Category: Tax Deductions and Credits

Deductions and credits may be similar but they are far from identical when it comes to your tax return. A tax deduction is a qualifying expense that decreases your taxable income. On the other hand, tax credits allow taxpayers to reduce their tax due to the IRS, dollar-for-dollar. You subtract the amount that the credit is worth from your tax liabilities. If you had to compare the two, a tax credit is more valuable on your tax return. Want to learn more about different credits you are eligible for or tax expenses you can claim? PriorTax tells you about expenses you can claim.

Archive for the ‘Tax Deductions and Credits’ Category

Child Tax Credit 2022

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

Individuals and businesses must pay different taxes, but credits can help offset some burdens. For example, Tax Credit are often given for activities that benefit the economy or further important goals. In most cases, child tax credit 2022 cover expenses paid during the year and have certain requirements that must be met before claiming them. By taking advantage of available tax credits, taxpayers can save money and reduce their overall liability.

Child Tax Credit 2022

The Child Tax Credit in 2022 is a powerful tax tool that can help you save on your taxes. The Child Tax Credit 2022 is now worth up to $2,000 per qualifying child and can be used to reduce the amount of tax you owe. A tax credit is a bit different from a tax deduction. Tax credit effectively reduces your total taxable income by the dollar for each dollar of deduction. The 2022 Child Tax Credit if qualified, is a great way to preserve money on your tax, so take advantage of it!

You may get a refund on your Child Tax Credit by using the Additional Child Tax Credit (ACTC). However, your adjusted gross income needs to stay below a specific amount based on your tax filing status, not to limit your Child Tax Credit. Remember, you can claim these tax credits when filing your taxes!

Contact our PriorTax Tax Service Professionals to guide your through this process to maximize your tax refund in 2022!

child tax credit 2022
child tax credit 2022

Qualifying for the Child Tax Credit in 2022

For your dependent or children to be eligible for the Child Tax Credit in 2022, you must provide their name(s) and Social Security Number(s) on your tax return. In addition, you and any joint filers must provide your taxpayer-identification numbers or TIN.

To qualify as a dependent for tax purposes, your child must meet the following criteria:

You may claim your son, daughter, stepchild, foster child that are eligible, brother, sister, half-brother, half-sister, or their descendant as a dependent on your tax return as long as they meet the following criteria:

– They lived with you greater than half of the tax year while some exceptions exist.

– They must not have provided them with more than 50% of their financial needs to support them during the tax year

– To be eligible, they must not have filed a joint tax return for the year

– They must have an official Social Security Number.

Determining the Child Tax Credit 2022 amount

To calculate the amount of the Child Tax Credit in 2022, you will need to gather a few key pieces of information. First, you will need to determine the number of children that qualify for the child tax credit. Then, multiply that number by $2,000 to calculate the total potential child tax credit once you have that number.

However, keep in mind that the potential Child Tax Credit amount may be reduced depending on your adjusted gross income. For those who are married and filing jointly, the maximum adjusted gross income is $400,000. For all other tax filing statuses, the maximum is $200,000.

Additionally, any remaining 2022 Child Tax Credit amount will be further reduced after considering federal income tax. Specifically, if your federal income tax somehow is less than the anticipated total Child Tax Credit amount, the tax credit is limited to the amount of your total tax obligation. However, those who owe more taxes than their potential credit can claim the full credit by filling out Tax Form 8812.

Determining the Additional Refundable Child Tax Credit amount

The Child Tax Credit is a great way to help offset the costs of raising a family. However, sometimes families need more tax liability to take advantage of the full credit. In these cases, the Additional Child Tax Credit can greatly help.

This tax credit is refundable up to $1,400 per qualifying child for the unused amount of your Child Tax Credit. The tax credit is calculated by taking 15% of your total earned income above $2,500. Even though the traditional earned income requirements must usually be met to qualify for a refundable credit, there are some cases where filers with three or more qualifying children may still be able to receive the tax credit. To calculate the credit using this method, net Social Security and Medicare taxes are subtracted from the earned income credit claimed. Claiming the child tax credit in 22′ using this method is only possible when the number from this calculation is greater than the standard calculation that uses earned income. When it’s not, filers have to use the number that results from taking 15% of their earned income above $2,500.

