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

Child Tax Credit 2022

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

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

Child Tax Credit 2022

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

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

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

child tax credit 2022
child tax credit 2022

Qualifying for the Child Tax Credit in 2022

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

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

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

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

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

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

– They must have an official Social Security Number.

Determining the Child Tax Credit 2022 amount

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

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

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

Determining the Additional Refundable Child Tax Credit amount

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

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

Updates on Student Loan Forgiveness

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

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

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

student loan forgiveness
student loan forgiveness

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

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

Student Loan Forgiveness: When Do Student Loans Resume?

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

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

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

How to Apply for Student Loan Forgiveness in 2022?

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

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

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

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

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

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

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

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

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

How to Prepare your Education Tax Credit

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

What is Education Tax Credit?

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

education tax credit
education tax credit

What is American Opportunity Credit, AOTC

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

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

What is Lifelong Learning Credit, LLC

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

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

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

What are some other Tuition Tax Deduction

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

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

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

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

How Do I Report Taxes on Tip Income for my Tax Return?

Posted by admin on June 9, 2022
Last modified: June 16, 2022

If you are a server, barista, or another staff member making tips, you need to know how these tips will factor into your taxes. In short, you report and pay taxes on tip just like you report and pay taxes on the rest of your income from your W-2 job. Your employer will use your monthly reports to determine how much money your employer needs to take from your paycheck to cover the payroll taxes and fees for tips. Estimate your return with our powerful tax calculator for current year or prior year taxes on tip.

So, do I have to report my tips?

As a worker in the food and beverage industry, you may be wondering if you need to report your tips to the IRS. The answer is yes – the IRS assumes that you will earn tips at an average of 8%. If you regularly report tips under this amount or don’t report any tips, the IRS may investigate.

So what exactly should you include taxes on tip income for your taxes

Tips are usually paid through credit/debit card or with cash, but there are other ways to receive a gratuity. Sometimes people who know you well might leave other perks as a tip.

These can include:

-Gift cards

-Free meals or drinks

-Tickets to events

If you receive any of these non-cash items as a tip, make sure to keep track of their fair market value so you can properly report them come tax time.

How do I report my taxes on tip to the employer and to the IRS?

Are you a server who needs to know how to report your tips? You’ve come to the right place. Keep reading to find out everything you need to know about reporting your tips to your employer and the IRS.

First, let’s start with reporting tips to your employer. You can use Form 4070A to keep a record of your tips as you earn them. Then, use Form 4070 to report them to your employer by the 10th day of the following month. So, if you earned tips in January, you would need to turn in your Form 4070 by February 10th.

Your employer will report your numbers to the IRS, and it will withhold money from your salary to cover tips. Reporting tips to your employer helps your employer keep enough money in your wages to cover taxes on tip. You must withhold income and FICA taxes on tip and taxes on every paycheck, and you must report every employee’s tip to the IRS. If you are not earning enough from wages and tips, your employer pays you directly to cover the taxes that were withheld; your W-2 shows you how much you owe.

Now let’s talk about reporting taxes on tip to the IRS.

If you make less than $20 in tips in a month, you can report them directly to the IRS using Form 4137. But if you earn tips from more than one job, you’ll need to treat each one separately. That is, you won’t add up your tips from different jobs – you will report your gratuity for each job individually.

At the end of every shift, your employer will give you a W-2 form reflecting the wages you earned and tips that you reported; one copy goes to the IRS. The IRS requires that you report the total monthly tips you make to your employer before the 10th of the following month. While the IRS requires that tipping employees file tip reports once per month, you need a report every paycheck period, or else you cannot properly report your employees’ total wages or keep proper taxes on file (and pay your share of the FICA taxes). In addition, employers are required to pay their employers’ share of Social Security and Medicare taxes, which are based on total wages paid to tipped employees and reported tips revenue.

All cash tips received by employees during a given calendar month are subject to the social security and Medicare taxes and must be reported to the employer. All tips, including cash, collected tips, your share of the tip pool, and non-cash items such as tickets and passes, are considered income and are subject to income, Social Security, and Medicare taxes. Therefore, when you accept non-cash tips, like tickets, collectibles, passes, or other items with value, the non-cash tips must be reported as income. These are not required to be reported as cash tips, but you are still responsible for reporting the non-cash tips to IRS as their fair market value.

taxes on tip
taxes on tip

When you accept a good for a tip, you must report that item’s fair market value as income. You do not have to report any non-cash tips, like passes or tickets, but you must report the cash value of the non-cash tips on your taxes on tip return. Tips that add up to less than $20 per month do not have to be reported to the employer, but they do have to be included with your wages on your tax return. If the total tips received by an employee in a single calendar month from a single employer are less than $20, those tips are not required to be reported, and no taxes are required to be withheld.

