Category: Tax for Business

PriorTax keeps you current on the most recent tax for business news from the IRS. There’s no need to decipher confusing IRS lingo because we’ve got you covered when it comes to business taxes. Always check back here for information on new business deductions and credits that you should be claiming for your LLC or Partnership. From claiming deductions to filing your return, we handle your taxes while you handle your business.

If you have questions about your business tax, then leave a comment on our blog posts. Our tax experts will provide you with the answers that you need!

Archive for the ‘Tax for Business’ Category

4 Key Changes for the New Employee Withholding 2024 IRS Tax Form W-4

Posted by admin on June 6, 2024
Last modified: June 6, 2024

Exploring the newest developments in the 2024 Tax Form W-4 is crucial for staying informed. This detailed article delves into the ins and outs of the updated Tax Form W-4, shedding light on its purpose, revisions introduced in the latest version, its application, and a step-by-step guide on completing each section. Additionally, essential guidelines governing this important form will be examined, along with recommended strategies for effectively incorporating it into your professional environment.

What is a W-4 Form?

The Employee’s Withholding Allowance Certificate, identified as Form W-4 or Employee’s Withholding Certificate, is a crucial document that determines the amount of federal tax to be withheld from an employee’s salary.

The computation takes into account the employee’s information, including their filing status and family size. Because these details can change, the amount withheld may differ each year. Employees should review and update their forms every year to ensure accuracy.

The W-2 form is an essential complement to the W-4 when it comes to documenting income and taxes.

In response to recent tax law updates such as tax rate adjustments and tax deductions, the IRS introduced the updated Form W-4 Employee’s Withholding Certificate. This revised form aims to assist taxpayers in accurately determining their withholding amount by incorporating changes like the enhanced Child Tax Credit, including the new Other Dependent Credit, and removing dependent and personal exemptions.

In an effort to streamline the tax withholding process, the IRS has announced that not all workers will be mandated to fill out the updated 2024 Tax Form W-4. Remarkably, the agency has coordinated the federal withholding tables to accommodate the latest version of the form and the withholding computations from previous years. Only new hires and employees seeking to adjust their withholding must complete the form.

Rest assured that you don’t need to stress over deciphering the specifics of the modifications to the Form W-4 and determining your 2024 W-4 withholding calculations. Leave it to PriorTax dedicated tax professional to guide you through. Utilize PriorTax’s complimentary Updated W-4 Withholding Calculator to project your withholding amount effortlessly.

Tax Form W-4

Looking to maximize your tax refund, reduce your tax bill, or increase your take-home pay?

The free W-4 withholding calculator from PriorTax is here to assist you. Easily estimate your withholding and complete Form W-4 for your employer with confidence.

In the year 2024, you can now input details about your dependents, earnings, and important tax deductions and credits into the system. With this information, the tool will assist you in modifying your withholding amount, providing insights into how it impacts both your tax refund and the amount you receive in each paycheck.

Exploring the latest updates in the IRS 2020 Form W-4, it is essential to grasp the significant changes that impact your withholding. PriorTax’s updated W-4 Withholding Calculator streamlines the process of estimating your withholding accurately.

Personal Withholding Allowances

In the latest version of the W-4 form, a significant alteration involves the removal of personal withholding allowances. Rather than relying on this system, the updated form now adopts a 5-step approach and incorporates fresh Federal Income Tax Withholding Methods for calculating accurate withholdings. Previously, the concept of withholding allowances was closely linked to personal and dependent exemptions, which were subsequently removed as part of the tax reform.

Focus on Tax Credits including Dependents Tax Credits

In the third step of the document, you can confirm your eligibility for the Child Tax Credit and the Other Dependent Credit. Moreover, you can specify any other credits, such as education tax credits, to adjust your withholding amount precisely.

Exemption Section is Removed

In the absence of a designated section for claiming withholding exemptions, you can indicate that you are exempt by writing “Exempt” in the space provided below 4C. 

When you fill out and deliver Form W-4 to your employer, it helps them determine the appropriate amount of tax to withhold from your earnings. It is common practice to update your W-4 when there are changes in your personal or financial circumstances.

Options for Making Adjustments

Step 4 of the form is an optional section where you can:

  • Consider modifying your withholding if you receive supplementary income such as interest, dividends, or retirement earnings.
  • If you find yourself eligible for deductions beyond the standard deduction, such as itemized deductions and extra tax breaks like student loan interest, consider decreasing the amount withheld from this portion.
  • If you wish to designate a specific amount of extra income tax to be tax deducted from your paycheck, please indicate the additional withholding here. This includes any necessary adjustments if you or your spouse are employed in multiple positions simultaneously.

In the event that your circumstances remain unchanged, you may find that there is no necessity to submit the updated IRS Form W-4. The IRS has taken steps to ensure that the federal withholding tables are compatible with the latest iteration of the form and withholding calculations from previous years.

In case you have been affected by recent tax regulations, experienced alterations in your financial circumstances, commenced a different position, or found discrepancies in your 2025 tax filing results, it would be advisable to complete the updated W-4 form.

What are the repercussions of incorrect filing?

Mistakes in calculating your W-4 form may lead to tax discrepancies that could catch you off guard. Underestimating federal tax withholdings can result in unexpected bills when it’s time to file your taxes. These errors have serious financial consequences and can lead to hefty penalties. Engaging in the following two activities could result in fines or incarceration.

Underreporting Estimates

When it comes to underreporting estimates, employees must accurately calculate their federal tax withholdings to avoid potential penalties. If employees underestimates their withholdings during tax filing, they may be subject to a $500 fine.