Tax Write Offs

Posted by admin on October 30, 2022
Last modified: October 29, 2022

Easy Guide on Tax Write Offs

While people typically think of business expenses when thinking about tax write offs, these may also be tax deductions, credits, or expenses you are entitled to claim against your personal taxes, also reducing your individual taxable income. By taking advantage of business tax write offs, expenses you incur while running your company can be deducted against income, which eventually reduces your tax liability.

Tax deductions help you lower the amount of income subject to federal income taxes, which may help reduce the amount of taxes you owe. Tax credits and deductions can modify how much you owe in taxes so that you owe less. Tax credits may also be called a kind of refund since the tax credits are applied against taxes you owe, reducing your total tax bill directly. Taxpayers can qualify for a number of tax breaks and credits on their taxes every year, which may help them pay lower taxes – or get refunds from the IRS.

If you are self employed, you can take many of the same business tax write offs that corporations do, which lowers the amount of taxable self-employment income. In addition, self-employed individuals, such as independent contractors and small business owners, may be able to deduct their business expenses as a sole proprietorship from their gross income in order to reduce their tax bill. Businesses and individuals alike have opportunities to claim some deductions that lower their taxable income.

tax write offs
tax write offs

Be sure to check your local government’s tax write offs guidelines since certain states allow several unique income deductions or require certain conditions to be eligible for lowering your tax liability. For example, You can claim this deduction on your Virginia state return only if you are eligible to claim a credit for childcare expenses and child support payments on your federal return. In addition, the Virginia deduction for long-term care premiums is fully disallowed if you claimed any Federal income tax credit for long-term care insurance premiums paid in a taxable year.

Before tax write offs, any expenses on your federal income tax return, it is important to understand what you can deduct and the rules for filing the deduction. Well, tax write offs on any legitimate expense you are allowed to deduct against your taxable income on your tax return. It is allowed by deducting certain expenses when you are ready to file your federal income tax return.

The IRS lets you choose whether you want to deduct either state taxes and local sales taxes, your income taxes, and certain taxes paid overseas. Under the Tax Cuts and Jobs Act (TCJA), all state and local income taxes (SALT), including estate taxes, are limited to $10,000 deductions. If you are a homeowner, you may also be able to deduct your property taxes from your tax bill.

You can deduct mortgage insurance premiums, home mortgage interest, and real estate taxes you paid for your home throughout the year. In addition, you can deduct regular transportation expenses, including fees and taxes, taken from your paycheck by Uber and Lyft. With Multiply, you can deduct a percentage of the real costs for gas, repairs, car depreciation, insurance, and other car-related expenses. There maybe two ways to tax deduct car expenses, and you can choose the direction that gives you the most significant tax write offs. If an expense is also beneficial to you personally, only the part attributable to your business is deductible.

Home Office Tax Write Offs and Tax Deduction

As long as your income is greater than your business expenses subject to tax write offs, and you have a home office you only use for work, you may deduct expenses related to the work-related use of your home. The home office deduction was once an expense that would have been unpopular with self-employed business owners. Still, you have a dedicated space in your home to conduct your work. In that case, you should not be afraid to take advantage of the office expense and home office tax write off and tax deduction, which is a percentage of home expenses such as rent or mortgage interest, property taxes, and utilities, depending on how much square footage you use for your home office.

Standard tax deduction 2021 for Tax Write Off

Suppose your filing status has a standard deduction greater than your total deductible expenses for the tax year. In that case, it could be better off to take the standard tax deduction rather than trying to itemize for tax write offs. The Internal Revenue Service (IRS) allows individuals to claim a standard deduction on their income tax returns and itemize their deductions if they exceed this level. When you file your income taxes, the IRS uses your reported income, less your deductions (or itemized deductions) and credits, to determine which tax bracket you are in and what tax rate you will pay for taxable income.

Tax Write Offs Tax Calculator

To figure out how much you are saving by taking your tax write offs, Use our free PriorTax Tax Calculator and take the expense amount and multiply it by your tax rate. Each tax write off scenario will vary, but the expense will typically show up in the income report, subtracted from whatever income was already reported. These tax write offs are not exhaustive, but they provide a sense of what various businesses might be able to deduct from their taxes. Even the legitimate write-off categories can eliminate some expenses from being tax-deductible.