If you receive more than $20 of tips, both in cash and not cash, in any one month, you must report all tips you make for that month to your employer. If you earn cash tips during your work, you are required by the Internal Revenue Service to report them, whether you received them from a customer, another employee, your employer, or a pooled cash tip. Servers who receive tips as part of their jobs are required to report the totals to their employers and the IRS on their annual income tax returns. In addition, once a month, all employees who receive tips are required to provide the employer with a summary of their tip revenue on Form 4070, Employees Tips Report to Employer.

The employer has several obligations regarding the employees’ tips income, including responsibility for record keeping and reporting, collecting taxes on tip, filing specific forms, and paying or depositing taxes. The employer is required to only keep as much as the employer is allowed to collect on income taxes, any time up until the end of the year, and only when employee Social Security taxes, Medicare taxes, and any additional Medicare taxes collected from tips are deducted first and fully by those sources. The employee must use Form 4137, “Social Security and Medicare Taxes on Unreported Tips Income,” to report the amount of any unreported tips income to be included as an additional wage payment on his or her Form 1040 or Form 1040-SRR, the United States. The amount taken out of your paycheck is based on your total wages, plus any tips income you report, even if you received tips directly from customers as cash.

Because the customer does not opt into the extra charge or select a dollar amount, it is not considered tipped income and thus is not reported by you, as an employee, to your employer. However, if your income is mostly made up of tips, like in a food services job, you might have a right to extra tips income, which your employer would report to the W-2.

You should include:

– All cash tips that you get directly from customers.

– Tips added on credit cards.

– Your share of any tips you get through a tips-splitting arrangement with your co-workers as part of your total income.

Tips are typically reported on your Form W-2 if you primarily receive paychecks as a waiter, customer-service worker, or another occupation that regularly receives tips.

Your employer typically tracks all of the tips you collect, but you should add these to a daily tips journal to ensure that all of your tips are reported. The point is that restaurant employees must report and pay taxes on tip and all of their wages, including tips. An employer that operates a primary food or beverage establishment is required to file Form 8027, Annual Report on Employers Reports of Tip Income and Allocated Tips, to make annual reports to the Internal Revenue Service regarding the income they receive for food and beverages, as well as tips that employees report back to their employers. The employer reports to the Internal Revenue Service the difference between tips and an 8% fee allocated to its employees.

Finally, it’s important to remember that all tips should be included in your taxable income, regardless of who you report them.

We hope this article helped understand how to report your tips. Happy serving!

Tax Deduction for Homebuyers and Home Sellers

Posted by admin on June 3, 2022
Last modified: June 3, 2022

The Tax Cuts and Jobs Act has brought changes the landscape for homeowners looking to buy or sell their homes. In the past, there were several deductions and exemptions that specifically benefitted homeowners. However, many of these have been affected by the new tax reform. If you are a homebuyer or seller in the current market, here is what you need to know about the changes to your taxes.

The Tax Cuts and Jobs Act made several changes to deductions and exemptions for homeowners, so if you’re filing your taxes this year, here’s what you need to know.

If you have bought or sold a home in the last few years, you may have been eligible for certain tax breaks that were specifically designed to benefit homeowners. However, several of these deductions and exemptions have been affected by the Tax Cuts and Jobs Act. This means that if you were a homebuyer or seller in the past few years, your tax filing will be different compared to the years before. Here is what you need to know about the changes to expect.

The state and local taxes you can tax deduct on your federal income tax return are now capped at $10,000. This change was made by the Tax Cuts and Jobs Act of 2017. Previously, there was no limit to the amount of state and local taxes you could deduct. This meant that if you itemized your deductions, you could deduct all of your property tax and state tax and local income tax you paid. The new $10,000 limit applies to all state and local taxes combined. If you pay both property taxes and state income taxes, you will have to choose which deduction to take based on which will give you the lower tax bill. The limit also applies to married couples filing separately – each spouse is allowed to deduct up to $5,000 for a total of $10,000.

In other words, After tax reform, the amount you can deduct for state and local income, property, and sales taxes combined is now capped at $10,000. This means that as married, you and your spouse may each deduct $5,000 for a total of $10,000. Get a better idea on your tax refund with you tax calculator.

Tax Deduction for Homebuyers and Home Sellers
Tax Deduction for Homebuyers and Home Sellers

Moving Expenses and Costs

Relocating for work can be expensive, but the IRS allowed certain deductions for moving expenses before tax reform. This included transportation, lodging, packing materials, storage, and insurance. However, after-tax reform in 2018, these deductions are no longer available, except for active-duty military members who are moving on orders. So if you’re planning a job-related move, be aware that you may have to shoulder the entire cost yourself.

