements. The American Opportunity Tax Credit allows you to claim expenses such as tuition, fees, books, supplies, and other necessary equipment for your course of study. Other qualifying credits include the Lifetime Learning Credit and the tuition and fees deduction.

To qualify for any of these credits, the expenses must be paid for educational purposes only – room and board, insurance, health fees, transportation, and living expenses do not count. Additionally, income limits may affect your eligibility for certain credits.

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Category: Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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How to Prepare your Education Tax Credit

Posted by admin on August 16, 2022
Last modified: August 15, 2022

What is Education Tax Credit?

Are you or is your dependent a student? Then you might want to determine whether you qualify for one of two education tax credit covering typical student expenses. You can skip paying federal income taxes if you use an education tax credit to cover expenses other than the money in a 529 college savings plan.

education tax credit
education tax credit

What is American Opportunity Credit, AOTC

The American Opportunity Credit can save up to $2,500 in taxes on the education expenses of every qualified student. To give students and their families financial and tax relief, the federal government has created education tax credit that can reduce the costs of going to school.

The American Opportunity Tax Credit is available during the first four years of college, so if you are eligible, you (or your parents, if you are a dependent) could claim it while you are still at school. The AOTC is an education tax credit that taxpayers can take to help pay some of the costs of going to college during the first four years a student is in school for a postsecondary degree. You can claim the AOTC for your first four years of higher education and get a credit worth up to $2,500 each year.

What is Lifelong Learning Credit, LLC

The Lifelong Learning Credit is available for undergraduate students who have not completed the first four years of postsecondary education. There is a limitless number of times the Lifetime Learning Credit may be claimed, making the lifetime learning credit a valuable tax deduction for college students returning for postsecondary study. In addition, eligible students who take courses (including courses for job skills acquisition or improvement) at qualified colleges, universities, vocational schools, or other postsecondary institutions may claim the lifetime learning credit.

You may be eligible to use the Lifetime Learning Credit (LLC) to help cover qualified tuition and related student expenses paid by eligible students enrolled at a postsecondary educational institution, including bachelor’s, master’s, and professional degree courses. Qualifying expenses you can claim under the Lifetime Learning Credit include tuition and fees, along with books, supplies, and equipment, so long as the tuition and fees are required to enroll. Payment means that a parent or student may be eligible, depending on who pays for a student’s tuition at college. That means if you are a parent with two dependent children enrolled in grad school, you could be eligible for as little as $2,000, no matter how much tuition and related expenses you are paying.

The Lifetime Learning Credit (LLC) is not refundable, meaning the Lifetime Learning Credit may help bring your tax bill down to 0, but you do not receive any excess amounts as a tax refund. Fortunately, provisions within the US tax code offer tax breaks on education as credits or deductions for the different expenses you owe.

What are some other Tuition Tax Deduction

With the Tuition & Fees Deduction, you could lower your taxable income by up to $4,000 for the tuition and fees you paid at qualifying postsecondary institutions. Like the Lifelong Learning Credit, you must reduce qualified expenses by the amount of help you receive through scholarships, grants, Pell Grants, employer tuition assistance, refunds from schools, and other nontaxable assistance. In addition, you can boost an education tax credit and lower your overall tax bill or boost your tax refund if a student (you, your spouse, or a dependent) decides to count all or a portion of some scholarships or fellowships as income.

If a education tax credit reduces your tax bill to zero, you can have up to 40% of the remaining amount, up to $1,000. A nonrefundable credit may lower your tax bill, but you will not get any money back. A refundable credit can earn you money back when the credit is worth more than the taxes you owe. That means that if your education tax credit reduces the amount of tax you owe to zero, you could receive the money back as a tax refund.

This tax deduction is available alongside the other tax deductions and credits. If you are eligible for both credits, you should pick which provides you with the most significant tax savings. For example, if you provide more than half of your financial support (even if you are using student loans), you may claim either the education tax credit or tax deduction. If you are still wondering whether you are eligible for this education tax credit.

Check out our Tax Calculator for tax deduction and tax return estimates.