In other words, any expense deductible from business or personal income taxes can count as a tax write off. There is just one tax principle, outlined in Section 62 of the Internal Revenue Code, that says that any expense that is made to produce revenue is a valid tax write off. The deductions mentioned above may be claimed on Schedule C or Form 1065, but there are several other tax breaks that small-business owners often claim on their individual returns.

As a sole proprietor, you could qualify for a 20% deduction for qualified business income under the tax law, which would combine with lower personal tax rates under tax reform. The deduction is valid whether you own a sole proprietorship or LLC, and there is no requirement that you have a specific kind of business entity in order to deduct expenses.

Self Employment Tax

Posted by admin on October 20, 2022
Last modified: October 20, 2022

A Quick Guide for Self Employment Tax

Self employment tax is a tax that comprises two taxes: Social Security and Medicare. All working Americans pay self employment taxes. The IRS enforces it rigidly. It is the golden child of the tax code: untouchable by all and a real pain in the butt. There are only a few exceptions to the requirement to pay this tax to date. So yes, we all pay for it.

Let’s Dive Deeper into Self Employment Tax

Self employment tax is a tax that is paid by those who are self-employed. This tax is also known as FICA (Federal Insurance Contributions Act). Self employment tax is made up of two taxes: Social Security and Medicare.

All working Americans pay FICA. The IRS strictly enforces this tax. It’s a very important tax that all Americans must pay.

There are a few exceptions to the requirement to pay self-employment tax. One of these exceptions is church employees who take a literal vow of poverty.

Self Employment Tax
Self Employment Tax

How Much Does Self Employment Tax Sum Up To?

Are you self-employed and wondering about your FICA taxes? Here’s what you need to know.

As a self-employed individual, you are required to pay FICA taxes. This is because when you pay taxes as a self-employed person, it is known as “self employment tax” or SE tax.

All earned income is subject to Medicare and Social Security taxes. So what exactly is earned income? Earned income is anything you receive in exchange for a product or service.

Due to the lack of a middleman, the IRS requires freelance workers to pay the employer and the employee portions of FICA. In total, the combined self-employment rate for FICA is 15.3%.

For example, an employee’s wage is considered earned income because they receive it in exchange for their time and labor. However, self-employed individuals do not have an employer and instead receive their earnings directly from the customers they serve or sell products to.

Who Applies to file Self Employment Taxes?

As a self-employed individual, you are required to pay self employment taxes, regardless of whether you are a freelancer, independent contractor, or small business owner. This also applies to W-2 employees who have side hustles. So, even if you only drive for Uber on weekends or sell occasional items on Etsy, you are still responsible for the full 15.3% self employment tax.

There may be instances where you end up paying more Social Security tax than you actually owe. In these cases, the IRS will refund the overpaid amount when you file your 1040 tax return.

Quick Guide To Lowering Your Self Employment Taxes

No one likes paying taxes; self employment taxes can be especially difficult to stomach. Luckily, there are some things you can do to minimize the amount you owe.

Our self employment tax calculator can help you estimate how much you will owe in taxes. Using our self employment tax calculator is the best way to estimate how much you will end up paying. Just enter your net income, and the PriorTax Calculator will give you an idea of what you can expect to owe. Simply enter your net income, and the calculator will do the rest.

There are also some deductions you may be eligible for that can reduce your tax bill. These include student loan interest, retirement contributions, and the standard deduction. Be sure to explore all of your options so that you can keep more of your hard-earned money.

Quick Guide to Deduction on Self Employment Tax

Self employment tax can be a deduction against your income taxes. In addition, the employer portion of your SE tax can be used to reduce your income taxes. For example, you might deduct half when you fill out Schedule SE.

As a freelancer, you are used to being your boss. But did you know that comes with a few perks – like being able to write off half of your self employment tax?

That’s right, the additional 7.65% you pay to be your own boss is an eligible write-off against your income taxes. And since employers are permitted to write off their portion of FICA (7.65%), it’s essentially like getting a deduction for being self-employed.

