Category: Tax and Life Changes

Life changes and your taxes go hand in hand; believe it or not. That being said, it’s easy to forget about your tax return as a newlywed or when you’re welcoming a newborn into the family. Be aware that many of these changes also make you eligible for deductions and credits on your tax return. In some cases, you may need to update your W-4 form as well. PriorTax will keep you up to date on what to do when these life changes occur. You won’t be left in the dark.

Check back here for answers to your questions about how these changes affect your taxes.

 

Archive for the ‘Tax and Life Changes’ Category

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.

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.

Updates on Student Debt Forgiveness: February 2024

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

The Biden Administration is Forgiving $1.2 billion in Student Debt Forgiveness for 153,000 Borrowers. 

On the 19th of January 2024, a significant announcement was made regarding an extra $4.9 billion allocated for student debt forgiveness and relief. This relief is specifically for 73,600 individuals, including teachers, social workers, firefighters, and nurses, who are eligible for the Public Service Loan Forgiveness program.

In a recent announcement, the administration led by President Biden revealed plans to forgive $1.2 billion in student debt for 153,000 borrowers. Individuals whose loans are set to be forgiven can expect to receive a personal email notification from the President himself within the day, as per the Department of Education.

In response to the Supreme Court’s ruling against the Biden administration’s proposal for widespread student loan forgiveness, the White House has introduced a new initiative to tackle the nation’s massive $1.77 trillion student debt burden. This debt relief program aims to support millions of borrowers by allowing them to eliminate up to $20,000 each in student debt.

In its most recent announcement, the Biden administration confirmed that they have given the green light for loan forgiveness to almost 3.9 million borrowers. Among them are individuals who have been diligently paying off their debts over the span of many years. Specifically, the latest batch of debt relief, which benefits 153,000 borrowers, is allocated to those participating in the Saving on a Valuable Education (SAVE) repayment program and have completed a minimum of a decade’s worth of payments.

student debt forgiveness

Who Qualifies for February 2024 Student Debt Forgiveness?

According to a recent Biden administration announcement, 153,000 borrowers under the SAVE program have been deemed eligible for certain benefits. As confirmed by the Education Department, these individuals have fulfilled the criteria of being part of repayment schemes for a minimum of a decade and having initially borrowed $12,000 or fewer for their college education.

Upon surpassing the borrowing threshold of $12,000, the department clarified that each subsequent $1,000 loaned entitles the borrower to forgiveness after another year of timely payments.

What Do You Need To Do?

As per the Education Department, individuals who qualify for loan forgiveness will soon receive an email notification from the President. No additional steps are required from recipients, as loan servicers will handle the forgiveness process promptly. Following the official statement, borrowers can expect to witness their loans being forgiven directly in their accounts within the next few days.

What Is The SAVE Student Debt Forgiveness Plan?

Introducing a new initiative called the EASE program, a modern income-driven repayment solution launched under the guidance of the current administration. EASE aims to alleviate financial strain by adjusting a borrower’s monthly payments based on their income, offering relief from excessive debt accumulation. This innovative program addresses issues that existed in previous IDR programs, preventing interest from escalating on borrowers’ debts.

Participants in the SAVE program can qualify for loan forgiveness after either 20 years or 25 years of making repayments. However, the White House has introduced a more expedited 10-year forgiveness plan specifically for individuals with lower loan balances.

How Many People Are Enrolled in SAVE Student Debt Forgiveness Plan?

As of Wednesday, the Education Department reported that 7.5 million individuals are registered in SAVE, with approximately 4.3 million not making monthly payments.

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.

Can You File a Tax Refund on a Weekend?

Posted by admin on February 15, 2024
Last modified: February 16, 2024

Is Weekend Tax Filing Possible? YES.

On weekends, taxpayers can anticipate the processing of their tax refunds by PriorTax and our dedicated tax professional, although they should still expect the weekend tax refunds to be processed within the typical operational timeline.

The policies of the company or institution issuing the refund will determine the extent to which refunds differ. A noteworthy observation is that numerous refunds, particularly those processed through automated electronic means, can be accommodated even during weekends.

In regards to the processing times of tax refunds, certain refunds might be affected by the operational schedule of banks and financial institutions, as they may not handle transactions during weekends. To ensure accurate details regarding refund processing times, it is advisable to reach out directly to the company or institution from which you are anticipating a tax refund from weekend tax filing.

Since the question needs more specific details, let’s assume the scenario involves receiving a refund on a bank card or credit card after returning an item on a Saturday morning. Upon returning the item and having it scanned by the store, the refund process is initiated promptly.

weekend tax

At the onset, a contractual agreement is established to ensure the provision of a refund. 

