Tax News Blog

Tax-Deductible Donations to Ukraine

Posted by admin on May 11, 2022
Last modified: May 11, 2022

Maximize Tax Return through tax deductible donations to Ukraine

As the War in Ukraine escalates, appeals have gone out for financial and material support for the refugees who have fled to nearby countries. In response, many people are making generous donations to U.S. charities. To be tax deductible donations, these donations need to follow the rules for contributions to a U.S.-based 501(c)(3) charity for use abroad and gifts to a foreign charity. The Internal Revenue Service publishes a list of all eligible 501(c)(3) organizations on Publication 78. Unfortunately, direct donations to a foreign charity or donations made to a domestic charity that then hands over the funds to a foreign charity are not tax deductible donations to Ukraine.

Unfortunately, there are restrictions when it comes to tax deductible donations to Ukraine charities outside of the U.S. One way around these restrictions is to donate to Friends organizations in the U.S. that raise tax deductible contributions. Many Friends organizations support foreign colleges or universities, and they all have the same downside: you can’t earmark your donation for a specific foreign charity.

Another option is through International Donor Advised Fund. These are funds set up worldwide by certain foundations, mutual funds, and brokerage firms. They have one restriction in common: they can’t give specifically to foreign charities. That restriction is lifted with some International DAF’s like the United Way Worldwide. It’s important that you make sure their screening process for foreign charities is sufficient if you’re setting up a DAF.

The third option for those looking to make a significant gift is to set up a private foundation. The biggest downside of a private foundation is an excise tax on foreign grants. It’s easy to set up a private foundation if you are in the very high income bracket and want ultimate control over where your donations go to Ukraine. If the war ends quickly or drags on, there will be human costs outside of Ukraine and inside. You can create a tax deductible donation to Ukraine and not have to do too much work to help this cause.

New tax preferences to support Ukraine

The Ministry of Finance of Ukraine has come up with some new tax changes to help victims of the ongoing armed conflict. The amendments aim to subsidize the production and purchase cost of goods and rights. Of which are then donations for counteracting the effects of the armed conflict in Ukraine.

The proposed changes include, amongst other things, the deduction of expenses incurred for production or purchase price of goods and rights that are subject to a donation against the effects of an armed conflict on Ukrainian territory made during a period from 24 February to 31 December 2022.

tax deductible donations
tax deductible donations

Here are 4 tax deductions allowed under Ukrainian tax law

Documented tax deductible donations and givings

A registered resident taxpayer may deduct a limited amount of documented expenses for the expenses mentioned below, so long as the total amount does not exceed their annual taxable income. Any amounts not deducted from a taxpayer’s annual income cannot be carried forward to be deducted from future year’s profits. Therefore, all expenses should be properly documented.

Charitable Contributions for Tax Deduction in Ukraine

Caring for others is important. By contributing to registered Ukrainian charities and not-for-profit organizations, you can deduct the money you donate from your taxable income. Unfortunately, you can only deduct a maximum of 4% of your annual taxable income.

Education Expenses for Tax Deduction in Ukraine

Expenses are incurred in the pursuit of higher education or in the pursuit of academic degrees. Parents who educate their children in Ukrainian institutions are eligible for tax deductions. The total amount of the deduction may not exceed 100% of annual general taxable income calculated as a salary.

Insurance Premiums for Tax Deduction in Ukraine

For 2022, the deductible amount on voluntary long-term life insurance or non-state pension insurance for the benefit of a taxpayer and his or her immediate family members has limits. For example spouse, parents, or children is limited to UAH 3,480 per month for the taxpayer. Although this limit may be higher if there are other persons insured from the same policy. The limit for payment related to the taxpayer’s immediate family members is half of the above monthly limit.

Mortgage Interest Expenses for Tax Deduction in Ukraine

Kudos if you’ve read this far. I wanted to make it as clear as possible that I’m not trying to talk down to everyone here. Unfortunately, not everyone will have time to read through full docs, so let’s keep it short and with less mumbo jumbo whenever possible.

Charitable Donations Tax Deductible and Gift Tax Deduction

Posted by admin on May 4, 2022
Last modified: May 4, 2022

What to Know about the Gift Tax Deduction and Charitable Donations Tax Deductible and Under the Jobs Act and Tax Cuts

Here are some important things to know about taking a deduction for charitable gifts. Giving to charity can be one of the most rewarding ways of giving, and with the rise in the standard deduction, more people will be able to take advantage of this new law change.

The itemized deduction is being limited by the Tax Cuts and Jobs Act and you may want to consider doing the same. However, it may be more beneficial for some people to establish that a standard deduction will be taken instead. But remember, this new policy is only on the books until 2025, so you’ll likely want to check back in with an accountant in a couple of years.

The Tax Cuts and Jobs Act was a big change for tax deductions, but there is a good side: charitable donations are tax deductible up to 60% of AGI. The new law provides lots of incentives to give to charity, and it’s likely that you’ll choose to take advantage of the increased deduction. Here are some things you should know when donating gifts to charity.

donations tax deductible
donations tax deductible

To Maximize Tax Return from Charitable Donations can be itemized Tax Deductions.

According to the Tax Cuts and Jobs Act, the standard deduction increases from $6,350 ($12,700 married filing jointly) to $12,000 ($24,000 married filing jointly). So, for many taxpayers – maybe you – it will make more sense to take the standard deduction than itemize with all of these changes. But don’t worry about it! If you input all your itemized deductions into e-file, TaxSlayer will automatically choose the best choice for you.

Not every donation counts towards your deduction to Maximize your Tax Return

A lot of people don’t realize this, but not all donations will count towards your donations tax deductible.

There are very specific guidelines to consider when it comes to deductions, and not every donation counts. Here are some guidelines:

-If you donate anything other than cash, you need to determine the Fair Market Value of those items.

– You cannot deduct for food items collected in a drive or given to a food pantry.