Entering False Data

Employees who deliberately provide incorrect information or omit details that could impact their withholdings may be subject to legal consequences. Conviction for such actions could result in a fine of $1,000 or a maximum of one year behind bars for the employee. Employers, however, are solely responsible for calculating withholdings based on the information furnished by the employee and are not obligated to validate the accuracy of the data.

Feeling uncertain about calculating your withholding amount? No need to stress – PriorTax offers a free W-4 withholding Calculator that can help you quickly determine your withholding and complete Form W-4.

In tax preparation, let PriorTax be your trusted ally to ensure that every financial decision you made in the past year is maximized for your tax benefit.

Pay nothing out of pocket now with a Tax Refund Transfer.

Posted by admin on May 30, 2024
Last modified: June 6, 2024

Protect your wallet by utilizing Refund Transfer which enable you to cover tax preparation fees and other expenses using your tax refund. Afterward, you have the flexibility to designate the destination for the remaining balance.

One of the services offered by Prior Tax involves collaborating with reputable banks in the United States to offer a product known as Refund Transfer. This product is designed to facilitate the process of receiving tax refunds through a bank deposit rather than as a loan.

When you provide approval for transactions from the linked account of your Refund Transfer, it will impact the final amount you receive as your refund. Charges may be incurred. A qualifying anticipated tax refund and electronic filing are necessary for this process.

Customers can conveniently cover their tax preparation fees and other costs using a Refund Transfer (RT). The Refund Transfer Fee is levied when the initial funding is received, regardless of whether it comes from a federal or state refund. Furthermore, a Subsequent Funding Fee is applied for each extra funding received, regardless of whether its source is a federal or state refund.

refund transfer

Pay for Your Tax Preparation Fees with Refund Transfer.

Our convenient Refund Transfer method offers a hassle-free payment option for online tax preparation. With no upfront expenses, you can easily cover the costs of your tax preparation. The processing fee for Refund Transfer will only be charged upon completion of your filing.

Why Would I Choose a Tax Refund Transfer?

Refund Transfer for Convenience

Providing a seamless experience is essential. You can find a dedicated tax professional for tax preparation services all without incurring any initial costs.

Refund Transfer for Speed

Efficiency is key when it comes to Refund Transfers. This service enables customers with bank accounts to enjoy the convenience of having their refunds securely processed through direct deposit, eliminating the need to wait for a paper check to be issued and mailed by the IRS. Additionally, bank checks can be printed in your office for immediate pick-up on the same day.

For individuals who do not have bank accounts, various choices are available for securely accessing funds.

Refund Transfer for Security

When it comes to financial safeguards, a considerable number of taxpayers, including individuals with existing bank accounts, opt to retrieve a bank-issued check from the secure environment of their tax office instead of having an IRS-issued check delivered by mail or through direct deposit.

How Refund Transfer works

To start the tax refund process, you have the option to submit your application either in person or online. Collaborate with a tax professional or utilize online tools for assistance with your application. Afterward, establish an FDIC-insured Refund Account to receive your tax refund payment securely. When all services are finished, fees will be deducted directly from your refund, including those for tax preparation and Refund Transfer. Remember, fees are only charged upon completion of services.

Make the most of your funds. Treat yourself to something special. Or set aside some savings for unexpected expenses. Spend your refund in any way that suits you best.

2024 Tax on Digital Assets and Digital Transactions using Venmo and Crypto

Posted by admin on March 21, 2024
Last modified: March 22, 2024

Another year has come around, bringing with it the annual task of navigating the intricacies of the tax code. Once again, we are faced with the complexity of 2024 tax rules as we explore benefits such as tax breaks for electric vehicles, workarounds for SALT deductions, incentives for retirees, and a fresh filing system for eligible taxpayers.

In the current transition period, while not as chaotic as during the pandemic, numerous new regulations are coming into force, with the possibility of certain adjustments occurring during the middle of the season.

Caution is advised to avoid financial repercussions: The interest rates on outstanding taxes and fines for tardiness have recently escalated to 8 percent from previous levels, emphasizing the importance of timely compliance.

2024 Tax Updates from IRS to mitigate the significant inflation?

In response to soaring inflation, the IRS has implemented an increase of approximately 7 percent to the outer boundaries of the federal tax brackets. This adjustment ensures that individuals who receive salary hikes are not penalized by having more of their income subject to higher tax rates, even if their earnings are merely keeping up with the rising cost of living.

In the tax year 2023, there are adjustments to the tax brackets. Single taxpayers will enter the 24 percent tax bracket once their income exceeds $95,375, while married joint filers will reach this bracket at $190,751. Other tax brackets also see alterations corresponding to these changes. Notably, the standard deduction for single filers has increased to $13,850, an increase of $900.

In the year 2023, the maximum allowable contribution to 401(k) plans has increased to $22,500, compared to $20,500 in the previous year of 2022. Eligible individuals need to note that they can maximize their savings in their IRA for the year 2023 until they submit their tax returns.

2024 tax

Is IRS tracking digital payments with Venmo for 2024 tax?

Before the time comes, individuals such as independent contractors, freelancers, small business owners, and those juggling side hustles must diligently monitor and disclose their income to the IRS. Once they surpass the $400 threshold.

In order to encourage adherence, various online platforms and payment processors such as Venmo, PayPal, eBay, and Airbnb had plans to enhance the monitoring and reporting of sales transactions in the upcoming year. This increased scrutiny would involve the filing of the IRS. Form 1099-K, which would be submitted to both the taxpayer and the IRS.