Suppose an item necessitates shipment back, analogous to the tax return process implemented. In that case, the timing of the tax refund processing varies depending on the status of one’s account and the nature of the item itself. It may be imperative to wait until the designated party physically receives the item before the tax refund can be effectively initiated. Remarkably, the registration of refunds transpires promptly once the item is scanned; nevertheless, in certain instances, the dispersion of refunds might be deferred until the conclusion of the business day, coinciding with the closure of operations.

It is doubtful that you will receive it on the weekend. The processing time for both banks and credit card companies may take several days. This is due to the multi-step verification process required to ensure the transaction is not fraudulent. The electronic payment first needs to be verified and approved by the store. It needs to be reviewed and approved by the corporate office if applicable, and finally, it has to be authorized by the financial institution before the funds are disbursed.

After transmitting the funds, they forward them to the appropriate institution responsible for verifying the presence of the funds in the originating account. To ensure the validity of the funds, all the transactions made throughout the day undergo processing before your institution finally deposits the funds into your account. Due to this meticulous process, it occasionally takes a span of two or three days.

In regards to the weekend tax filing, it is ultimately up to your particular establishment. Although certain banks, credit unions, and credit card customer service may have limited weekend hours, their operations are not at full capacity with all departments functioning. As a result, services related to transaction confirmations and funds availability are typically unavailable.

If the information gets processed partially before the weekend, there is a chance you will come across a pending status. However, if the information is not processed even in part, no notification will be displayed. Although some institutions can operate at full capacity throughout the entire week, the majority of them do not. Consequently, the funds will remain on hold until Monday for further processing unless they fall on a holiday.

The 2024 E-File is Now Open. File Early with our Free Dedicated Tax Professional

Posted by admin on February 1, 2024
Last modified: February 1, 2024

The commencement of the 2024 tax filing season was marked by the Internal Revenue Service (IRS) on January 29, as they began accepting and processing the 2024 Efile for 2023 tax returns. It is a well-known fact that many taxpayers choose to postpone filing their taxes until the eleventh hour. Nevertheless, it begs the question: why delay such an important task?

When it comes to improving your financial situation, few things make as much of an impact as your tax refund. Last year, the IRS reported that around 65% of tax filers received a refund, an average amount exceeding $3,000. To ensure you receive your refund promptly, filing your tax return as soon as possible is advisable. Take advantage of PriorTax’s early opening to Efile both your current and past year taxes, maximizing your potential refund.

Are you looking for some motivation to Efile your taxes early? Be sure to do it before the last minute of the April 15, 2024, tax deadline. Instead, please take advantage of these four compelling reasons to start working on your taxes today and electronically submit your 2023 tax return with the assistance of our experienced tax expert, all at no cost to you.

2024 efile
2024 efile

1. Begin Your 2024 Efile for 2023 Tax Refund Today

Filing your taxes early and getting your refund sooner can be a smart financial move, especially considering the impact that last year’s events and the current year can have on your finances.

According to the Internal Revenue Service (IRS), taxpayers who file their taxes electronically and opt for direct deposit can expect to receive their tax refunds within 21 days or less, provided there are no complications with their tax return. Additionally, the potential for larger refunds may arise due to the various tax deductions and credits associated with moves made during the year.

2. Filing online for 2024 EFile is good, but with our Dedicated Tax Professional is Better

Achieving a seamless and precise tax filing experience with PriorTax E-File has always been challenging. By conveniently assembling your tax documents, you can gain access to an interactive platform where you will be prompted to provide essential information about yourself, ensuring that you receive the highest possible tax refund. With PriorTax diligently scouring through an extensive range of nearly 400 tax deductions and credits, you can rest assured knowing that you will receive every dollar you rightfully deserve, thanks to the accuracy of your answers.

Instead of going elsewhere to handle your taxes, there is no need when you have the opportunity to receive comprehensive guidance or have your taxes completed by our dedicated tax professional, all free of charge.

3. PriorTax Dedicated Tax Professional Will Do your Taxes from Start to Finish

When it comes to handling your taxes, there is an option to seek assistance from a knowledgeable tax expert. By connecting with a PriorTax free tax expert, your 2024 tax filing process can be efficiently completed within a short timeframe. Whether it be a full day or even as quick as 30 minutes, your taxes will be taken care of from beginning to end.

4. It’s Time to Find your Dedicated Tax Professional

Even if you find yourself in debt to the IRS, there is a compelling incentive to prioritize the early filing of your tax return. By submitting your return sooner rather than later, you are granted the luxury of delaying payment of any outstanding taxes until the mid-April filing deadline.