– If you donate items such as clothing or certain household supplies to an charitable organizations, you may take a deduction for the value of those things if they are in good, used condition, or better.

– If you participate in a charity run, don’t rush to deduct the cost of the race, travel, and accommodations. Your participation probably won’t count as a charitable donation unless it provides other tangible benefits to the charity.

Plan ahead for Charitable Donations to Maximize your Tax Return.

If you usually use the standard deduction, you can donate to charity and get a tax break. But if you make a significant donation this year, consider saving up that amount throughout the year. Then plan on donating it during a year when you also file a tax return. Overall with hopes to get full advantage of the 60% threshold deduction.

You may not be able to deduct your donations if you don’t itemize them. When taking the standard tax deduction, you can still totally donate to charity — even if it means you won’t get the tax break. But if you usually make a cash donation to your favorite organization, consider saving up your contribution amount over time. Then plan to make a large donation when you also itemize your deductions for a year. This could allow you to take advantage of the 60% threshold.

What if I don’t itemize my deductions? You don’t have to! You still have options! If you usually take the standard deduction and don’t itemize deductions in any given year, that doesn’t mean you can’t donate to charity. Keep in mind that donating means giving something from your own funds.

You need proof of the gift to claim it as an itemized tax deductible on your taxes. Therefore, it’s important to document your charitable giving for your records. If it’s worth $250 or more, you’ll have to ask for a document from the charitable organization stating what the gift was worth. This isn’t always necessary, but it is required when the gift is worth either $250 or more and, if it’s not worth $250, there are all sorts of other conditions which apply, so consult a tax accountant before moving forward with this.

Making a qualifying Charitable Donations for Tax Deductible is easy.

The IRS has a handy-dandy tool that determines what your donations are worth, so all you need to do is enter in the total amount of your gift, and it will tell you the value. For example, if your gift was worth $250 or more, you’ll need to find paperwork from the organization stating the gift’s fair market value and whether or not you received any goods or services in return.

It used to be that you could only deduct up to 50% of your Adjusted Gross Income (AGI) for charitable donations. This year, the limit has increased to 60%. This change is a great incentive to donate to charity and you might want to take advantage of this increased limit.

Tax reform eliminated several tax deductible, but the standard deduction was almost doubled. What this translates to many of taxpayers is that it’s better for them to take the standard deduction instead of itemizing until 2025. If you’re not certain on which method will maximize your tax, don’t worry. You’ll input your itemized deductions when you e-file your taxes, and PriorTax will automatically choose the process that will give you the biggest refund.

Tax Year 2021 Dependent Tax Credits and Deductions

Posted by admin on April 25, 2022
Last modified: April 25, 2022

Federal tax breaks for taxpayers who claim dependents, in short dependent tax credits and deductions are available to take advantage. These dependent tax credits or breaks may reduce the amount of federal income tax owed, and some even increase the refund. PriorTax has helped me find all the dependent tax credits and deductions that might be applicable to my situation. There is no limit to the number of dependents you can claim, but each one must meet IRS requirements to qualify.

Tax Breaks for Dependents

The child tax credit is a federal break given to taxpayers who claim dependents on their return. With the CTC, you may be eligible for up to $3,600 in savings per qualifying dependent. Again, there is no limit to the number of children you can claim, but each one must meet IRS requirements in order to qualify for this credit. If your dependent is over the age of 17 or doesn’t qualify for other reasons, you may still be eligible for a tax credit worth $500. This dependent tax credit is not refundable.

dependent tax credit
dependent tax credit

Child Care Tax Credit and Dependent Tax Credit

One of the many credits and deductions that is often overlooked is the Child and Dependent Care Tax Credit. This credit is available to parents who don’t stay at home to take care of the kids. They may be eligible for a tax credit worth up to 50% of their qualifying expenses.

Earned Income Tax Credit (EITC)

The EITC is a tax benefit for taxpayers with low- to moderate-income levels. You must have earned income to claim the credit. The amount of credit you could get depends on your AGI and the number of dependents you have. For example, a married couple earning less than $57,414 and with three dependents can qualify for up to $6,728 in tax credit. Watch out for taxes when you file your return since the IRS may require you to repay some of the EITC you were given if you had too much income or didn’t have any qualifying children.

Education Tax Credits

Education tax credit is generally a refundable income tax credit that can be claimed by certain taxpayers who, in the preceding year, paid qualified education expenses of higher education. The American Opportunity Tax Credit (AOTC) is worth up to $2,500 per year and is refundable for up to $1,000 for students who qualify. There are also two other credits for college education: The Lifetime Learning Credit and the Tuition and Fees Deduction. The Lifetime Learning Credit is worth up to $2,000 and may be used by those who don’t qualify for the AOTC. The Tuition and Fees Deduction is worth up to $4,000 and only applies to undergraduate coursework.

Student Loan Interest Deduction

The IRS provides relief for qualified student loan interest. But what is an eligible student loan, and what type of relief can it get? Let’s find out. Student loans are not tax-deductible when repaying student loans are a hassle, or so I’ve heard. Luckily, there is a way for you to deduct the interest you’ve paid on them. If your dependent is a college student and you meet other requirements, then you can claim up to $2,500 for the interest paid. If a student loan is qualified, interest paid on it can be in addition to one of the education credits.

Health Insurance Premium Tax Deduction

If you’re self employed and paying the insurance, you can deduct your health insurance premiums under section 280E US Internal Revenue Code on your individual income tax return. Health insurance premiums count as an itemized tax deduction, which means that they reduce the amount of taxable income. The dependent tax deduction can’t exceed the amount of income after all required deductions have been made.

Filing Taxes When Unemployed

Posted by admin on April 6, 2022
Last modified: April 6, 2022

If you aren’t earning income, there’s a very good chance you can skip filing taxes when unemployed and for filing tax returns.