The IRS has decided to delay the requirement for individuals earning income from online payment processors or marketplaces to receive tax forms for payments over $600 for the second year in a row.

In preparation for the upcoming tax season, it is important to remember that the familiar regulations remain unchanged. Individuals engaged in selling goods or services must provide 1099-K forms once their transactions reach over 200 and the total payments exceed $20,000 annually.

In preparation for the upcoming tax year 2024, the IRS has outlined a gradual reduction of the threshold for reporting payments. Initially set at $5,000 in total annual payments with no minimum transaction requirement, the threshold is expected to eventually settle at a permanent level of $600. Despite these adjustments, individuals may continue to receive forms for payments exceeding the lower thresholds.

In light of the complexities that can arise from distributing an influx of new forms to individuals who may not anticipate them or have any outstanding tax liabilities, the IRS has announced a need for additional time to address potential issues. Efforts are being made to streamline the process and verify that Form 1099-Ks are dispatched only to the appropriate recipients.

I’ve Traded Crypto During 2023. How do I report Crypto for Tax Return?

To ensure compliance with tax regulations, individuals must disclose capital gains and losses, alongside interest and dividend earnings, from the sale of stocks, bonds, and investments on their tax returns. In order to facilitate this process, brokerage firms are obligated to furnish tax documents like the 1099-B and 1099-DIV to monitor these financial transactions, which are subsequently reported to the Internal Revenue Service (IRS).

Changes may be coming for brokerage firms regarding the reporting of cryptocurrency and digital asset transactions. A proposed rule set to take effect in 2025 would mandate the submission of a new documentation, termed the 1099-DA, specifically for digital assets. Until now, such transactions have not been subject to this reporting requirement.

However, taxpayers must still fulfill their obligations for the upcoming tax year of 2023 and beyond.

No matter if an individual receives a tax form or not, they bear the duty of disclosing all their earnings. Additional guidance on this process can be located in the 1040 instructions, along with the resources provided by the Taxpayer Advocate Service and IRS online platforms.

When dealing with cryptocurrency transactions made within a conventional investment vehicle such as a Bitcoin ETF, the trades are recorded and monitored through the familiar 1099-B system, similar to how transactions involving exchange-traded funds or stocks are handled.

Last Day for Business Tax Filing for 2023 Taxes in 2024

Posted by admin on March 14, 2024
Last modified: March 15, 2024

With the 2024 business tax deadline approaching fast, businesses registered as an S Corporation, Partnership, or LLC taxed as such need to file their tax returns by this Friday, Mar. 15. To avoid harsh penalties, make sure to submit your documents on time or explore the option of an extension to ensure compliance.

To begin with, business tax filing deadlines are not limited to just one. Unlike individuals, businesses face unique deadlines and requirements when it comes to taxes. Find your dedicated PriorTax Tax Professional to walk you through to file your 2024 business tax from start to finish.

Being a business owner necessitates understanding tax filing deadlines to prevent incurring penalties and fees. Managing taxes can pose challenges for businesses, particularly those navigating the process for the first time.

It’s essential to note that 2024 business tax filing deadlines vary depending on your business type. Unlike individual tax requirements, businesses are subject to distinct deadlines and obligations. Below, we have outlined the key dates you need to know for your specific business type. Familiarize yourself with each deadline provided and ensure you add all pertinent business tax filing dates to your schedule.

2024 business tax

Business Tax Filing Deadlines You Need For?

Mark Your Calendar: Essential Tax Filing Deadlines for S Corporations, Partnerships, and LLCs Taxed as Partnerships in the Upcoming Season. Be sure to submit your tax returns by Mar. 15, 2024, which is the initial deadline for partnerships, LLCs categorized as partnerships, and S corporations.

The deadlines for filing taxes are influenced by your business structure, and how your business is taxed may also differ.

Partnerships

Collaborative ventures offer a straightforward framework where multiple individuals jointly own a business. Each party shares equal financial, legal, and managerial duties in a general partnership.

Looking at it from a tax standpoint, a partnership operates as a pass-through entity, whereby the company does not bear the burden of federal income tax. Instead, the partners must disclose their earnings, deductions, and credits on their personal tax filings utilizing Schedule K-1 (Form 1065).

A partnership should consider the implications of self-employment taxes and estimated quarterly taxes. It is advisable to consult with a tax professional to gain insights into individual tax circumstances.

S Corporations

Within the realm of corporate entities, S corporations are a prevalent structure, standing alongside C corporations. Often embraced by small businesses and family-owned enterprises, S corporations must adhere to certain criteria to attain this designation. Notably, S corporations have a shareholder limit of 100 individuals.

Employing pass-through taxation, S corporations also report their income, deductions, and credits on their shareholders’ personal tax filings, preventing double taxation at the corporate level.

When it comes to tax obligations, S corporations have a defined process. Utilizing Form 1120-S, these corporations submit their yearly tax return and distribute a Schedule K-1 to each shareholder, outlining their individual portion. Shareholders are viewed as self-employed in this scenario, bearing the duty of settling self-employment taxes for the income they derive from the S corporation.

LLC

In many cases, limited liability companies, commonly known as LLCs, embody elements of both partnerships and corporations. One key advantage of this business structure is its flexibility regarding taxation. Depending on the number and tax status of its owners, who are called members, an LLC has the option to elect to be taxed as a sole proprietorship, partnership, S corporation, or C corporation.

When an LLC consists of just a single member, it is classified as a single-member LLC and is subjected to taxation similarly to a sole proprietorship. Conversely, when an LLC has several members, it is classified as a multi-member LLC and is automatically taxed as a partnership.