By taking the proactive step of starting your tax preparations ahead of time, you will have ample opportunity to strategize on how best to fulfill your financial obligations or explore alternative solutions if you owe a balance. Additionally, an appealing option to consider is contributing towards your Individual Retirement Account (IRA) for the year 2023 before the tax deadline on April 15, 2024.

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.

8 Very Commonly Overlooked Tax Deductions and Tax Credits

Posted by admin on November 30, 2023
Last modified: November 30, 2023

Taxpayers tend to overlook certain tax deductions, tax credits, and even tax exemptions that can help them pay less in taxes. Understanding these available tax breaks is important so that you are not leaving money on the table come tax season.

People only sometimes take full advantage of the possible opportunities to reduce tax bills. The ever-changing landscape of federal and state laws can make it challenging to keep up with all the available deductions, credits, and exemptions. Here, we have gathered 16 overlooked options for saving money on taxes – so if you qualify for any of these reliefs, you could be leaving more cash in your wallet this year!

Most importantly, reach out to locate your free dedicated tax professional from PriorTax to walk you through your tax filing from start to finish. Get in touch with your tax professional now.

Gambling Losses Tax Deduction

The Internal Revenue Service (IRS) allows a tax deduction for gambling losses for those who choose to itemize deductions. However, these write-offs are only available up to the amount of any gambling wins that were declared as taxable income. Additionally, it’s important to recognize that other forms of wagering can be taken into account when claiming deductions related to gambling, such as non-winning bingo tickets or lottery expenses.

If you believe that this tax deduction is the right move for you, be certain to save all of your gambling receipts – such as losing tickets. The IRS also recommends to keep a daily log of your gambling activity. This should include details like the date and type of bet, where it was placed, the names of those with you when wagering, and how much was won or lost in each instance.

tax deductions

Child and Dependent Care Tax Credit

The financial burden of childcare can be difficult to bear for many families. Fortunately, the child and dependent care tax credit is available to help lessen this expense’s impact on a household budget.

If your family requires childcare for children under 13 years old or a disabled dependent of any age, 2022 could be the time to claim a non-refundable tax credit. This credit can provide up to 35% or $3,000 of qualifying expenses for one child and $6,000 maximum for two or more qualifying children.

The child and dependent care tax credit can provide financial assistance to those paying for the cost of taking care of dependents. This could include elderly parents who are claimed as dependents on an adult child’s tax return, for example. In such cases, any related expenses may qualify for the credit above.

State Income Tax Refund

Taxpayers Can Avoid Reporting State Income Tax Refund. As outlined on Schedule A of the IRS Form 1040, many individuals can avoid including their state income tax refund when filing their federal income tax return. This is because when you claim the standard deduction for state and local taxes on your most recent federal tax return, that refund isn’t considered taxable.

When reporting a state income tax refund, you should not include it on your tax return if you did not itemize deductions for the year you received the refund. This avoids making an unnecessary report of the income. But suppose you are still determining whether the Form 1099-G related to your state income tax refund is taxable or not. In that case, consulting a professional might be wise to determine its taxable status.

Out-of-Pocket Charitable Tax Deductions

Giving to Charity Can Be Rewarded. You may be aware of the possibility of deducting larger charitable gifts that you made, such as by check or payroll deductions. However, it is worth noting that lesser amounts can still make a difference and should not be overlooked. In addition, you can also claim out-of-pocket expenses incurred while working for a charitable organization.

When it comes to charitable contributions, even something as simple as providing the ingredients for a meal prepared for a soup kitchen run by a nonprofit organization or buying stamps for a school’s fundraising effort can qualify. In other words, spending money supporting these causes is just as valid and beneficial to the cause as an outright donation.

It is important to maintain documentation of your charitable contributions. If the total value of your donations is $250 or higher, you must acquire a receipt verifying the contribution from the charity in question. In addition, for travel-related expenses associated with charitable activities, you are eligible to write off 14 cents per mile as well as parking fees and tolls.

State Sales Taxes

A deduction for state sales taxes can be a real boon for those who reside in states that don’t levy income taxes. If you opt to itemize deductions, you have the option of deducting either state taxes or your state and local sales taxes, whichever one offers the best financial relief.

Those who pay state income taxes can write off sales taxes in certain situations. The Internal Revenue Service (IRS) has a calculator that can help residents of different states figure out how much they can deduct, considering their income and applicable state and local tax rates. For instance, if you have made any large purchases like a vehicle, boat, or airplane, the calculator also includes the taxes paid on these items when figuring out total deductions for sales tax.

Regarding tax deductions, there is a limit for the amount of sales and property taxes that can be claimed – $10,000 annually ($5,000 if filing separately). Unfortunately, this amount includes both your local sales tax deduction and your local property taxes.