However, there are exceptions to this rule—and it’s worth trying out the IRS Help. In December 2020, the IRS provided guidance to help taxpayers better understand what types of income may be taxable when their form W-2 is not issued because they have lost their job or are not working. In May 2021, the IRS provided guidance on how to amend a prior tax year return (filed before the end of 2020) for those individuals whose form W-2 is not issued because it was the first time filing taxes they were unemployed.

If you want more information about how COVID-19 impacts your taxes, PriorTax tax experts can help you navigate these complex tax laws, including both current year and prior year tax filings.

filing tax when unemployed
filing tax when unemployed

How to Filing Taxes When Unemployed

The IRS published guidance in December 2020 on how to file taxes if your form W-2 is missing because you have lost your job or have been laid off due to COVID-19 or by other circumstances. In May 2021, the IRS released further guidance on how individuals filing taxes when unemployed for the first time without a form W-2 should amend their previous year returns in cases where it was the first time they were unemployed. The complexity of this rule and its multiple elements shows why tax preparation services are gaining popularity and are growing quickly in market share and usage as individuals prepare their taxes. Reach out to the PriorTax support team, and our tax experts will help you navigate the process of filing taxes.

Just as there are income thresholds for declaring unemployment, there are tax thresholds for self-employment. So for example, if you are unemployed but receiving Social Security benefits, you would still need to file a tax return. You don’t have to pay Social Security and Medicare taxes on unemployment benefits, but you must report them as income on your tax return.

Federal Tax for Filing Taxes When unemployed

In addition to paying taxes on unemployment benefits, if you worked part of the year before you lost your job, you may also be liable to pay federal income tax on that wage. Whether you owe additional tax on this wage will depend on the choice you made on your W-4 form and whether your former employer withheld sufficient federal income tax (and state income tax, if applicable) from the payroll. The amount you pay will depend on your tax bracket and your taxable income.

Depending on the amount of your unemployment benefits and your other sources of income, you may choose to make estimated quarterly payments and withholding if your total withholding is not enough to cover the income tax you owe. Another option is to pre-estimate the quarterly payment of any taxes you think you owe your benefits. Then, you can estimate your taxes and estimate payments on a quarterly basis to increase your chances of getting an unemployment tax refund or at least reduce the risk of having to pay by April 15.

Filing Taxes When Unemployed for Unemployment Benefits

If you qualify for unemployment benefits during the tax year, that income will also be part of your unemployment tax refund. The total amount of income you receive, including unemployment benefits and your tax return status, will determine whether you need to file a tax return. If you’re filing an unemployed tax return this year, your family’s income will come into play.

If you earned or received income during the calendar year, you will most likely need to file a tax return. There are some exceptions, such as those with income below the gross income threshold, but in most cases, yes, you must file a tax return. You may also have to pay additional tax on the income you earn if you do not withhold enough tax.

When you receive wages from work, you pay taxes because you withhold wages. Employers generally withhold federal and state taxes from wages based on how much you earned and the information you provided on Form(s) W-4.

It is possible that you should pay more taxes in addition to your unemployment benefits if wages for work or jobs worked have not been sufficiently deducted from each paycheck in accordance with your choice in W4. In the case you have been working at a higher salary for most of the year, you will probably have to pay taxes. If you haven’t paid enough taxes, you may end up paying tax when you file your return. If you do not pay within a year, the IRS expects you to pay the tax you owe in full by the filing date, and you may face a penalty for non-payment.

Timeline for Filing Taxes When Unemployed

You have until January 15 to pay your estimated tax payments on all benefits you received between September and December of the previous financial year. If you paid any state or federal income tax on unemployment benefits you received in 2020, you might be eligible for a refund. For these states, you are out of luck; you owed state income tax on your unemployment benefit, and you are not getting a refund of the state income tax you paid. If you live in one of these states and filed after a Congressional decision and erroneously excluded unemployment benefits from income, please check if you are required to file an amended state tax return and pay more state taxes.

Withholding Tax From Paycheck

You may be eligible to withhold income tax from your unemployment benefit, so you don’t have to pay the total amount when you file your tax return, but it won’t happen automatically. Can choose to withhold income tax from unemployment benefits, if necessary, to avoid unpleasant surprises when you file your return next year. If you also pay your taxes quarterly on your own instead of getting them from every unemployment benefit. Withholding federal taxes means that a fixed 10 percent of your unemployment benefits will need to pay federal taxes, similar to a withholding tax on a regular paycheck.

As an employee, a portion of your salary in many cases automatically deducted from federal income tax and Social Security taxes. When your employer withholds taxes from your paycheck, the payroll department calculates your withholding tax as if you were earning the same amount all year round. The payout means you must include the benefit on your tax return, even though the money was technically for unemployment in 2020. When you return your unemployment benefits next year, you will not be able to receive a tax credit unless next year’s repayment is more than $3,000.

In case you paid more than $3,000 in unemployment benefits in 2020 that you included in your gross income the previous year, see Pubs Reimbursement. If you are among the record holders, it is important to know that you will likely have to pay taxes in 2021 on the unemployment benefits you received in 2020. Unlike stimulus checks, on which you don’t have to pay taxes.. unemployment benefits are taxable income and must be reported on your 2021 return.

While the U.S. changed that rule in 2020 in response to COVID-19, those who increased their unemployment income in 2021 should expect to pay all taxes for these benefits. In the fiscal year 2020 (2021 tax return), if your Adjusted Gross Income (AGI) is less than $150,000 in the fiscal year 2020.

Free Tax Advice from the Tax Experts

Please reach out to our Tax Experts for free advice. In addition, we provide free support for simple and easy filing taxes when unemployed.

Self Employed Tax Forms, E-file and Calculator

Posted by admin on March 14, 2022
Last modified: March 14, 2022

Tax Forms for Filing Self Employed Taxes and How to use Self Employed Tax Calculator

Are you one of the many people across the country who has recently left full-time employment for self employment or taken on a side-job in the past year? Whether your new self employment is now your only source of income or an added boost to your paychecks, there are a few things that may look a bit different when you file your taxes. So, what tax forms and tax regulations should every self employed taxpayer be aware of?