Mortgage Loan Interest Tax Deduction for Homebuyer

The mortgage loan interest deduction is a tax benefit that allows you to deduct the interest you pay on your home loan. Prior to tax reform in 2017, the maximum amount of debt eligible for the deduction was $1 million. However, the new tax law lowered the maximum debt allowance to $750,000. As a result, you can now deduct interest on mortgages up to $750,000.

Capital Gains Tax Exemption

There are a few things to know about capital gains taxes and exemptions if you’re thinking of selling your home. First, depending on how long you’ve lived in the house, you may be exempt from paying taxes on some of the capital gains. If you owned while living in the house for at least two out of the five years before selling to a homebuyer, the IRS may not tax any capital gains from the sale. This is called capital gains exclusion.

The Tax Cuts and Jobs Act didn’t change the capital gains exclusion, but it did change how capital gains tax rates are determined. Before the new tax law, your rate was based on which income tax bracket you fell into. Now, your rate is determined by a new income threshold.

Here’s a breakdown of the different rates:
0% for income up to $38,600 for single filers ($77,200 for joint filers)
15% income between $38,601 and $425,800 ($77,201 to $479,000 for joint filers)
20% for $425,801 and up ($479,001 and up for joint filers)

So, if you’re considering of selling your home, keep in mind that you may have to pay capital gains taxes on the sale – unless you meet the criteria for the exclusion.

Standard Tax Deduction for Homebuyer and Home Seller

The standard deduction is a specific set amount you can tax deduct from your income if you do not itemize your deductions. The amount of the tax deduction depends on your filing status. For example, for the 2018 tax year, the standard deduction for a single filer is $12,000. If your taxable income is $50,000, you will reduce your taxes owed by $12,000 by taking the standard deduction instead of itemizing.

The Tax Cuts and Jobs Act of 2017 increased the standard deduction significantly. It will now make more sense for many taxpayers to take the standard deduction rather than itemizing their deductions. However, everyone’s situation is different, so be sure to run your taxes both ways to see which method will benefit you more.

Filing Taxes When Unemployed

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

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

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

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

filing tax when unemployed
filing tax when unemployed

How to Filing Taxes When Unemployed

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

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

Federal Tax for Filing Taxes When unemployed

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

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

Filing Taxes When Unemployed for Unemployment Benefits

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

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

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

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

Timeline for Filing Taxes When Unemployed

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

Withholding Tax From Paycheck

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

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

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

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

Free Tax Advice from the Tax Experts

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

2019 Tax Calculator

Posted by admin on November 8, 2021
Last modified: November 8, 2021

If you need to file back taxes for 2019, a tax calculator is something you’ll want to have in your back pocket during the process. A federal tax calculator for the 2019 tax year will give you an estimate of what your tax liability was for that year and can help guide your next steps.

Use a 2019 tax calculator to figure out which of the three possible scenarios of where your relationship with the IRS currently stands applies to you:

  • The taxes that have already been withheld from your paychecks from 2019 combined with the tax credits you are eligible for may cover your 2019 tax bill.
  • If you’ve had too much tax withheld from your paychecks, then you should expect a tax refund when you file, and the 2019 tax calculator can tell you how much that will be.
  • If you’ve not had enough withheld or prepaid based on estimates (if you’re self-employed), then you may still need to pay the rest of your tax bill.

Link to 2019 Tax Calculator

Gather up your documents and get started today with our easy-to-use online federal tax calculator for 2019. And if you need help with your tax returns for any other year, we have the tools for that too. We offer tax calculators for each year going back to 2011, and we can help you prepare prior-year tax returns for each year going back to 2008. So visit PriorTax.com today to get up to date with your taxes.

Is the federal tax calculator for 2019 safe to use?

When you use any of our online prior-year tax calculators, it will be completely anonymous. You don’t need to create an account with us or enter any identifying personal information to use it.

What do information do I need to use a federal tax calculator for 2019?

When you open our 2019 tax calculator, you’ll find three different sections. The information needed to estimate your tax bill has been divided into three parts to make things as straightforward as possible.

The first section is ‘Family’. This is where you’ll provide your general personal information, including things such as age, filing status, and the number of dependents you are claiming.

The second section is ‘Income’. This is where you’ll need the tax paperwork you received from work and from any banks or other financial institutions. You’ll need to enter

  • any income you received as an employee or during unemployment
  • any income earned from investments, including any retirement plans
  • any income earned from either self-employment or your own business
  • any other forms of income such as Social Security benefits, federal tax withheld from benefits, or alimony payments

This information is used to determine your total income for 2019.