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Category: Tax and Life Changes, Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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How to E File Previous Years Taxes Online

Posted by admin on August 10, 2022
Last modified: August 10, 2022

Life is full of surprises; sometimes, things will simply happen before you know it, like the Tax Deadlines in April. If you have taxes past due, you are probably wondering where to begin. Has the deadline officially passed, or is it possible to continue filing previous years taxes? Tax Service Professionals at PriorTax are going to take you through the steps.

How to File Previous Years Taxes

To file your prior year’s return, you will need your W-2s or 1099 forms that you received in those tax years to report your income. Back tax returns have to be filed on paper and mailed to the IRS – they can be filed electronically or simply E-file tax online with PriorTax, and our LIVE Tax Service Professionals support will help you through it.

Taxpayers may e-file online with PriorTax, or use a tax preparer that is an approved electronic return originator (ERO). Under this arrangement, taxpayers may use approved software to file federal income tax returns and state income taxes in Missouri. You may also file electronically using approved, commercially available software programs, or you may have your return prepared and submitted by a licensed tax professional. If you wish to prepare your taxes in person, you may also use an authorized E-file vendor. The simplest and easiest way to file previous year taxes online is with PriorTax with the LIVE help of Tax Service Professionals.

You can use PriorTax to Efile tax online previous years taxes returns for up to 3 years after it is due.

Easy way to E file Previous Years Taxes Online

Simply create or log into your PriorTax account or create a new account to begin. Then click on the tab in the middle of the “My Account” page. Select the year you wish to begin previous year tax filing and begin filing your previous years taxes return online as E-file. From there, you’ll enter the income and expense information for the year you are filing. Of course, you can always rely on our free LIVE Tax Service Professionals for free. You will have the easiest experience filing taxes for both previous and current years.

Once your return is complete, any previous years taxes filings up to three years, you do not need to print out and mail in paper copies of your forms. This is because with PriorTax, the IRS supports e-filing prior tax year returns online electronically.

When you file your previous tax year taxes with PriorTax, you’ll get all the correct tax forms and the instructions for the previous tax year you are completing.

previous years taxes
previous years taxes

EFiling Previous Tax Years with PriorTax Online for Tax Returns

If you’re behind on your previous taxes, you can use PriorTax to E-file to get caught up. You can electronically Efile tax returns for the last 3 years. In 2023, you can file your 2022 return, plus returns for 2019, 2020, and 2021.

If needed, you can also file older returns by mail. Our Free Tax Service Professionals will help file with PriorTax for earlier years.

Keep in mind that the IRS usually only audits returns that are six years overdue or less. So your past six years of tax returns are typically the only ones that would be considered for an audit.

By Efiling Tax Online Previous Year Taxes Can I Still Get My Tax Refund?

Suppose you filed your return within three years after your original filing date. This deadline period is also applicable for tax credits such as the Earned Income Tax Credit (EITC). Tax deductions and credits can significantly reduce your tax burden, so it is in your best interest to file during this three-year window to receive your earned tax credits and refund. If you have a previous-year return you are still due, you can start today with PriorTax. 

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Category: Tax Deductions and Credits, Tax for Business, Tax News, Tax Tips and Tricks, Taxes for Prior Years
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Everything about Tax Form 1099-NEC

Posted by admin on August 2, 2022
Last modified: August 1, 2022

Since 2020, Form 1099-NEC is the new form businesses are required to file annually with the IRS to report non-employee compensation (NEC). If you made payments to individuals or companies for services that were not your employees, you might need to file this type of return. Compensation for non-employees was formerly filed in Box 10 on Form 1099-MISC. If you are still going to use this for other payments, make sure to put information in the correct boxes, as they are in different places now. The IRS started separating Form 1099-NEC income from Form 1099-MISC since 2020 for the tax payers in 2021. Contact our available Tax Service Experts today.

One of the most common reasons you will receive a Form 1099-NEC (form 1099-MISC for previous years) is if you were an independent business owner or performed independent contractor work in the prior year. In 1983, the IRS added an additional box to the existing Form 1099-MISC to allow businesses to report payments made to self-employed individuals who worked for them during the tax year.