This deduction can have a significant impact on your tax liability. For example, say you are in the 10% income tax bracket and have $10,000 in freelance income. Your total tax liability would be $2,530 ($1,000 + $253), which is just over 25% of your income. However, with the self-employment deduction, your total tax liability would be reduced to $2,265 ($1,000 + $226), which is still a significant amount but less than what you would otherwise owe.

You may not have realized that your business income is subject to income and SE tax. Just remember that the employer portion of your SE tax can be used to reduce your income taxes. You can deduct half of it when you fill out Schedule SE. So when you are filling out your taxes this year, take advantage of this deduction by including it on Schedule SE.

Deduction on Self Employment Tax from Business Expenses

Are you thinking of becoming your own boss? There are many things to consider before taking the leap into entrepreneurship, including taxes. As a business owner, you will be responsible for paying taxes on your business income.

One way to lower your tax bill is to deduct eligible business expenses from your income. This will lower your net income and, therefore the amount of taxes you owe. Anyone self-employed can deduct business expenses – you don’t need to set up an LLC to claim these write-offs. You will report these expenses on your Schedule C, which is used by those who are self-employed to document their income and expenses.

Some common deductible business expenses for freelancers and gig workers include home office expenses, cell phone bills, internet costs, computers and software, continuing education courses, and auto expenses. A general rule of thumb is that any necessary cost for running your business can probably be claimed as a deduction.

So, How To File Self Employment Taxes?

Self employment tax can be a big burden, but with PriorTax’s self employment tax calculator, you can get a good estimate of your tax bill. In addition, there are a few different ways to pay the IRS: you can mail them a check or Efile with the help of our tax service professionals

Remember, you don’t have to pay all at once! Most people make estimated quarterly tax payments to spread the cost over the year. In fact, the IRS will penalize you for not paying quarterly if you’re on track to owe more than $1,000 in taxes.

1099 NEC

Posted by admin on October 13, 2022
Last modified: October 12, 2022

Deep Dive into 1099 NEC

Are you self-employed? Do you work as an independent contractor, gig worker, or small business owner? Then you may need to file a Form 1099-NEC.

Depending on what is happened to your financial life over a year, you may receive one or more types of tax forms for your 1099 Form or even more than one 1099s from the same type. Your 1099 form is a kind of income information return; if you received any kind of payments or income during the past year other than wages, salaries, or tips, you would get a 1099 form in the mail. Tax Form 1099 is one type of IRS tax form used to report income that is not wage income for federal tax purposes. Just because you get a tax form with 1099 Form does not necessarily mean you owe taxes on this money. You should always report your accurate business income to the IRS if you get your 1099-K form through PriorTax.

1099 NEC
1099 NEC

Because the IRS treats every 1099 Form payment as taxable income, you are required to report 1099 Form payments on your tax returns, meaning that even if you do not get a 1099 Form, you should still report your 1099 payments. Reporting your 1099 Form is easy with the PriorTax E File Tax filing with the help of our Tax Service Professionals. Continue reading below for examples of the types of income for which you might receive 1099-NEC Tax Form, as well as how you can report taxes using this tax form. No matter what type of 1099 income you receive, you almost always have to report it when filing taxes. Since taxes are not a part of your 1099 income, it is important to track all your reported income.

Tax Form 1099 is one type of IRS tax form commonly used to report various types of income a taxpayer receives each year from organizations, financial institutions, and other sources unrelated to work. An IRS 1099 form is a set of tax forms documenting various types of payments made by an individual or a business, which is generally not your employer.

Complete Guide to 1099 NEC

There’re various types of 1099 tax forms, but one of the most common is the Tax Form 1099-NEC. This form is typically sent to self-employed individuals, such as independent contractors, gig workers, and small business owners. As an independent contractor, gig worker, or small business owner, you may receive a Form 1099-NEC. This form reports income earned from work such as driving for DoorDash, freelancing on Upwork, or renting a room out on Airbnb.

As an independent contractor or small business owner, you may receive a 1099-NEC tax form from your clients or customers. This form reports money paid to you for services rendered. The “NEC” in the form’s name stands for “Non-employee Compensation.”