In both sole proprietorships and partnerships, business income is treated as pass-through for tax purposes. This implies that the income is taxed on personal tax returns rather than on separate business tax returns, thereby preventing double taxation.

If a Limited Liability Company (LLC) wishes to change its tax classification to either an S corp or C corp, it can do so by submitting Form 2553 to the IRS. C corporation taxes are reported at the corporate level, while S corporation taxes flow through to the individual level. It’s important to note that state tax regulations differ across states; therefore, seeking advice from a tax professional is advisable to gain clarity on your personal tax circumstances.

Need More Time? File A Business Tax Extension

To obtain a tax extension for your business, you have the option to submit either Form 7004 or Form 4868, depending on the nature of your business. Entities like multi-member LLCs, partnerships, corporations, and S corporations typically opt for Form 7004.

Tax Form 7004 is due.

  • Mar. 15, 2024: partnerships, S corporations, and LLCs taxed as a partnership or as an S corp;
  • Apr. 15, 2024: C corporations and LLCs taxed as a C corp.

(Sole proprietors and single-member LLCs use Form 4868, along with individuals filing their tax returns. The deadline for filing Form 4868 is Apr. 15, 2024.)

With the tax extension, your new updated tax deadlines will be:

  • Sept. 16, 2024: Partnership and S corp tax deadlines.
  • Oct. 15, 2024: Individual, sole proprietorship, and C corp filing deadline

New IRS rules for Venmo Tax for the 2023 tax filing in 2024

Posted by admin on March 14, 2024
Last modified: March 15, 2024

In your side gig, you rely on Venmo to handle transactions. Are your earnings from such ventures receiving increased scrutiny from the IRS Venmo tax this year? 

No. At present, there have been no changes.

To ensure transparency and accountability, individuals have long been required to disclose their earnings to the IRS once their income surpasses $400. To enhance adherence to tax regulations, digital payment platforms and online marketplaces such as Venmo, PayPal, eBay, and Airbnb were expected to intensify their monitoring and reporting of sales transactions starting in 2023. This information would be detailed in the IRS Form 1099-K for Venmo Tax, which would be furnished to both the IRS and the taxpayer.

The IRS has once again delayed the requirement for online payment processors and marketplaces to issue tax forms for payments over $600, which affects individuals earning income through these platforms.

As we approach tax season, it’s important to remember that the traditional regulations remain in place. Those engaged in selling goods or services must issue 1099-Ks once their sales exceed 200 transactions and reach $20,000 in total payments throughout the year.

In preparation for the tax year 2024, the IRS has announced its intent to reduce the threshold to $5,000 for total payments made yearly without setting any transaction minimums. This adjustment will be incremental until it reaches the permanent threshold of $600 for total payments. Despite these changes, individuals might continue to receive the necessary forms for payment amounts exceeding the newly established lower thresholds.

In light of the situation, the IRS has determined that additional time is necessary to address any potential challenges that could surface with the distribution of numerous new forms to individuals who may not anticipate receiving them or who may not have any tax liabilities, including Venmo Tax.

Contact your PriorTax dedicated Tax Professional to walk you through the latest updates on Venmo tax and Crypto tax, including any taxes you may own from past years in any digital payments and crypto transactions.

venmo tax

Venmo tax and Crypto tax rules for 2023 and 2024

It is convenient when utilizing Venmo to transfer funds, request payments, or receive money. Nevertheless, engaging in specific transaction types through Venmo may lead to potential tax obligations.

Fortunately, individual payments made through the platform generally do not result in tax obligations. However, if Venmo is utilized for business-related transactions, it is essential to anticipate potential tax liabilities.

Unsure of how taxes are applied to transactions made on Venmo? Delve into this guide for insights. Discover the types of Venmo transactions subject to taxation by the Internal Revenue Service and key considerations for tax preparation. Additionally, explore anticipated tax adjustments affecting Venmo and similar payment platforms expected in 2024.

What is the $600 tax rule for digital payments

Introducing a recent regulation, the $600 tax provision is poised to impact third-party payment services such as Venmo, PayPal, and Cash App. Users who generate over $600 in earnings on these platforms during a tax year will be subject to Form 1099-K reporting. Although initially scheduled for implementation in 2023, the rule has been postponed, meaning users will feel its effects in the 2024 tax season.

Will Venmo Payments be taxed in 2024 for filing 2023 tax return?

It is mandatory to report and pay taxes on income received via Venmo for the year 2023 and beyond. Nonetheless, the IRS has postponed the introduction of updated Form 1099-K threshold regulations.

In the upcoming tax year of 2023, individuals can anticipate receiving a 1099-K tax form if their Venmo payments for goods and services exceed $20,000 and involve a minimum of 200 transactions. Nevertheless, it remains crucial for taxpayers to report any Venmo income that falls below these thresholds and ensure compliance with tax obligations, irrespective of whether a 1099-K is received.

Do I pay taxes if I sold cryptocurrency and bitcoin using Venmo?

Upon completing a cryptocurrency transaction or buying or selling bitcoins on Venmo, you can expect to be provided with a statement detailing your gains and losses. It is important to note that when selling crypto on any platform, the profits incurred are liable to capital gains taxes. In some instances, you might mitigate some gains by utilizing capital losses. Seeking guidance from a tax specialist is advisable to gain a clear understanding of the regulations in place.