This would have included any independent contractors, gig workers, or sole proprietors that had previously reported their payments on Box 7 on Form 1099-MISC for past years before 2020.

How Form 1099-MISC and Form 1099-NEC are Different?

Prior to 2020, Form 1099-MISC was used to report payments, including compensation, that were not made to an employee. Starting in the 2020 tax year, non-employee compensation is no longer reported on Form 1099-MISC. Employers must instead use Form 1099-NEC.

What is Non-Employee Compensation, and what to expect from Form 1099-NEC?

Non-employee compensation is defined as the money paid to an independent contractor for the work performed. Common examples include fees, commissions, prizes, and awards for services.

IRS Form 1099-NEC is used to report any compensation paid to a non-employee by a business. There are five sections on the 1099-NEC. For example, non-employee compensation would be reported in Box 1. Box 4 will report any Federal Income Tax collected. This box should be empty unless you have an alternative way to have the tax withheld. For example, box 5 would report any state income taxes withheld from compensation.

So I’m a business owner running a company. Do I need to file Form 1099-NEC for our staff?

All businesses are required to file Form 1099-NEC for compensation of someone other than a full-time employee when you follow the following conditions. You are paying someone who is not a full-time employee of yours, You are paying for services performed in trade or business (including public agencies and non-profit organizations), You are paying a person, a partnership, an inheritance, or, in some cases, a corporation, You paid at least $600 to an individual in the course of a tax year, and you are required to file Form 1099-NEC for everyone you have back-up tax-paying employees, even if the amount is under $600.

Form 1099-nec
Form 1099-nec

More About Tax Form 1099-NEC

IRS Form 1099-NEC is a tax form used to report compensation from non-employees for tax years 2020 and later. Prior to the 2020 tax year, the form used to report this type of income was 1099-MISC. Here’s what you need to know about the 1099-NEC, whether you are an independent contractor or employer.

If the taxpayer did not receive a required 1099 form on the income earned–even if the business did not file form 1099-NEC – the taxpayer can choose to report it as non-business income. If the form 1099-NEC is not received, taxpayers are still liable to pay taxes on any income earned throughout the tax year. Businesses are required to send out a form 1099-NEC to a taxpayer (other than a business) that received at least $600 or more in non-employment income during the tax year. The 1099-NEC form is used to report non-employment income, including dividends paid on stock holdings or income earned by an independent contractor.

Suppose you made any payments throughout the calendar year to either a small business or a self-employed individual (an individual). In that case, you are probably required to file a tax return with the IRS. If your business paid a person or LLC at least $600 in rental payments, court settlements, or prizes or awards over a year, you must file a 1099-MISC. If your business employs a contractor and pays him or her more than $600 during the year, you are responsible for filing the new Form 1099-NEC with the IRS and sending the contractor a copy.

You must also file Form 1099-NEC for anyone you have retained federal income taxes from under reserve tax rules for any amount, even if the amount is less than $600, for that amount. So, for example, if the business sent the IRS your Form 1099, but for whatever reason, you did not get it, the IRS sends you a letter (actually, a bill) saying that you owed taxes on your earnings.

The tax payor is responsible for filling out a form 1099 tax and sending it to the IRS and the contractor. If you work with a paycheck service like Gusto to pay your contractors, they will complete and send 1099 forms to each contractor. You will send a copy to your payee and one copy to the IRS on Form 1096. The forms are supposed to be sent to the recipient (to who you paid money) and to the IRS on or before Jan. 31.

That means that you will be sending your tax payments to the IRS four times per year, plus any applicable state and local revenue departments. In other words, if you paid anyone who was not an employee for a tax year at least $600, you must report it to the Internal Revenue Service (IRS) using Form 1099-NEC. In addition, you must file a 1099-NEC form with any non-employee for whom you paid $600 or more in a single tax year for services related to your business.

When making payments to a non-employee or other business, you should always ask the person you are paying to submit a W-9 form so that they will have the information needed to complete their tax forms. Independent contractors get 1099s while employees get W-2s. Businesses must report payments to independent contractors and self-employed individuals using the 1099-NEC form.

A taxpayer might receive a 1099 form if he or she received dividends, which are cash payments paid to investors for holding stock in a corporation.