State Tax Paid for Previous Year

If you had to pay tax on your 2021 state income taxes, the cost is eligible to be used as a deduction when filing your 2022 federal return. Not only does this include the amount of taxes owed when filing, but it also takes into account any state income taxes taken out of your paycheck throughout the year or paid in quarterly estimated payments.

Additionally, the taxes withheld from your paycheck or paid in quarterly estimated payments should also be included. However, note that the deduction for state and local taxes is limited to $10,000 annually ($5,000 if married filing separately).

Dependent Tax Credit

You may not be aware, but claiming a dependent on your return can save you some money come tax time. The Dependent Tax Credit offers $500 for dependents who cannot qualify for the Child Tax Credit – such as children over 17 years old or elderly relatives in need of care in your home. So, if you have someone depending on you, remember to take advantage of this credit when filing!

It is crucial to be aware that for the 2022 tax year, the total of both the child credit and credit for other dependents may only be available when your adjusted gross income is $200,000. If filing jointly as a married couple, this number goes up to $400,000.

1099-K for TPSO Reporting Delay For Tax Year 2023

Posted by admin on November 23, 2023
Last modified: November 23, 2023

IRS Announced 1099-K Form for TPSO Reporting Delay For Tax Year 2023

The IRS has announced a postponement of Form 1099-K reporting requirements for third-party platforms in 2023. Instead, the current threshold of $5,000 will be implemented in 2024 as a gradual transition period.

For the upcoming tax season, the IRS has pushed back its initial reporting threshold for third-party settlement organizations (TPSOs) to take effect. The American Rescue Plan 2021 requires that transactions over $600 in Tax Year 2023 not be reported on IRS Form 1099-K by TPSOs or the payee. This decision affects popular companies such as Venmo and PayPal.

The IRS has ruled that the existing 1099-K reporting threshold for the tax year 2023 will remain the same, being payments of more than $20,000 in total from over 200 individual transactions.

Here are the Details of the 1099-K Form Reporting Delay

To minimize taxpayer misconception and confusion, the IRS issued Notice 2023-74, announcing that the new $600 Form 1099-K reporting threshold for third-party settlement organizations has been postponed until calendar year 2023. The decision was based on an analysis of feedback from taxpayers, tax professionals, as well as payment processors.

To reduce potential confusion, the IRS has declared that 2023 is to be viewed as a transition year regarding the new law. The agency will only require reporting if a taxpayer receives more than $20,000 and they have engaged in more than 200 transactions during that year. This has been put into effect due to the estimated 44 million Forms 1099-K being sent out to unsuspecting taxpayers who may not owe any tax.

In order to ensure stakeholder certainty and help individual taxpayers comprehend the intricacies of the new provision, the IRS is proposing a phase-in for the $600 reporting threshold in 2024. This would involve setting a threshold of $5,000 for tax year 2024 as stipulated by the American Rescue Plan (ARP).

In response to the valuable input of those within the tax community, the IRS is mulling over potential updates to Form 1040 and its associated schedules for 2024. Making changes to this essential form – which serves over 150 million taxpayers annually – requires much consideration and analysis, hence why these changes are planned for 2024 to gain further feedback from stakeholders.

Beginning in 2022, the American Rescue Plan has mandated that any third-party settlement organizations (TPSOs), including digital payment apps and online marketplaces, must report payments of more than $600 for goods and services on a Form 1099-K. This form will be sent to taxpayers and the Internal Revenue Service (IRS) to assist them in correctly completing their tax returns. Prior to this regulation, only transactions that amounted to more than $20,000 through at least 200 sales per annum were required to submit such paperwork.

1099-K

The IRS Temporarily Delayed the New 1099-K Requirement.

When it comes to personal transactions such as presents for a birthday or special occasion, sharing the cost of a car ride or dinner with someone, or paying another person for a household expense, there is no need to file any reports. These payments do not incur taxes and should not be recorded on Form 1099-K.

Though it may seem odd, many individuals who make casual sales of goods and services – like used clothes, furniture, and other household items – might receive a Form 1099-K in the mail, even if these sales produce no taxable income. In fact, it is not uncommon for those selling such goods to take a loss.

The IRS has determined to push back the date for the reporting requirements and set a threshold of $5,000 for 2024 in light of the difficulty in identifying these transactions. They are asking for input on the dollar amount as well as any other aspects on how to focus on taxable trades. In particular, they seek feedback concerning the chosen threshold of $5,000 for the 2024 tax year.

PriorTax understands the importance of properly managing the expansion of information reporting that is to take place due to the new thresholds set for Form 1099-K. In addition, it is vital that both taxpayers and our tax professionals have all the necessary resources to help them understand and comply with these changes. This increased reporting leads to a higher rate of tax compliance.