Before 2022, payments made to contractors and freelancers were reported on a 1099-MISC form instead. That form still exists but is now used for reporting different types of non-wage income.

Payers should send you Forms 1099-NECs earlier in the tax season so that you have time to get a tax return prepared and so that the IRS has proof of how much income you earned throughout the tax year. If you were using online tax services such as PriorTax and assisted by a Tax Service Professional, you will be asked to input the information from any Form 1099s when you fill out your return. When you hire a contractor, be sure that he fills out the W-9 Tax Form so that you will have his information when it is time to send him (and the IRS) your 1099-NEC. To get that information on every non-employee, you will have them fill out W-9 forms as soon as they begin working with you.

Fourth Stimulus Checks

Posted by admin on September 30, 2022
Last modified: September 29, 2022

As concerns about inflation continue to mount, some states are taking matters into their own hands. Eighteen states will send fourth stimulus checks payments to taxpayers in the coming months in an effort to provide relief from rising prices.

Unlike previous pandemic relief measures, these fourth stimulus checks payments are much more targeted, and most offer considerably lower dollar amounts. That’s not because governments have developed a mean streak. Instead, it’s about helping Americans whether raising prices without making inflation worse.

These states hope to ease the burden on residents struggling with inflation by providing targeted relief payments.

With prices soaring for basic goods and services, many Americans struggle to make ends meet. To ease the financial burden, the federal and state governments have implemented relief plans that target specific sectors or groups.

For example, some gas cards provide discounts at the pump, while others offer direct disbursements based on income thresholds. While these plans won’t eliminate the pain caused by rising prices, they can help ease the financial burden of struggling people.

Summary on the Latest 6 State’s Fourth Stimulus Checks

fourth stimulus checks
fourth stimulus checks

Fourth Stimulus Checks in California

Expected fourth stimulus check, maximum $1,050 as a rebate. Californians rejoice! Gas prices in California may be through the roof, but soon enough, some financial relief will be headed your way. Thanks to the state budget for 2022-2023 that Governor Gavin Newsom signed on June, 23 million California residents would be receiving direct payments ranging from $350 to $1,050. This is amazing news for over half of the state’s population! The California Franchise Tax Board has confirmed that these payments will start rolling out on Oct. 7.

In anticipation of this event, the state has set up an information page all about the “Middle-Class Tax Refund.” In addition, you can find a calculator on this page to help you estimate your payment amount.

California is set to provide stimulus payments to eligible taxpayers through direct deposits and debit cards. Individual taxpayers who make $75,000 or less per year will receive $350, while eligible couples filing jointly will receive up to  $700 if they make no more than $150,000 annually. Households with qualifying dependents will also receive an additional $350.

Payments are set to be issued between October 2022 and January 2023. Californians can expect to receive their payments during this time frame via direct deposit and debit card.

The majority of people eligible for the Golden State Stimulus will receive their payments by direct deposit, with a smaller number of debit cards being used to distribute the remaining payments. The schedule for issuing these payments is as follows:

-If you received either of the two previous Golden State Stimulus payments by direct deposit, you’ll receive your Middle-Class Tax Refund by direct deposit between Oct. 7 and Oct. 25.

– Otherwise, if you have filed your 2020 tax return electronically in California and got a tax refund by direct deposit, you may expect to receive a direct deposit between Oct. 28 and Nov. 14.

– Fourth stimulus checks debit cards can be used to distribute the remaining payments from the state. For example, if you plan to receive the Golden State Stimulus by debit card, you could expect to receive a fourth stimulus check debit card for the Middle-Class Tax Refund between Oct. 25 and Dec. 10. Other payments done by debit card would be sent by 2023, Jan. 15.

Fourth Stimulus Checks in Florida

Expected fourth stimulus check, $450 payments. Some families in Florida with children will get one-time payments of $450 per child through Hope Florida – A Pathway to Prosperity, a program operated by the Department of Children and Families.

This money comes from pandemic aid funds intended for households receiving Temporary Assistance for Needy Families (TANF) cash assistance and will help to offset the costs of caring for children. Eligible recipients include foster parents, relative and non-relative caregivers of children, participants in the state Guardian Assistance Program, and families receiving TANF cash assistance.