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Category: Tax Deadlines, Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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Filing Self Employment Tax made Easy

Posted by admin on July 19, 2022
Last modified: July 25, 2022

Have an account with Fiverr or Upwork?

Do you have an account on Fiverr or Upwork, or are you working as an independent contractor? PriorTax self employment tax calculator allows you to enter your income, operating expenses, and incremental deductible expenses and provides net income, self-employment income, and self-employment tax assessment calculations. A freelance tax calculator can also help you to calculate your numbers accurately.

How to File My Self Employment Tax?

To calculate your tax rate, first, calculate your business’s net profit or net loss. When you begin filing with PriorTax, input the income or loss calculated in Schedule C or Schedule C-EZ to determine how much Social Security and Medicare taxes you would have to pay during the year. Once you have applied all of the above deductions to your net income and found your AGI, you must calculate your Social Security and Medicare taxes.

If you are filing self-employment tax, your Social Security tax rate is 12.4%, and Medicare tax is 2.9% on the same amounts of income, but you can deduct your employer’s contributions. So you will pay 6.2 percent, and your employer will pay 6.2 percent Social Security taxes on the first $128,400 of your covered salary.

The 0.9% Medicare tax rate applies to wages, compensation, and self employment income above the threshold for the tax year beginning December 31, 2012. For annual income over $200,000, you’ll pay an additional 0.9% Medicare tax for singles, $250,000 for joint marriage claims, and $125,000 for separate marriage claims. If you earn self-employment income from church activities, you are not required to pay self-employment tax on this amount unless your gross income exceeds $108.28 per year.

tax employment tax
tax employment tax

Getting means, you will need to know your total net self-employment income for the year, as this is what you will use to calculate your self-employment tax. The SE schedule is part of Form 1040, where you calculate your self-employment tax liability and pay the appropriate amount. If you submit Form 1040 or 1040-SR, Schedule C, you may be eligible to apply for an Earned Income Tax Credit (EITC). In addition, you can use the blank vouchers included on Form 1040-ES for postal estimated tax payments, or you can pay with PriorTax using the Federal Electronic Tax Payment System (EFTPS).

If you plan to make estimated quarterly tax payments, use Form 1040-ES Estimated Tax for Individuals, which contains a worksheet similar to Form 1040. Use IRS Form 1040-ES as a worksheet for determining estimated tax payments. Before determining your tax liability, determine your tax rate and consider whether separate city taxes are required in your area. As a self-employed person, you are generally responsible for your estimated quarterly taxes and annual return. In addition, you are responsible for federal and state taxes (if applicable) on your adjusted gross income.

Keeping Track of your Expenses for Self Employment Tax

It’s also important to keep track of your self-employment income and expenses throughout the year to be as prepared as possible when you pay your taxes.

Understanding how these taxes work can bring you significant financial savings as a business owner. The IRS has rules and advice for the self-employed, but many business owners choose to work with our CPA accountant or PriorTax tax professional to ensure they qualify. A qualified small business accountant can help you navigate S Corps. In addition, if you own your business, you can access tax credits and waivers.

While there are other over-the-line deductions, their effectiveness may not significantly impact your tax savings. However, because deductions reduce taxable income, they also reduce the amount of tax payable by lowering the tax bracket rather than by reducing actual taxes. Therefore, any deduction you request may reduce the amount of tax you owe, resulting in an overall reduction in your IRS bill. In this article, you’ll learn how we calculated the above estimate, how using deductions reduces this tax, and the next steps to improve your tax strategy.

If you’re earning a high income instead, read on to see if the 0.9% additional tax will impress you. For example, if you earned between $40,256 and $86,375 and reported your taxes as a sole proprietor, you would fall into the 22% tax bracket, meaning you would pay 22% of your income in income tax on top of the 15.3% self-employment tax. You are liable to pay the 15.3% tax if you do not have an employer.