Standard Deduction for 2023 Tax Year

Posted by admin on March 7, 2024
Last modified: March 8, 2024

Individuals filing their tax returns in 2024 can benefit from a standard tax deduction in fiscal year 2023. Single tax filers are entitled to a standard tax deduction of $13,850, while joint filers can claim $27,700. Heads of household have a standard tax deduction of $20,800 available to them. 2023 Tax Filers who are 65 or older may have a higher standard deduction amount.

When considering ways to reduce your taxable income, the IRS provides two primary options: claiming the standard deduction or itemizing your deductions. Many individuals choose the standard deduction for its simplicity, even though itemizing could be more beneficial depending on individual circumstances.

Let’s begin by exploring the concept of the standard deduction, including who it benefits most and the specific standard deduction figures for the tax years 2023 and 2024. Additionally, we’ll delve into the extra standard deduction figures available for individuals aged 65 and above, along with guidance on computing it for dependents.

Standard Deduction 2023

What is the Standard Deduction?

When it comes to tax deductions, the standard deduction is a fixed amount recognized by the IRS. This deduction is subtracted from your adjusted gross income to reduce your taxable income. Your tax filing status typically determines the level of standard deduction you qualify for.

Among specific individuals, including those who have visual impairments or have reached the age of 65, there is typically a provision for an increased standard deduction, often referred to as an extra standard deduction. Conversely, those who are eligible to be claimed as dependents may receive a reduced standard deduction.

In the realm of tax deductions, the standard deduction is a common benefit accessible to many taxpayers, even in the absence of other qualifying deductions or credits. While the IRS typically allows individuals to claim this deduction without much scrutiny, specific scenarios might render some taxpayers ineligible for this tax benefit.

Consider this scenario: When married couples file their 2023 tax return jointly and have an adjusted gross income (AGI) of $125,000, they qualify for a standard deduction of $27,700. This deduction effectively lowers their taxable income to $97,300 ($125,000 – $27,700).

How the Standard Deduction Works for 2023 Tax Return

When it comes to filing your taxes, you have the choice between claiming the standard tax deduction or itemizing your tax deductions for 2023. Opting for the standard deduction allows you to deduct a set amount without needing to provide evidence to the IRS. On the other hand, itemized deductions provide an alternative method for lowering your taxable income.

Individual expenses permitted by the IRS, known as itemized deductions, serve as a means to reduce your taxable income. Some examples of these expenses are property taxes, specific unreimbursed medical expenses, and business mileage.

Opting for the standard deduction prevents you from claiming deductions on home mortgage interest or accessing specific tax benefits. However, if you choose to itemize your deductions, it is essential to retain all relevant tax deduction documents in case the IRS audits you.

Standard Deduction 2023

In the tax world, the 2023 standard deduction holds different values for various filing statuses. For single tax filers and married individuals filing separately, the deduction stands at $13,850, while it increases to $27,700 for those filing jointly. Heads of household are eligible for a standard deduction of $20,800.

Tax Filing Status 2023 Standard Deduction

  • Single $13,850.
  • Married, filing separately $13,850.
  • Married, filing jointly; qualified widow/er $27,700.
  • Head of household $20,800.

Additional standard tax deduction who is 65 of age or older

Individuals aged 65 and above, as well as those classified as blind according to IRS criteria, are eligible for an extra standard deduction that can be applied on top of their current standard deduction allowance.

The amount of additional tax deduction you qualify for is determined by your filing status and the specific criteria that apply to your situation.

2023 Standard Tax Deduction for Dependents

When submitting your tax return and being claimed as a dependent by another individual, the standard deduction you’re eligible for is based on your earned income. In the upcoming tax year of 2023, the options available to you are a fixed $1,250 or the total of your earned income plus $400. It’s important to keep in mind that if you choose the latter option, the sum cannot surpass the standard deduction allotted for your specific tax filing status.

Itemized vs. Standard Tax Deduction calculator

Posted by admin on February 29, 2024
Last modified: March 4, 2024

Explore our tool that contrasts the Standard Tax Deduction and Itemized Tax Deductions. In just a short amount of time, you can grasp the differences between these tax deduction types and receive an estimated calculation of your tax deductions by providing key information.

Should you be wondering about whether to opt for the standard or itemized tax deduction, this tool can guide you and even suggest strategic end-of-year tax strategies to boost your itemized tax deductions. Feel free to reach out to our dedicated Tax Professional for a personalized assessment of how you can maximize your tax refund.

Standard Tax Deduction

Pros and Cons of Choosing Itemized Tax Deductions?

Exploring tax deductions on your tax return has the potential to make a significant impact on individuals by lowering their tax liability. However, grasping the concept of itemized tax deductions is essential to determine if you qualify for the standard deduction or itemized tax deductions. It’s crucial to accurately discern which tax deduction method is most beneficial for you.

Consider this scenario: with minimal itemized deductions such as personal property taxes on your vehicle and without significant expenses like home mortgage interest, it becomes evident that opting for the standard deduction is the probable choice.

Pros of Choosing the Itemized Tax Deduction

Choosing to itemize tax deductions rather than opting for the standard tax deduction can prove advantageous from a tax perspective. By itemizing, you have the opportunity to include detailed expenses such as mortgage interest, medical bills, or substantial charitable contributions, among others. This approach has the potential to lower your taxable income even more if your itemized expenses exceed the standard deduction for the applicable tax year.

Additionally, should you find yourself nearing the standard tax deduction threshold, you have the opportunity to enhance your tax deductions by ensuring you collect receipts for extra itemized deductions that could potentially push you beyond the standard deduction limit.

Explore the benefits of leveraging our advanced tax deduction calculator to gain clarity on the potential tax deductions tailored to your specific situation. This tool empowers you to make an informed decision on whether the standard tax deduction suffices or if itemizing your tax deductions would be more advantageous for you.