First off when filing self employed tax, who does the IRS consider self employed?

According to the IRS, there are three broad categories of people consider self employed:

  • if you work in a trade or business as a sole proprietor or an independent contractor
  • when you are a member of a partnership that works in a trade or business
  • if you are in business for yourself. (Both full-time and part-time businesses includes here)

When does a self employed person need to file a tax return?

If your net earnings from your self employment are $400 or more, you will need to file a federal income tax return. It is also a good idea to file a return if you are eligible for any of the following credits, including:

  • Earned Income Credit,
  • Refundable Child Tax Credit or Additional Child Tax Credit,
  • American Opportunity Credit,
  • Credit for Federal Tax on Fuels,
  • Premium Tax Credit,
  • Health Coverage Tax Credit,
  • Recovery Rebate Credit,
  • Credits for Sick and Family Leave, or
  • Child and Dependent Care Credit.
Self Employed Tax
Self Employed Tax

What are my self employed taxes obligation?

When you’re self employed, the primary tax obligations are filing an annual tax return and making estimated tax payments to the IRS quarterly. The IRS expects self employed individuals to pay estimated tax payments quarterly if they expect to owe $1,000 or more in taxes. You need to file an annual tax return when your net earnings from your self employment are $400 or more.

When self employed, you are typically responsible for self employment-specific taxes in addition to income tax. These self employment-specific taxes are social security and medicare tax. Which can withheld from your wages if you were an employee. Overall the tax rate is 15.3%: 12.4% for social security and 2.9% for medicare. 

Consider using a self employed tax calculator to get a sense of your tax bill and determine how these regulations relate to your situation. Form 1040-ES, Estimated Tax for Individuals, has a worksheet to help determine your obligations. You can also refer to the IRS’s Pub. 334, Tax Guide for Small Business (For Individuals Who use Schedule C) for further details on figuring your net profit/loss and resulting tax obligations. These and all other tax forms and publications are available as a PDF on the IRS website.

If over the course of the year, your total self employment business expenses are more than your self employment earned income, you aren’t making a profit, and you won’t owe taxes on your self employment income.

What are quarterly taxes, and when are quarterly taxes due?

Quarterly taxes are payments of your estimated tax liability that you pay to the IRS spread out through the year. It is equivalent to withheld taxes on a paycheck for jobs where you receive a W-2. You can use Form 104-ES, Estimated Tax for Individuals, to figure your estimated tax, which will take into account your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year.

Quarterly tax payments to the IRS are due as follows:

  • For January 1 to March 31: April 15
  • In case for April 1 to May 31: June 15
  • For June 1 to August 31: September 15
  • and September 1 to December 31: January 15 of the following year

The payment due dates move to the next business day when the designated date falls on a Saturday, Sunday, or legal holiday.

What special tax forms should I be aware of when self employed?

  • Tax Form 1099-NEC and 1099-MISC: Since 2020, Tax Form 1099-NEC has been used to report independent contract income (previously included on Tax Form 1099-MISC). You should receive a 1099-NEC form from clients who paid you $600 or more in a year.
  • Tax Form 1099-K: You may receive a Tax Form 1099-K from payment processors, such as PayPal, Venmo, or other third-party networks. The threshold for Form 1099-K filing requirements changes from 2022, so you may begin receiving them when you didn’t before starting in 2023.
  • Tax Form 1040-ES: This form is used to figure out and pay your estimated tax. It includes a worksheet to calculate your estimated tax obligations.
  • Tax Form W-9: If you are paid $600 or more by a client, they may ask you to complete a Tax Form W-9, which they will use to prepare your 1099 form.

Need a self employed tax calculator?

Make use of the comprehensive free tax calculators on the PriorTax.com website to get a sense of the tax refund or outstanding tax bill you can expect. If you were self employed in 2021, 2020, 2019 or 2018, the sections most relevant as someone who was self employed using the tax calculator would be the “Business” section under “Income” and the “Payments” section under “Deductions and Credits.”

What information do you need as someone who was self employed when using the tax calculator?

If you were self employed for part or all of tax year 2021, 2020, 2019, or 2018, when using the Tax Calculator on Free Tax Calculator at PriorTax. Go to the most relevant sections to your self employment would be the “Business” section under “Income” and the “Deductions and Credits” section under “Payments.”

The “Business” section is where you will enter any income you earned from self employment and your own business(es). In this section, you can enter your net business income. Your gross income from self employment minus your business expenses will be the number you use here. You are also able to note in this section if you have an income or a loss from K-1 tax forms. As a member of a partnership.

The “Payments” section is where you will enter any pre-payment of estimated federal or state income taxes. This includes payments for social security and Medicare taxes and income tax. Which you may have made when filing quarterly estimated tax payments to the IRS.

Looking for more tax tips and information to help you this tax season? Keep PriorTax.com bookmarked to keep up to date with current and prior-year tax news on our Tax News Blog and learn more about our full range of tax filing services.

Easy Tax Filing

Posted by admin on March 7, 2022
Last modified: March 7, 2022

Easy Free Tax Filing and Simple Tax Filing on PriorTax.com

When tax documents start to appear in our inboxes and pile up in our mailboxes, that can only mean one thing – the 2022 tax season is upon us. The 2022 tax filing season began on January 24th, when the IRS began to accept 2021 tax returns, so what can you do to ensure a simple and easy tax filing season this year through PriorTax.com?

What to prep in advance for easy tax filing and simple tax filing with PriorTax.com ?

PriorTax simplifies your tax filing, making easy tax filing possible. Otherwise you’ll want to have all of the relevant documents close to hand – either hard copies or PDFs will work, whichever is easier for you. So, do be sure to save all of those documents that you have been receiving via email and regular mail.