This one-time payment provides a much-needed financial boost for families struggling to make ends meet during these difficult times.

The state of Florida is providing a payment of $450 per child to offset the costs of rising inflation and help with the new school year. You don’t have to do anything to receive this payment; if you are eligible, you should have already received a check in your mail box. Delivery was anticipated to occur on or before Jul. 25, when the state’s back-to-school tax holiday began.

Fourth Stimulus Check in Massachusetts:

Expected fourth stimulus check, up to 7% of income may be returned. Up to 7% of your income may be returned to you in the form of a rebate check from the state of Massachusetts. The exact amount of the rebate will not be announced until Sept. 20, but it is estimated that each resident will receive an amount equal to 7% of their total income tax paid for the year.

This return of funds is possible due to a 1986 law that allows for rebates when there is a surplus in state revenue. Currently, the state auditor’s office has declared a surplus of $2.3 billion. For someone with an annual income of $75,000, this would mean a rebate of approximately $250.

While this new fourth stimulus checks news in Massachusetts is a relief to many taxpayers, it is important to keep in mind that this is only a temporary measure.

Fourth Stimulus Check in New Jersey

Expected fourth stimulus check, $500 rebate checks. In order to get the $500 rebate check from the state of New Jersey, you must file your taxes using a taxpayer identification number instead of a Social Security number. The Excluded New Jerseyans Fund applies to nonresident and resident aliens, their spouses, and dependents. You do not need to apply for this rebate; after you file your 2020 NJ-1040 return, a rebate will be calculated automatically for most eligible taxpayers in New Jersey.

If you are eligible, you will receive a rebate equal to the tax paid after credits, up to a maximum of $500. So, if the amount on line 50 is less than $500, you will receive a check for that amount. But if the amount on line 50 is $500 or more, you will get a check for $500. Tax rebates will be issued as paper checks, separate from your Income Tax refund.

To qualify, you must be:

– A New Jersey resident for all or part of 2020

– Have submitted a 2020 NJ-1040

– Have at least one qualifying child claimed as a dependent on your NJ-1040

– Have a Balance of Tax of $1 or more (line 50 of the NJ-1040)

– And have New Jersey Gross Income (line 29 of the NJ-1040) that is:

– $150,000 or less for individuals with a filing status of Married Filing Joint, Head of Household, or Surviving Spouse

– $75,000 or less for individuals with a filing status of Married Filing Separate or Single

Pending Fourth Stimulus Check in Pennsylvania.

Pennsylvania is considering a new program providing direct financial assistance to nearly 250,000 households. The PA Opportunity Program, proposed by Governor Tom Wolf, would give eligible households with an income of $80,000 or less a one-time payment of $2,000.

The payments would come from the state’s surplus; however, some state Republicans argue that this could worsen inflation. Meanwhile, some residents may already be eligible for a Property Tax/Rent Rebate under a different program. Fourth stimulus checks are being sent out to those who qualify, including senior people over 65, widows and widowers over the age of 50; and people with disabilities 18 and older.

You could qualify for a rebate of up to $650 from the Pennsylvania Department of Revenue if your annual income amount is below certain thresholds. For homeowners, the maximum income is $35,000 per year. For renters, the maximum income is $15,000 per year. In addition, Social Security income is only required to be claimed if it is half of your total income. To see the full list of application rules and income exemptions, visit the Pennsylvania Department of Revenue website.

The latest round of stimulus checks will let people use their most recent tax data for 2019 or 2020 (file a tax return through TurboTax) so that the newest information about dependents and payments is available. This will not likely have any lasting impact beyond updating your dependent or payment data. Still, the IRS will use only the data from your 2020 tax return to determine whether you are eligible for the fourth stimulus checks, as long as the IRS has processed your return (WMR Refund Status=Refund Sending). If your 2021 tax information has changed, that will be reported on the 2021 return, and your credit amounts will be adjusted accordingly. Make sure you are set up for this round of stimulus checks with our PriorTax Tax Service professionals.

Updates on EV Tax Credit

Posted by admin on September 22, 2022
Last modified: September 28, 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.

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.

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.

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.

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.