By utilizing the calculator before the year-end, you can strategically plan out tax-saving maneuvers to maximize your itemized tax deductions before the year concludes.

Cons of Choosing the Itemized Tax Deduction

In terms of potential downsides, there are no significant issues to be concerned with. Individuals who opt for itemized tax deductions simply need to ensure they have all the necessary paperwork ready come tax season to avoid any oversights. For example, those who own a home should have their Form 1098 detailing mortgage interest payments, records of property tax payments, documentation of state income or sales taxes paid, as well as receipts for any charitable contributions made.

Rest assured that you don’t need to stress about understanding the nuances of itemized tax deductions. PriorTax is designed to guide you through the process by asking straightforward questions about your tax deductions, regardless of your knowledge of their classification. For further clarity on which expenses qualify as itemized tax deductions, utilize our standard versus itemized tax deduction calculator to gain insight.

You may need to collect additional paperwork when it comes to itemizing. Some may be attracted to a more straightforward method involving standard tax deductions. However, if your itemized tax deductions exceed the standard amount, putting in a bit more effort to gather the necessary documents can lead to cost savings. Utilize our comprehensive tax document checklist to streamline the process of compiling your documents for itemizing tax deductions.

What are the Pros and Cons of Taking the Standard Tax Deduction?

Pros of Choosing the Standard Tax Deduction

In considering your tax planning, it’s crucial to grasp the impact of each tax deduction on your overall tax picture. Many individuals choose the standard tax deduction when filing their taxes for several reasons.

To begin with, the efficiency of the process is notable. Furthermore, the annual adjustment of the standard tax deduction results from inflation and the decisions made by Congress. This adjustment helps lower taxpayers’ taxable income.

Different filing statuses, such as single, married, filing tax jointly, or head of household, determine the standard deduction amount, which is increased for individuals aged 65 or older and those who are visually impaired.

Please be aware that if married couples decide to file separately, they won’t be able to claim the standard deduction if one spouse chooses to itemized deductions. It is necessary for both spouses to agree on either itemizing tax deductions or taking the standard tax deduction.

Cons in Choosing the Standard Deduction

Opting for the standard tax deduction simply for convenience might lead to overlooking opportunities to deduct expenses and potentially lower taxable income. The decision between standard and itemized tax deductions ultimately comes down to crunching the numbers.

When faced with the decision between standard and itemized tax deductions, it ultimately comes down to the numbers at hand. Opt for itemized deductions if they exceed the standard tax deduction amount, and choose the standard deduction if it provides greater benefits. In cases where your standard deduction aligns closely with your itemized deductions, ensure to review and consider any additional itemized deductions that could potentially tip the scale in favor of itemizing.

Rest assured that deciphering between standard and itemized tax deductions is not a concern you need to dwell on. Rest easy knowing that PriorTax can maximize your tax benefits, regardless of your financial decisions made the previous year. Whether you prefer to handle your taxes independently or seek the expertise of a PriorTax Tax Professional, rest assured that we are committed to securing every dollar you are entitled to and aiming for your most substantial tax refund possible.

Standard vs Itemized Tax Deduction

Posted by admin on February 29, 2024
Last modified: March 4, 2024

If you have ever carefully listed out your itemized tax deductions before, especially if you own a home, consider a different approach now. With the updated standard tax deduction amount for your specific filing status, you might find it more advantageous to take the standard deduction instead of itemizing your tax deductions.

The latest data from the IRS reveals that approximately 90% of individuals filing taxes are now opting for the standard deduction, a shift largely attributed to changes implemented through the Tax Reform legislation in 2017. If you find yourself uncertain about the most advantageous choice for this tax year, consider utilizing our convenient tax deduction calculator or reaching out to our specialized tax experts for personalized guidance throughout the entire process.

In just a short amount of time, grasp the modifications in the standard deduction and itemized deductions, and receive an approximate calculation of your deductions depending on the information provided. Additionally, this tool advises you on whether to opt for standard or itemized deductions and offers suggestions on year-end tax strategies to enhance your itemized deductions.

In general, when your standard deduction outweighs your itemized deductions, opting for the standard deduction is usually the more advantageous choice.

Should I take the standard vs. itemized tax deduction

Contemplating whether to opt for the standard deduction or dive into the itemized deduction realm? The decision of which one will yield a greater tax benefit for you is contingent upon your specific situation. Let’s delve into different scenarios where either the standard or itemized deduction would be most advantageous.

Itemized Tax Deduction

When you should take the standard deduction

Understanding the complexities of tax preparation may appear overwhelming at first, yet rest assured, assistance is within reach. The choice between opting for the standard deduction or itemizing largely hinges on your eligibility for various deductions. The standard deduction represents a fixed sum determined by your tax filing status, offering supplementary advantages for individuals aged 65 and above or with visual impairments.

The current standard tax deduction is:

  • $13,850 for single filers
  • $13,850 for married, filing separately
  • $20,800 for heads of households
  • $27,700 for married, filing jointly

Each year, the IRS updates the standard deduction figures to account for inflation. As a result, it is important for you to review your expenditures annually in order to determine the best strategy for your situation if you have itemized deductions such as mortgage interest and property taxes.

In the upcoming tax year of 2023, significant inflation adjustments have been implemented, marking one of the largest increases in decades at 7.1%. This adjustment may lead to the standard deduction surpassing your itemized deductions for the year, making it more advantageous to opt for the standard deduction.