Remember that the primary purpose of gathering up all these documents is to ensure that you have all of your income information for 2021 to hand in order to accurately prepare your tax returns. This helps to minimize your tax bill and maximize your tax refund if you are owed one.

easy tax filing
easy tax filing

Depending on your financial and employment situation, your relevant documents should include two broad categories:

  • W-2 Forms that will detail information concerning your salaries, wages, and tips that you earn as an employee
  • 10099 Forms that will detail information concerning other sources of income. These are self-employment income and earnings like interest or dividends from banking and investment accounts

In addition to paperwork and information related to your income and expenses last year..

You’ll want to make sure that you have the following personal information:

  • Social Security and/or Taxpayer Identification Numbers as well as Birthdates for yourself, your spouse, and, if you have any, your dependents
  • Your Bank Account Number and Routing Number to receive your tax refund via direct deposit. (The IRS recommends filing electronically with direct deposit details to ensure an accurate return and quick refund processing.)

Easy Free Tax Filing for Single Filers Under 21

For those under 21 years old who need to prepare tax returns and are either single filers or married and filing separately, PriorTax.com offers a Free Basic Package for current year filing. This package can be an excellent choice for those who may be new to needing to file their tax return. Whether because you recently started your first job and/or started college.

The Basic Package uses PriorTax.com’s easy-to-use web application to help guide you through the process of submitting information about your

  • Wages,
  • Unemployment,
  • Interest,
  • and/or Dividends.

In addition, if applicable, this package can help you claim the Education Credit and/or Earned Income Credit (for filers without dependents). This ensures that you take advantage of credits available to you. This will help minimize your tax bill and maximize any tax refund you might receive.

If you’re currently in higher education, the Education Credit can help to reduce your tax bill. As an added benefit, if claiming the credit reduces your tax bill to less than zero, you may receive a refund on any taxes that were withheld from your paychecks in 2021.

You can claim an Education Credit when filing if you fulfill these requirements:

  • You or the 3rd party (family or friends) pay expenses related to your education (tuition, mandatory enrollment fees, and required course materials)
  • Enrolled at an eligible educational institution
  • The eligible student is listed on your tax return

The IRS doesn’t allow you to claim an Education Credit if you are listed as a dependent on someone else’s tax return. (Although they may be eligible to claim the credit on their return). College students can benefit from this credit by preparing and filing their tax return as single filers. PriorTax has a process that the Basic Package web application was designed to guide you through. 

More Simple Free tax filing options when you have easy tax filing obligations.

Even if your financial situation doesn’t allow you to take advantage of PriorTax.com’s Basic Package, don’t worry. There are still free tax filing options available to you. Visit the IRS’s website to take advantage of two options from the IRS Free File program.

If your adjusted gross income in 2021 was $73,000 or less, you could qualify for free guided tax preparation offers that will help you to prepare and file your federal tax return. And sometimes your state tax return too, for free. Use the PriorTax Customer Service to either inquire this year’s offers or to answer a few questions. IRS also provides Online Lookup Tool to receive a list of relevant offers. (Please note, with complicated IRS filing remember to create your account by accessing the IRS Free File provider’s website from the IRS website. This is to take advantage of the IRS Free File offer. The Free File program and commercial tax preparation offers from these providers are separate and not interchangeable.)

If your adjusted gross income in 2021 was more than $73,000 or you prefer to fill out and file taxes yourself, you can use the IRS’ Free File Fillable Forms. This option is available to all income levels. It provides free electronic forms for you to file out and file yourself. However, you’ll need to be comfortable using IRS forms, instructions, and publications as this option won’t offer any tax preparation guidance and only limited calculations.

PriorTax Top Tax Professional Support and Tax Packages for Easy Tax Filing

Looking for more assistance with your tax returns than Free File Fillable Forms can provide? If you don’t qualify for an IRS Free File Offer, consider one of the affordable and easy-to-use tax filing options at PriorTax.com. Like those free tax filing options, the easy-to-use web application works by asking you to answer simple questions regarding your work and financial situation and doing all the math for you. In addition to several different tiers of packages, you can either choose Complete Additional Services as a package. Or individually select additional services so that you only pay for what you need.

This tax season, visit PriorTax.com for easy tax filing and essential tax tips. We’re here to help with a range of resources and services to help you file your taxes. We can help whether you’re a student with simple tax filing obligations in need of our Basic Package to claim education credits on your return this year or you have a wide portfolio of business. It can also be personal income that could benefit from our Platinum Package and for any tax situation in between.

Free Tax Filing

Posted by admin on February 28, 2022
Last modified: February 28, 2022

PriorTax Free Online Tax Filing and Free Tax Calculator

As preparations begin for the IRS to start accepting our 2021 tax returns and the 2022 tax season gets underway, we’re here to help you navigate your options to find the best free tax filing and online tax filing options for your needs at PriorTax

Why is online tax filing a good option?

The IRS has already put out advice that they encourage all taxpayers and tax professionals to opt for online tax filing this year because of staffing issues. They warn that paper tax returns could take several additional weeks to process. This is additional weeks beyond the estimated 3-week turnaround they quote as typical for getting tax refunds to American taxpayers opting for online tax filing with E-File.

Opt for free online tax filing with E-File as the faster, easier, and more accurate option. You’ll be able to benefit from built-in accuracy checks, faster acknowledgments of receipt (in near real-time), and faster processing times of your tax returns.

free tax filing 2021
free tax filing 2021

I owe the IRS money for my 2021 taxes. Why is online tax filing a good option for me too?

Doesn’t online tax filing just mean that the money will disappear from my account faster?

Whether you owe the IRS money or the IRS owes you money, all taxpayers can benefit from the addition of accuracy checks and more timely acknowledgment of receipt for their returns. 

If you have a tax bill this year and owe the IRS money, you can take advantage of EFW. Electronic Funds Withdrawal (EFW) is for when using an online tax filing option with E-File. EFW allows scheduling the withdrawal of funds from your bank account. As a result, you can schedule your payments for any future date up to the tax return deadline.