Considering that the 7.65% deduction takes into account half of the employer’s FICA tax that the company would deduct if you were paid as an employee, you can deduct the employer-equivalent portion of SE tax to calculate your adjusted gross income. You pay just under 8% of your gross income in Social Security and Medicare taxes, and your employer pays this contribution. Everyone must submit Form 1040 or 1040 SR to report their Social Security and Medicare taxes. First, calculate your self-employment-adjusted gross income for the year.

All wages, tips, and net earnings combined for the current year are subject to the 2.9% Medicare Self-Employment Tax, Social Security Tax, or Railroad Retirement Tax (Tier 1) in any combination. If your wages and tips are subject to Social Security tax, Railroad Retirement Tier 1 portion, or both, and are at least $137,700, do not pay the 12.4% self-employment tax for social security on any of your net earnings. Section 2042 of the Small Business Jobs Act allows for deducting health insurance costs for self-employed workers for income tax purposes.

What is a Self-Employment Tax? Learn more about how the self-employment tax works.

The self-employment tax is basically your share of your federal insurance contribution act (FICA) taxes. For employees who get W-2s, the FICA tax comes straight from their paychecks. W-2 employees pay 7.65 percent on wages up to $137,700 for Social Security and Medicare (FICA), and their employer matches that payroll tax, so the total pay for each employee for FICA is 15.3 percent. You are responsible for the full 15.3% tax as an independent business owner.

There are many benefits to being a self-employed person. But, things can certainly get complicated when it comes to filing taxes. The good news is that when filing self employment tax youo do not need to be a pro at filing your returns. But, here are some basics on self-employed taxes that will get you started.

Do I have to pay the federal taxes, too?

The short answer is that you do. Just like W-2 employees pay federal tax on their incomes, as well as FICA, self-employed workers are required to pay the Self-Employment Tax as well as the Federal Tax.

Whether working as a freelancer full-time or doing some side projects to make extra money, you will have to file a Form 1040, a U.S. Federal income tax return, if you make $400 or more through self-employment. This is because your business income would be reported on Schedule C, while your self-employment taxes would be calculated using Schedule SE. Learn about the various forms of self-employment taxes.

Can I deduct business expenses when I am a sole proprietor?.

As a self-employed employee, there are some expenses that you can write off when filing an income tax return. For instance, you can write off some of these expenses if you have a home office.

You also might have to travel to do your work. In this case, you could be deducted a specific amount of mileage. In addition, you could deduct other business expenses like promotional costs, business insurance, rent, tuition, meals, etc. It is important to look up the required guidelines to find out what qualifies.

PriorTax for filing self-employment tax and using its self-employment tax calculator

Knowing what taxes you are liable for as a self-employed employee is a lot to handle – especially when you are busy finding new businesses, maintaining product quality, and all that goes into working for yourself. That is all the more reason to use PriorTax Self-Employed. PriorTax makes it easy to fill out forms, calculate taxes, and claim all of the tax deductions and credits you deserve- for a fraction of competitors’ price. Start using PriorTax today.

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Category: Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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Previous Years Taxes Electronically Online

Posted by admin on July 8, 2022
Last modified: July 11, 2022

How to file previous years taxes online?

You can file your previous years taxes and tax returns with PriorTax for up to three years after you are due. Simply sign in to your account or create a new one to get started. Then, click the “tax year” tab at the center of the top main menu on the home page. Select the year you want to create, then click Start Now. From there, you will input income and expense information for the year you are filing.

You can choose to e-file an electronic return for up to 3 prior years with PriorTax, or you will have to print out and mail a hard copy of your form. This is because the IRS does not support electronic filing of previous years returns. When you submit your previous years taxes using PriorTax, you will receive the proper forms and instructions for the particular year you are filing.

previous years taxes
previous years taxes

How many years can you e-file back previous years taxes electronically? 

You can send your returns electronically for three years at PriorTax. That means that, in 2023, you could file a tax return for 2022 using PriorTax, and also be able to file your taxes from 2019, 2020, and 2021. Then, you can use paper filing for additional back taxes if needed.

You can usually find forms for earlier years on the IRS’s web site. However, the IRS generally does not examine returns more than six years late. In other words, your last six years worth of tax returns are generally the only ones that will be considered for audit. You can learn more about how to prepare a past-year return using PriorTax here.