The third and final section is ‘Deduction and Credits’. This is where any estimated federal and state tax payments you have already made are taken into account. You will also enter information about household, education, and unreimbursed work expenses and information about retirement savings plans and donations made during the year.

What information does the federal 2019 tax calculator provide?

In addition to your estimated refund or outstanding tax bill, you will also see a breakdown of the numbers that contributed to this amount. You will be given line-by-line details outlining your:

  • Total Income
  • Above the Line Deductions
  • Adjusted Gross Income
  • Standard Deduction
  • Total Exemptions
  • Taxable Income
  • Regular Taxes
  • Alternative Minimum Tax
  • Tax Credits
  • Additional Taxes
  • Tax Payments
  • Refundable Credits

What can I do if I am missing any information needed for the federal tax calculator for 2019?

The 2019 tax calculator, like all of our online prior-year tax calculators, can only provide an estimate based on the information that you enter into the form. If you enter estimates or guesstimates for details like your wages, keep in mind that our calculation will be based on those numbers. Remember that your exact tax refund or tax bill may change once you enter your exact numbers.

It is always important to keep track of any tax documents you receive throughout the year, like your W-2 forms from your employers or 1099 forms from your bank or for any other source of income. If you are missing any of these forms or never received them, a good first point of call will be your work or your bank.

However, the IRS understands that there are times when you aren’t able to obtain copies of these documents. If this is your situation, you can contact the IRS to request a free tax transcript from the IRS. These are available for the current tax year as well as for the past three years and will summarize your return information.

Sometimes you need an actual copy of your prior tax return rather than just a summary. For those situations, a copy of your prior tax return can be requested from the IRS for a fee. You are able to request full copies for the current tax year and for the past six years.

The federal 2019 tax calculator estimates that I am owed a refund. What next?

Everyone has three years from the original filing deadline to file their prior-year tax return and claim their refund. When you don’t have an outstanding tax bill, you are not subject to any IRS penalties for not filing your return on time. And you have until April 15, 2023, to claim your refund for the 2019 taxes you overpaid.

The federal tax calculator for 2019 estimates that I have outstanding taxes to pay. What next?

Unlike the deadline to claim a refund, there is no deadline to file your 2019 tax return.

There are penalties for both late filing and late payment that the IRS will levy. These additional charges will accumulate over time. However, the late filing penalty will usually work out to be more costly than the late payment penalty. So it’s often a good financial decision to file your prior-year return for 2019 as soon as possible, even if you are not currently in a position to pay the full bill.

FILE 2019 TAXES

Posted by admin on November 3, 2021
Last modified: November 8, 2021

The deadline to file your 2019 taxes on time may have passed. However, it’s not too late to get on top of the paperwork and file your 2019 taxes. Plus, filing your prior year’s taxes can be easier than you think.

While it’s not too late to file your 2019 taxes, it is now too late to file your 2019 taxes online using e-file. Instead, you will need to mail in a hard copy of your tax return to file your 2019 taxes. The deadline to use e-file to file your 2019 taxes online was October 15, 2020.

Although you can no longer file your 2019 taxes online, there are options available for you to prepare your tax return online. Visit PriorTax.com today. We can help you prepare your 2019 tax return online, reviewing and organizing your documents to be downloaded, printed, signed, and mailed off to the IRS. In addition, our experienced tax professionals can answer any questions you may have along the way.

Now that you’ve decided to get back on track with your tax filing obligations, where to start? The first step to filing any prior-year tax return, including your 2019 taxes, is to gather all the information you will need.

So, what information will you need to file your 2019 taxes?

file 2019 taxes
file 2019 taxes

What you’ll need can be broken down into three broad categories: your personal information, information about your income, and any adjustments to your income. Let’s take each of these in turn.

Personal Information to file 2019 taxes online

This category contains information to help the IRS process your tax return. The IRS needs to match the file of your 2019 taxes to you, know who your tax return includes, and then know where to deposit your tax refund if applicable.

  • Birthdates and Social Security or other Taxpayer Identification Numbers for you, your spouse, and your dependents
  • Copies of last year’s tax returns are helpful but not required
  • Your bank account number and routing number, if you want to receive any tax refund by direct deposit

Information about your Income to file 2019 taxes online

This category contains all the information you will need to fill out the income section of your 2019 tax return. The most common document will be the W-2 form known as the “Wage and Tax Statement” that you received from your employer. Other forms of income include self-employment income, dividends, royalties which will have their own documents.