Want to know if you’re due a tax refund when you file your taxes this year?

On the PriorTax.com website, you can take advantage of our comprehensive and free tax calculator. And see what’s in store for you this tax season. Visit today to use our free tax calculator to calculate your tax bill or the refund you can expect from the IRS this year.

In addition to our free tax calculator for the 2021 tax year, we offer a full suite of free tax calculators. Our Free tax calculator includes prior year taxes. You can find a free tax calculator for each prior tax year going back to 2011.

Take advantage of our prior year free tax calculators before online tax filing in 2022, and you won’t be going into the online tax filing process blind this year.

Where can I get reliable information about free tax filing options for the 2022 tax season?

If you need to file your taxes this year, the IRS website is an excellent place to start. On their website, they maintain pages on IRS Free File where you can find free tax filing options to prepare and then file your federal taxes for free. For simpler filing process is done more easily and streamlined with PriorTax for maximum tax return with the best customer service.

For taxpayers with an Adjusted Gross Income (AGI) of $73,000 or less, the IRS offers a range of Free File Online Offers in conjunction with external providers.

This free online tax filing option allows taxpayers to prepare their 2021 federal tax returns with commercial tax preparation companies for free. These are guided preparation tools where you answer questions about your income and financial situation in 2021, and your tax return will be prepared for you. You can visit the IRS website to use their IRS Free File Online Lookup Tool and find the free tax filing offer for your needs.

Depending on the IRS Free File Program you choose, you may be able to receive free state tax returns too. Each offer is a bit different, so it’s essential to review the offers of each provider and determine and verify your eligibility. You will also need to create an account after accessing your chosen tax preparation provider from the IRS. Accounts made when visiting their website directly are separate from the IRS Free File program. So, to take advantage of these offers, you will need to access your chosen tax preparation provider via the IRS. The filing process can be easier and more streamlined filed with PriorTax for maximum tax return.

And for taxpayers with any AGI, the IRS offers Free File Fillable Forms.

This online tax filing option involves electronic forms that you can fill out and file yourself by making an account with the IRS. However, it lacks the guidance of the commercial tax preparation company offers mentioned above. So, you’ll need to be prepared to follow the IRS instructions, publications, and forms for yourself and, in some cases, make your own calculations to complete the free electronic forms offered.

In addition to these two resources, two IRS programs offer free assistance and e-filing for qualifying taxpayers: the Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs. These programs are offered in local communities across the country. You can visit the IRS website to use their VITA/TCE Locator Tool and to learn more information.

How can I find good online tax filing options with support beyond the IRS’s Free File Program?

The information above should poise you to take advantage of your free online tax filing options this year. Unfortunately, these resources cannot cover all scenarios. However, there are online tax filing options for the rest of us too!

If your financial situation is more complicated than can be served to your liking with the free providers, you’ll need to branch out to paid options for tax filing. Just make sure to do your due diligence. Check that you are working with a registered tax preparer. You can use the IRS’s Directory of Federal Tax Preparers to find well-qualified tax return preparers in your area, including enrolled agents, certified public accounts, and tax lawyers with unlimited representation rights to represent you before the IRS when needed.

Consider taking advantage of the peace of mind offered by the seasoned tax professionals and CPAs behind our easy-to-use online tax filing services. Visit PriorTax.com to begin your 2021 tax return today. You’ll have the support of our free phone, email, and live chat throughout the process. And for our clients with more complex returns, the option to add a Professional Review or CPA Review for less than working with an in-person tax preparation company from the comfort of your own home or office.

Free Tax Filing 2021

Posted by admin on February 24, 2022
Last modified: February 24, 2022

Ultimate Guide to Free Online Tax Filing and Free Federal Tax Filing

As things start to wind down for the year and 2021 comes to a close, it’s not too early to take a step back and make sure you have everything in order for the 2021 tax year. Setting aside just a few moments before year’s end to review your finances can pay dividends, metaphorically speaking, when the applications for free federal tax filing and free online tax filing come online next year.

First things first, remember that you file a tax return about what you earned in 2021 in 2022. Once 2022 comes around and the tax season starts, you’ll be looking back at the period from January 1 to December 31, 2021

So, what is one thing that should be on your financial checklist before we all ring in 2022?

Review your finances over the past year. Make a list of the documents, financial or otherwise, related to your income from 2021.

This includes documents related to your work, any investments you have, your health insurance, and any government assistance programs you’ve benefited from.

Paperwork you need to gather related to your income may include:

  • Form W-2
  • Form 1099-C “Cancellation of Debt” – Canceled debt is typically considered taxable income by the IRS.
  • 1099-G “Certain Government Payments” – These are forms related to unemployment income and state/local tax refunds.
  • Form 1099-MISC “Miscellaneous Income” – These are forms that may be sent to you related to a range of different types of non-employee compensation.
  • Form 1099-R “Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans” – These are forms you may receive concerning payments/distributions from IRAs or other retirement plans.
  • 1099-S “Proceeds from Real Estate Transactions” – These are forms that will record income you earned from the sale of a property.

There’s more..