In plain terms, choosing the standard deduction is the best decision when the total of eligible itemized expenses falls short of the standard deduction threshold. When contemplating whether to go with the standard deduction, it is crucial to evaluate itemized deductions like mortgage interest, medical costs, and charitable contributions to inform your tax-filing decision-making process.

When you should take the itemized deduction

Wondering about the right time to consider itemizing deductions? It becomes beneficial when your qualifying expenditures, such as medical expenses, mortgage interest, or donations to charity, exceed the standard deduction threshold. By itemizing deductions, you could potentially reduce your tax liability if these eligible expenses surpass the standard deduction amount.

In certain scenarios, it is possible for taxpayers to find themselves in a situation where their itemized deductions match the standard deduction amounts set at $13,850 for single filers and $27,700 for married couples filing jointly. To overcome this, individuals could consider strategies such as increasing their charitable donations towards the end of the tax year or ensuring they include all eligible charitable contributions when filing their taxes, thereby elevating their total itemized deductions above the standard deduction threshold.

Exploring potential qualifying expenses can be made easier by consulting our article on often-overlooked deductions. Utilize our calculator that compares standard and itemized deductions for a clearer picture. Additionally, our team of dedicated tax professionals at PriorTax will tailor their guidance to your specific circumstances without requiring you to distinguish between standard and itemized deductions.

Tax Deadline for Businesses You Need To Know

Posted by admin on February 22, 2024
Last modified: February 22, 2024

Tax Deadlines for Businesses such as C Corps, S Corps, and Partnerships, including LLCs.

When it comes to tax filing deadlines for business partnerships (such as multi-member LLCs) and S-Corps, the usual timeframe is by March 15 unless they follow a fiscal year. You can extend this deadline by six months to September 15 (or five months after the initial due date) by submitting Form 7004.

As of the fifteenth day of March 2024, it is the deadline for certain types of businesses to submit their taxes. Entities such as partnerships, multi-member LLCs, and S-Corporations must ensure they file either Form 1065 or 1120S by this date if they operate on a calendar year basis.

When operating a business that follows a fiscal year, it is essential to submit your tax return by the 15th day of the third month after the conclusion of your tax year. For instance, if your business adheres to a tax year from April 1 to March 31, the tax filing deadline for your business tax return would be June 15 instead of March 15.

What Should I Do if I Miss the Tax Filing Deadline for Businesses?

In the event that a tax deadline is overlooked, there are various options available to rectify the situation. The appropriate course of action is contingent upon the specific missed deadline and your financial circumstances, such as owing taxes or expecting a refund.

What Will Happen If I Miss the Tax Filing Deadline and Owe Taxes?

If you miss the tax filing deadline and have tax obligations, it is important to file your tax return promptly. Delaying the filing will result in accumulating interest, penalties for failure to file, and penalties for failure to pay until you settle the balance due by filing the return.

Did you Miss The Estimated Tax Payment Deadline?

If you fail to meet a tax deadline for making an estimated tax payment, it is important to rectify the situation promptly. The consequences, in terms of penalties and interest imposed by the IRS, are contingent upon the amount owed and the duration of the delay. Nonetheless, mitigating the repercussions can be achieved by remitting your payment as soon as possible.

The Best Way to File My Tax Return for Businesses

For those in search of the quickest method to submit their tax return, the most efficient and precise way is through electronic filing. Opting for E-Filing with PriorTax ensures speed and enhances security compared to traditional paper filing methods.

With the convenience of electronically filing your tax return, there’s no need to fret about the document going missing in the postal system or reaching the IRS after the deadline. Instant confirmation of the IRS receiving and initiating the processing of your return gives you peace of mind.

How Much Time Do I Have To File My Back Taxes from the Missing Tax Filing Deadline and Owen a Tax Refund?

In the event that you fail to meet the tax filing deadline and have a refund due to you, there are important considerations. If you have overpaid for the tax year 2023, there are usually no repercussions for submitting your tax return late. Nevertheless, it is advisable to submit your return at the earliest opportunity.

Typically, there is a three-year window from the tax return deadline for claiming a tax refund. This rule applies to the 2023 tax returns, with the deadline set in 2026. If left unclaimed beyond this period, the tax refunds usually revert to the ownership of the U.S. Treasury.

What if I Made Mistakes and Need to Fix My Taxes?

In the event that an error is discovered and a tax re-filing or fixing your taxes becomes necessary, it’s important not to panic. Mistakes are a common occurrence in the process of tax filing. Should you realize that certain income was omitted or a specific tax credit was not claimed after submitting your tax return, there is no need to redo the entire process. Instead, you can file an amendment using Form 1040-X, ensuring that you provide copies of any forms or schedules that require modification or were initially left out of your original submission.

When it comes to rectifying errors on your tax return, IRS Form 1040-X plays a crucial role. Assisting you in navigating the amendment process, the experts at PreTax can guide you through the necessary steps to ensure your tax return is accurate.

To prevent any setbacks, it is essential to submit Form 1040-X only after your initial Form 1040 has been approved. If you seek to claim a tax credit or refund from a past year, it is imperative to file within three years of submitting your original return or within two years of paying the tax, depending on the later date.

2024 LLC Business Tax Deadline

Posted by admin on January 25, 2024
Last modified: January 25, 2024

Important Tax Dates for LLC Business in 2024

Small business owners often find limited liability companies (LLCs) to be an attractive business structure. One of the primary advantages of an LLC is the liability protection it offers owners against business debts. Additionally, this business entity allows for flexibility in business tax deadline and tax filing and payment methods.

Due to the adaptable nature of Limited Liability Companies (LLCs), they are not bound by a specific tax deadline. Instead, the timing of their tax filing is influenced by several factors.