Can I still get my previous years taxes to refund if I’m filing back prior taxes?

Yes, as long as you filed your return within three years after your original filing date. This deadline applies even for tax credits such as the Earned Income Tax Credit (EITC). Tax credits and deductions can greatly reduce your tax burden, so it is in your best interest to file during this three-year window to receive your earned tax credits and refund. If you have a previous-year return you are still due, you can start today with PriorTax, for free.

What if I don’t have receipts or records for previous years taxes?

Many employers maintain electronic records of employees W-2s, so it is possible you can obtain copies of your earnings information on the Internet. You may also see what forms your employer has filed with the IRS by asking for a tax transcript. You can download a copy of your prior years transcript from the IRS’s website. If you do, you can ask clients if they can supply records about what they paid you. And look at credit card statements or bank statements to see proof of expenses.

What else do you need to you when filing previous years taxes online?

If you want information from your previous years tax return, use Get Transcripts to request your return or bill transcript. In addition, if you have lost any of your tax documents from the past 10 years, you may request a copy from the IRS by filing form 4506-T, Requesting a Tax Return Transcript.

To file a tax return with the past returns, you will need your W-2s or 1099 forms that you received in those tax years to report your income.

Find that you made a mistake or forgot to include an income, a deduction, or another credit on your original return. You will have to file Form IL-1040-X, an amended individual income tax return. If you want to file your IL-1040 via MyTax Illinois, you must use your account to do so. Suppose you are self-employed and are not filing federal income taxes. In that case, any self-employment income you make is not reported to Social Security, and you will not get credit for Social Security retirement or disability benefits.

For example, Maine Revenue Service is available for filing an individual income tax return (Form 1040ME), including a credit to help pay property taxes like in Maine. This is the self-service option, purchasing tax preparation software, either at a retail store or online, preparing your return, and pressing submit for electronic filing. You may use a tax preparer, software approved by the state of Oregon, or free electronic filing services.

See if you qualify for filing previous years taxes with PriorTax

If you have used PriorTax in the past, you already know how to prepare and file your taxes online. The IRS Free File program can give you online tax software from a number of tax prep companies, including PriorTax.

If you do not qualify for online filing options, you can still electronically file your returns using PriorTax. You can also e-file using approved commercially available software programs or have an authorized tax professional prepare and file your return. If you had a tax professional prepare your return, you likely authorized that person to e-file for you.

Be sure the e-filing supports the forms you wish to file. Please be sure that the company providing the software supports all the forms and schedules you will need to electronically file your individual income tax return.

Under this arrangement, taxpayers may file federal income tax returns. Taxpayers may e-file either through their own computer or a tax preparer, an approved electronic return originator (ERO). While many taxpayers still mail their returns, e-filing, typically using an online tax preparation service, is becoming increasingly popular. As a result, the IRS anticipates that this year, the number of individuals efile for taxes will increase to record levels.

To better verify taxpayer identities and to help detect refund scams, we are now asking for identification information to ensure individuals tax returns.

If you are due a refund due to a tax lien or estimated tax, you have until the 3 years after your due date for filing the return to claim the refund. If you cannot pay all the taxes due by the due date, just file your return and pay what you can. If you missed filing a return in 2021 to claim the missed stimulus payments – just the stimulus payments checks – you will need to re-file taxes, which cannot efile electronically after Oct. 15, 2022.

File any taxes you are owed, whether you can make the payment or not. If you cannot fulfill your filing requirements, you are not required to file any returns from prior years. However, if you filed your return solely for that tax, you might choose to file Schedule H on its own.

Within 24 hours of your filing, the IRS will mail the proof of receipt to the software company you used. Once completed, the Federal and State returns are signed using either the Federal PIN number (or Form EF in Oregon). Filing with PriorTax to efile the previous years taxes returns sends a confirmation message saying the Tax Office received and accepted your return.

Prepare and efile your Federal and State returns electronically with PriorTax before tax day, so you will not have to do the difficult work of calculating taxes and mailing the information through the mail. During any given current tax season or calendar year, an on-time return will be prepared and efile electronically for the prior calendar year.

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Category: Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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