  • Forms 1099-INT, -DIV, -B, or Schedule K-1 – These are forms that will record your investment or interest income.
  • Form SSA-1099 – These are forms you will receive if you received Social Security benefits.
  • Documentation related to alimony payments you received
  • Documentation related to your business or Farming income, including profit/loss statement, capital equipment information
  • Info and Documentation related to any miscellaneous sources of income, such as jury duty, gambling winnings, Medical Savings Account, scholarships, etc.
  • Documentation related to installment sale information, including Forms 6252, principal and interest collected during the year, SSN, and address for payer
  • Documentation related to income and expenses from any rental property you own, including profit/loss statement, suspended loss information.
free tax filing 2021
free tax filing 2021

Paperwork and information you will need to gather that can help reduce your tax liability:

  • Form 1098-E “Student Loan Interest Statement” – These are forms for student loan interest paid. The loan statements for your outstanding student loans will also be relevant here.
  • Documentation related to alimony payments you paid
  • Info and Documentation related to any IRA contributions you made during the year
  • Documentation recording your contributions to your Health Savings Account (HSA)
  • Are you a student, or do you have student dependents? Form 1098-T for tuition paid and your receipts or canceled checks for tuition paid for higher education
  • Are you a teacher? Your receipts/canceled checks for expenses paid for classroom supplies, etc.
  • Are you an armed forces reservist, an employee with impairment-related work expenses,
  • .. or a fee-basis state or local government officials, or a performing artist? Your receipts/canceled checks for employee business expenses
  • Are you self-employed? Your records related to health insurance payments and payments in qualified self-employed pension plans such as SEP and SIMPLE

In short.

The paperwork you need will be the same for all options for free tax filing for 2021 tax returns. This is including if you take advantage of any of the free online tax filing options.

Having this information organized and to hand once 2022 arrives, and you begin to receive your financial documents. This ensures you have all the information you need when free online tax filing opens up for the 2021 tax year. What’s more, this will make you less likely to forget anything in your tax return. This will help you avoid triggering an unwanted audit from the IRS.

When can I start a free tax filing for the 2021 tax year?

Information about and the application for free federal tax filing and free online tax filing will come online in January 2022. So, keep an eye on the IRS “Free File: Do your Federal Taxes for Free”. Where all the details you need will be available.

Did you use a free online tax filing option in 2021 for your 2020 taxes? In which case, you may receive an email notification when their system has come online and is ready for submissions for the 2021 tax year.

Where can I find free federal tax filing options for the 2021 tax year?

Check the IRS “Free File: Do your Federal Taxes for Free” website in January to find options for free online tax filing with an IRS partner site or to use the IRS’s Free File Fillable Forms.

Remember that IRS Free File will only be available to file your current year tax return. Each year, the program runs from mid-January to mid-October. Once the 2022 tax season is over and the program closes for the year. If you still need to file your 2021 tax return you will need to file it as a prior-year return.

Visit PriorTax.com today for more helpful information about filing your taxes.

On our website’s Knowledgebase, you will find information on late tax filing. This answers many common general tax questions, and information on how to find the information you are looking for from the IRS or your local state’s revenue and taxation departments. Or keep up today with other posts on our Tax News Blog. Here you can find helpful and timely information about filing prior year taxes.

Use our helpful resources to be better equipped to take advantage of free online and free federal tax filing options next tax season. If you have a more complicated financial situation, we offer current year tax filing services in addition to our prior year services. We support you with unlimited live support by phone, chat, or email.

With our tools at your disposal, you can be confident that you are getting your taxes done right.

2021 Tax Brackets

Posted by admin on February 9, 2022
Last modified: February 9, 2022

Complete Guide to Tax Brackets 2021

As 2021 draws to a close and we look back at the year that’s been, let’s take a moment now to look at what the 2021 tax brackets mean for you and the money you earned over the past year.

What are tax brackets, and what are they used for?

There are seven federal tax brackets by the IRS to determine how much federal income tax you owe on any income you earned during the year. Each bracket corresponds to a percentage rate: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. 

The U.S. federal income tax system is a progressive tax system. This means that you are subject to higher federal income tax rates when you have higher taxable income. But, equally, you are subject to lower federal income tax rates when you have lower taxable income.

Calculating how much tax you owe will get complicated. How much tax you owe depends on which tax brackets for 2021 your total taxable income will fall into. Rather than finding the bracket and paying the corresponding tax rate on your entire taxable income, your taxable income is divided across all applicable brackets. Each subdivision is then taxed at the corresponding tax rate.

Why are there 2021-specific tax brackets?

Ahead of each tax year, the IRS publishes updated income ranges corresponding to each tax rate. This is to take into account inflation rates and is part of the wider inflation adjustments the IRS makes annually to sixty plus different tax provisions.

These adjustments are announced during the final quarter of the preceding year. For example, the changes for the current tax year, including the tax brackets, were announced on October 26, 2020. Taxpayers and tax professionals then use this information for taxes due in April 2022 (or in October 2022, when a filing extension has been requested).

What information do I need to read the 2021 tax brackets?

When looking at the 2021 tax brackets, you will need to know your total taxable income in 2021 and your filing status. Your total taxable income refers to the part of your gross income for the year that is subject to taxation. It will depend on your income tax filing status, the type of income you had, and your financial activity over the course of the year.

All U.S. taxpayers fall into one of five different filing statuses. The IRS uses this to determine your filing requirements, possible deductions and/or credits, and your tax rate. In determining your filing status, your marital status, your spouse’s year of death (if a widow/widower), and the contribution toward household expenses from members of your household. The IRS offers an online interactive tax assistant, “What Is My Filing Status?” on their website to help you figure out your filing status.

You will use these two pieces of information to identify where amongst the tax brackets your financial situation falls and what that means for your tax rate when it comes time to file your tax return.

With these details laid out, let’s take a look at what the tax brackets mean for each filing status and how you can use this information. Looking at the table for your filing status, identify the row corresponding to your taxable income range to determine how much tax you will owe.

Single Filers:

What do the 2021 tax brackets tell us about calculating the tax owed for single filers?

2021 Tax Brackets for single filers

Head of Household Filers:

What do the 2021 tax brackets tell us about calculating the tax owed for people filing as head of household?

2021 Tax Brackets for Head of Household Filers

Married Filers, filing jointly:

What do the 2021 tax brackets tell us about calculating the tax owed for married couples filing jointly?

2021 Tax Brackets for Married Filers Filing Jointly

Married Filers, filing separately:

What do the tax brackets for 21 tell us about calculating the tax owed for married couples filing separately?