How Does LLC File Taxes?

LLCs stand out from other business structures due to their state-level creation. When an individual or group establishes an LLC, their state recognizes the business as a corporation. However, the IRS maintains its classification of a sole proprietorship for businesses owned by one person and a partnership for businesses with multiple owners.

In the realm of business entities, both sole proprietorships and partnerships stand as disregarded or pass-through entities. They earned this status due to their unique characteristic of profits passing through to the owners, who report them on their personal tax returns. The essence lies in the fact that these entities do not incur corporate income tax. LLCs, when classified as either of these entities, can reap the advantages of the protective shield offered by corporations against liability while escaping the burden of double taxation.

Unlike sole proprietorships and partnerships, LLCs are exempt from the burdensome tax filing process. Additionally, they can choose between being classified as an S corporation or a C corporation.

The optimal decision for you is contingent upon various factors. For instance, opting to establish a corporation can lead to financial savings in terms of self-employment taxes but necessitates more rigorous reporting.

If you need clarification on the appropriate filing status for your LLC, seeking the guidance of a CPA or tax expert can help you navigate the decision-making process effectively. By subscribing to a Bench premium membership, you gain unlimited and convenient access to consultations with experienced tax professionals who will guide you on every aspect of your situation.

Main Tax Filing Deadlines for Business Taxes

Regarding tax forms, the designated filing date is the 15th day of each month. However, if this day lands on a weekend or holiday, the deadline is pushed forward to the following business day. Rest assured, the IRS has no intention of shortening the time you have to file your taxes.

The timing of your filing date is also influenced by your choice of a non-traditional fiscal year. Typically, companies utilize the calendar year as their fiscal year, concluding their financial statements on December 31. Adopting the calendar year as your fiscal year can offer certain advantages, such as synchronizing your business taxes with your personal taxes.

Choosing a different fiscal year can prove advantageous for businesses that experience seasonal fluctuations in their operations, such as farms and schools. By aligning their tax season with the conclusion of their busiest period, these entities can reap the benefits of this strategic decision.

Depending on how the IRS categorizes your business, the month you file will vary if you do not opt for a different fiscal year. Your LLC has four distinct filing types, each with its specific deadline.

How PriorTax Can Help

Mastering your tax filing starts with being aware of important tax due dates. However, expecting you to dedicate 10,000 hours to acquire this skill is unrealistic.

From the moment you join forces with PriorTax’s knowledgeable and Dedicated Tax Professionals, your tax obligations will be expertly handled from the beginning to the end of the year. Upon finalizing your financial records, we equip you with a comprehensive year-end financial package, including all the necessary guidance to effortlessly complete your tax filing and secure the maximum tax refund available to you.

business tax deadline

LLC Sole Proprietorship Tax Deadline

In the event that one person owns an LLC, the IRS considers it to be a sole proprietorship. As part of the IRS Form 1040, your individual income tax return, you will report your business income on Schedule C. Consequently, your business taxes will be filed simultaneously with your income taxes.

In order to meet the tax requirements for the year 2023, specifically for filings in 2024, limited liability companies (LLCs)

LLC Partnership Tax Deadline

When multiple individuals own an LLC, the IRS considers it a partnership. As a result, it is necessary to fill out IRS Form 1065, which serves as the partnership return. This form allows you to disclose the business’s income and expenses over the year.

In order to ensure proper financial reporting, the LLC (or the entity that files Form 1065) distributes a document called Schedule K-1 to its shareholders. This document contains all the necessary income and expenses information obtained from the Income and Expenses section of Form 1065. Subsequently, shareholders are responsible for submitting their personal income tax return along with Schedule K-1 and paying any partnership taxes owed.

To comply with the requirements for 2024, it is important for limited liability companies (LLCs) operating as partnerships to submit their Form 1065 by March 15. However, if an extension is granted, the deadline for filing is extended until September 15.

S Corporation Tax Deadline

When your LLC successfully submits Tax Form 2553 within the specified timeframe for the fiscal year you are currently filing; the IRS recognizes your entity as an S corporation. As pass-through entities, S corporations require shareholders to report the business’s profits or losses on their personal income tax return.

When reporting your business’s income and expenses, completing IRS Form 1120S is a must. Just like partnerships, Form 1120S requires the completion of Schedule K-1, which is used to report the income share of each shareholder.

In order to meet the tax obligations for the year 2024, it is necessary for LLCs operating as S corporations to complete and file Form 1120S by March 15. However, if an extension is granted, the deadline for filing is extended to September 15.

C Corporation Tax Deadline

When your LLC makes the decision to be treated as a corporation by submitting Form 8832 (which we will discuss in further detail later), the IRS will classify your business as a C corporation. When it comes to taxation, businesses often encounter the concept of double taxation. This occurs when the business pays a flat corporate federal income tax, and the various shareholders will be taxed on their earnings when reporting their personal income taxes. This results in a duplication of tax payments, leading to the term “double taxation.”

In the world of corporate tax filing, one cannot escape the clutches of IRS Form 1120. This formidable document serves as the vessel through which C corporations submit their income tax returns. Once the taxable income is calculated, it falls under the jurisdiction of a 21% flat federal corporate income tax rate. But that’s not all – the state corporate income tax adds another layer of complexity, with rates varying between 1% to 12%.

In order to ensure compliance with the tax regulations for 2024, it is imperative for Limited Liability Companies (LLCs) that have chosen to file as C corporations to submit their Form 1120 by April 15. With an extension, the deadline for tax filing is Oct. 15.