Here’s a checklist of the relevant income paperwork and information you may have:

  • Form W-2
  • Form 1099-C “Cancellation of Debt” (the IRS generally considers canceled debt as taxable income)
  • Form 1099-G “Certain Government Payments” (forms for unemployment income and state/local tax refunds)
  • Form 1099-MISC “Miscellaneous Income” (forms you may receive for a range of different types of non-employee compensation)
  • Form 1099-R “Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans” (forms for payments/distributions from IRAs or retirement plans)
  • Form 1099-S “Proceeds from Real Estate Transactions” (forms for income from the sale of a property)
  • Forms 1099-INT, -DIV, -B, or K-1 s (forms for investment or interest income)
  • Form SSA-1099 (forms for if you received Social Security benefits)
  • Alimony payments received
  • Business or Farming income: profit/loss statement, capital equipment information
  • Miscellaneous Sources of Income: jury duty, gambling winnings, Medical Savings Account, scholarships, etc.
  • Installment Sale Information: Forms 6252, principal and interest collected during the year, SSN and address for payer

Income and Expenses from Rental Property: profit/loss statement, suspended loss information

Adjustments to your Income to file 2019 taxes online

This category contains the information about your expenses that will help you calculate your Adjusted Gross Income or AGI. This information can reduce the amount of your income that the IRS considers taxable. This can help increase your tax refund or lower the amount of your tax bill still outstanding.

  • Form 1098-E “Student Loan Interest Statement” (forms for student loan interest paid, loan statements for student loans are also relevant here)
  • Alimony payments paid
  • Records of any IRA contributions made during the year
  • Records of Health Savings Account (HSA) contributions
  • For Students and Student Dependents: Form 1098-T for tuition paid (receipts/canceled checks for tuition paid for higher education are also relevant here)
  • For Teachers: receipts/canceled checks for expenses paid for classroom supplies, etc.
  • For armed forces reservists, employees with impairment-related work expenses, fee-basis state or local government officials, and specific categories of performing artists: receipts/canceled checks for employee business expenses.

If you are self-employed:

  • Records of self-employed health insurance payments
  • Records of payments into SEP, SIMPLE, and other qualified self-employed pension plans

Itemizing your Tax Deductions to file 2019 taxes online

While filing your 2019 taxes, just like in any other tax year, you have the choice to either take the standard deduction or to itemize your deductions.

The standard deduction is a preset amount that taxpayers are allowed to deduct from their taxable income annually. The standard deduction amount will depend on your filing status, and to keep up with inflation, it is annually indexed.

Depending on your personal situation, itemizing your deductions and credits may help you to lower your tax bill more than standard deductions. This can be especially true for high earners who also have several large expenses to deduct. To itemize your deductions, you will need to collect documentation detailing expenses so that you can be sure you are getting all the deductions and credits to your tax bill that you are eligible for.

What can you do if you are missing some of the tax documents you need to file 2019 taxes?

There can be a lot of paperwork and digital files to keep track of to file your taxes. Have you lost some of your documents? Fortunately, for the times when you cannot obtain new copies of your tax documents, there is a backup available. In such cases, you can request a free tax transcript from the IRS. This document will summarize your return information. 

Free tax transcripts from the IRS are available for the current tax year and the past three years. So, you have until 2023 to request a free tax transcript for the 2019 tax year.

What’s New for the 2020 Tax Year?

Posted by Manisha Hansraj on January 15, 2021
Last modified: January 18, 2021
2020 tax year

Here’s the breakdown of all the changes.

Standard deduction

For the 2020 tax year, the standard deduction amounts have increased. Here are the amounts below.

  • Single or Married filing separately – $12,400
  • Married filing jointly and Qualifying widow(er) – $24,800
  • Head of Household – $18,650

For taxpayers who are blind or at least 65 years old, they can claim an additional standard deduction. The standard deduction is $1,300 and $1,650 for the single or head of household filing status.

Taxpayers who are both blind and of eligible age receive a doubled additional standard deduction.

Recovery Rebate Credit (Stimulus Payment)

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What is Form 1099-NEC?

Posted by Manisha Hansraj on January 11, 2021
Last modified: January 13, 2021
Form 1099-NEC

For the 2020 tax year, there’s a new income statement.

The IRS has introduced a new form called Form 1099-NEC. Whether you’re well versed in reporting your taxes or not, this may be confusing.

Typically, your self employment income is reported on box 7 of your 1099-MISC statement. For the 2020 tax year it is now reported on a 1099-NEC. The IRS has done this to separate filing deadlines.

Why would you receive Form 1099-NEC?

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