2021 Tax Brackets for Married Filers Filing Separately

Looking for more tax tips to prepare you for the 2022 tax season? Then look no further than PriorTax.com. Visit today to keep up to date with important tax news. Learn more about our full range of tax filing services. PriorTax.com provides Free Tax Advice and have CPA or Professional Reviews available for certificate. Also check out our state of the art free Tax Calculator

We offer both prior year and current year tax filing services to help you keep on top of your income tax obligations past and present.

Crypto Tax

Posted by admin on February 1, 2022
Last modified: February 1, 2022

Ultimate Guide to Cryptocurrency Tax.

How to Prepare Tax on Crypto?

Did you know that, for the IRS’s purposes, crypto tax is based on the fact that they consider cryptocurrency to be property?

One of the first questions on Form 1040 (the main U.S. Individual Income Tax Return form) is a yes or no question. At any time during 2021, did you receive, sell, exchange or otherwise dispose of any financial interest in any virtual currency? A version of this question first appeared on Form 1040 in 2020 and is there this year too.

According to the cryptocurrency exchange platform Coinbase, more than 10 percent of Americans traded cryptocurrencies in 2021. And cryptocurrencies are only growing more popular. Are you one of the many Americans holding, trading, and/or mining crypto? If so, it’s essential this tax season to be on top of what the IRS’s regulations for crypto tax means for your situation.

crypto tax
crypto tax

So, Crypto is Considered Property?

When thinking about crypto tax requirements, there are “taxable events” that the IRS will be interested in related to crypto transactions.

The IRS states that “Virtual currency is treated as property and general tax principles applicable to property transactions apply to transactions using virtual currency.” What does that mean for us, individual taxpayers? 

Certain activities related to holding and trading crypto will make you liable for capital gains taxes from certain activities:

  • selling crypto for cash
  • exchanging/trading one cryptocurrency for another
  • making purchases with crypto

It also means that activities like buying crypto or transferring assets between exchanges (on a like-for-like basis) are non-taxable events. You will only incur tax on crypto and make transactions that are taxable events when you have realized gains or losses from selling crypto. Whether that is for cash, to buy a new crypto, or purchase goods and services. 

What does it mean practically for cryptocurrency tax obligations.

Capital gains taxes on assets will differ depending on how long you’ve held your cryptocurrency before selling. Similar to income taxes, capital gains taxes are also progressive. The tax rate increase as the taxable amount increases. Additionally, there are different rates for long-term gains versus short-term gains. Long-term gains will be taxed at a reduced rate compared with short-term gains, and these rates will vary depending on your income.

Depending on your income level, you can also be liable for the Net Investment Income Tax, which is set at 3.8 percent. In addition to crypto, net investment income also includes things like other forms of capital gains, interest, dividends, and rental and royalty income.

There are also instances when cryptocurrency that you receive will need to be reported as income. Taxable events that fall under this category include activities such as:

  • being paid in cryptocurrency
  • both staking and mining cryptocurrency
  • airdrops from hard forks

Both gifting and donating cryptocurrency are treated like other gifting and donating activities for tax purposes.

Remember to keep track of crypto transactions across any exchanges you use both for filing purposes. Especially for reporting capital losses that can be deductible. It is subject of course to the limitations on the deductibility of capital losses.

What IRS forms should I know about when paying tax on crypto?

Form 1040, the U.S. Individual Income Tax Return

Form 1040, the U.S. Individual Income Tax Return, will ask you about receiving, selling, exchanging, or disposing of crypto in the form of a yes or no question.

 Form 8949, Sales and Other Dispositions of Capital Assets

You’ll use Form 8949, Sales and Other Dispositions of Capital Assets. This is to list your capital gain and loss transactions (crypto tax events taxable as property). 

Schedule D (Form 1040), Capital Gains and Losses

You’ll use Schedule D (Form 1040), Capital Gains and Losses to aggregate and calculate your gains or losses based on the information from From 8949. 

Schedule 1 (Form 1040), Additional Income and Adjustments to Income

You’ll use Schedule 1 (Form 1040), Additional Income and Adjustments to Income to report income from activities like staking or mining (crypto tax events taxable as income).

File your crypto tax with PriorTax.com. We answer question prompts that will ensure you accurately report your capital gains and losses and other forms of income related to your crypto activities. If you receive a Form 1099-MISC from any exchange platforms, they will be helpful in ensuring you are correctly fulling your crypto tax obligations.

Additional records like gain/loss reports as well as raw transaction reports can also be really vital here to calculate your gains and losses for accurate reporting.

Crypto Tax Calculator

I want to estimate how much I’ll get back when I file my taxes. How do I factor in cryptocurrency tax obligations when using the 2021 Tax Calculator?

Take all of your transactions at each of your exchanges as your starting point. If not already calculated for you, you’ll need to calculate your capital gains and losses.

Then, in the “Investments” tab, under “Income,” you’ll use this information to fill in fields for Capital Gains or Losses. There are separate fields for short-term and long-term capital gains and losses. In the “Other” tab, also under “Income,” you can record crypto taxable events that are treated as income. Events such as staking, mining, airdrops, being paid in crypto in the field for Other Income.

Have questions about crypto tax obligations and regulations? 

In addition to certified tax professionals like those at PriorTax.com, the IRS’s own website can be an excellent source of information for all things related to crypto taxes. The IRS maintains an FAQ on Virtual Currency Transactions that will cover many of the activities. They are part and parcel of using crypto or “Virtual Currency,”. You’ll find them referred to on their websites. 

The IRS has also published guidance regarding tax on transactions using crypto. This is also available on the IRS’s website in the bulletin IRS Notice 2014-21, IRB 2014-16.

Keep up to date with PriorTax.com’s Tax News Blog. On the blog, we share helpful information on topics like tax obligations on crypto and more to make sure you have everything at your fingertips to tackle your taxes with confidence. And when you’re ready to file your current year or any prior-year tax return, we’re here to help you through the process. We can help you avoid racking up any more penalties and claim the fullest tax refund you are eligible for.