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

Hawaii Announces Some Details on Wildfire Tax Relief Plan

Posted by admin on September 7, 2023
Last modified: September 8, 2023

Wildfire Victims May be Eligible for Hawaii Tax Relief

Taxpayers affected by the wildfire disasters in Hawaii counties may now receive various forms of Hawaii tax relief, according to an announcement from the state’s Department of Taxation (DOT). The DOT has released details about how those affected can take advantage of this tax relief, which this article will go through in detail.

Hawaii DOT will give special consideration on a case-by-case basis to those taxpayers adversely affected. This includes extensions for tax filing and paying various taxes, such as general excise (sales tax), transient accommodations, net income, tobacco, and liquor; waivers of penalties and interest; or any other form of assistance due to interruptions in mail delivery.

For those submitting their taxes via paper, write “2023 Wildfire Relief” on the top center of the return. Meanwhile, when filing electronically through Hawaii Tax Online, one must send a message selecting “I have a 2023 Wildfire Relief Question” in order to receive relief.

Those needing assistance due to the wildfire disaster should be sure to include a concise explanation when filing for tax relief. This statement should articulate what kind of help is requested and how the devastation has impacted their ability to meet tax obligations.

Individuals, businesses, and others can be considered “adversely affected taxpayers” when they cannot file tax returns or make payments due to the wildfire disaster.

The governor has declared certain areas to be disaster zones. Consequently, any funds from a property or casualty insurance policy resulting from the damage or loss of inventory utilized in a business within such an area are excused from General Excise Tax (GET).

For those affected by the Hawaii wildfires, there are specific tax relief regulations regarding Payment and Filing Relief and Extensions, Collections Relief and Extensions, and Taxability and Deduction.

Hawaii Tax Relief

Details on Payment Relief, Filing Relief, and Filing Extensions

Tax Filing Deadlines Extended for All Taxpayers?

Whether tax deadlines are extended for every taxpayer cannot be answered in the affirmative. Instead, the Department of Taxation (“Department”) has established that requests for tax filing extensions and waivers of late payment penalties and interest can be assessed on a case-by-case basis.

How do I request a waiver of penalties and interest from the Tax Relief?

Are you facing financial hardship due to the Hawaii wildfire disaster? Requesting a waiver of penalties and interest could be the solution. When filing by paper, add “2023 Wildfire Relief” to the top center of your return. Additionally, include with your tax filing a statement that explains why you have been adversely affected by the event.

When electronically filing, please be sure to get in touch with a free dedicated tax professional to help you explain how the wildfire disaster is negatively impacting you to the DOT of Hawaii.

I could not file on time due to a lack of electricity or internet due to the wildfires. Is that a good cause for a tax filing extension request?

Absolutely. Due to the devastating wildfires, tax filing can be delayed as a lack of electricity and internet made it impossible. Showing that you were affected by the fires would make you eligible to request a waiver or extension on penalties or interest.

Will this tax relief stay available? How soon will the DOT stop accepting requests for tax relief?

For what duration is relief available? As long as the Director determines necessary to counteract the effect of the wildfires, the Department will carry on considering requests for aid.

Do I still need to pay estimated taxes?

Should I submit estimated taxes? The answer is a resounding Yes. Even with the aftermath of the 2023 Hawaii wildfires, you may request extra time to make the necessary payments. To learn how to go about it, get in touch with our free, dedicated tax professional.

Is there any relief for taxpayers impacted by the Maui and Hawaii wildfires already under an installment payment agreement with the DOT?

Taxpayers will be obligated to resume installment payments following their payment plan. For further details, please get in touch with a dedicated PriorTax Tax Professional for free support from start to finish.

Taxpayers must restart their installment payments in order to comply with their current plan. Please reach out to your assigned collector for more info. If you do not have a contact detail, such as an email or a number, please call a relevant office and ask them to contact your collector.

Is tax relief available for a taxpayer with a property lien impacted by the Hawaii wildfires?

Those property owners affected by the wildfires in Hawaii may be wondering how they can access relief from their property lien dues. At present, the Department will not be providing a release of these liens. However, they could qualify for other forms of assistance, such as waiving interest during this difficult period. Get in touch with a free, dedicated Tax Professional to support your tax relief.

Details on Taxability and Deduction

Damages and Losses from Hawaii Wildfire Enable to Deduct from Tax Returns?

Which damages and losses can I declare on my taxes? We recommend that taxpayers speak with a dedicated tax professional or the IRS to determine suitable tax deductions. Concerning Hawaii income tax, the DOT aligns with section 165 of the Internal Revenue Code, addressed in Publication 547 from the Internal Revenue Service. Please refer to Tax Announcement 2023-03, under section II, to further investigate casualty loss claims.

Is the tax relief taxable?

Regarding taxation, one question lingers: Are tax relief payments taxable? It varies depending on the source of the funds and the purpose for which they are used. To elaborate further, please look at Tax Announcement 2023-03 and section IV to learn more about disaster relief payments.

Are donations to Hawaii Wildfire tax deductible?

The answer is yes. You may deduct donations from your taxes, but only under certain conditions. All donations and gifts from registered and qualified non-profit organizations will be eligible for tax deductions. However, contributions made to individuals or unregistered groups do not qualify. It is necessary to provide proof of the donation to receive the deduction on your taxes.

IRS Announces Tax Relief for Hawaii Wildfire Victims

Posted by admin on August 31, 2023
Last modified: August 31, 2023

The Internal Revenue Service (IRS) has issued a declaration of tax relief to those affected by the wildfires that began on August 8, 2023, in parts of Hawaii. Individuals and businesses affected have until February 15, 2024, to file returns and make required payments. Consideration is given to victims of the wildfire destruction in these areas of Hawaii.

In response to the damage caused by the Hawaii wildfire, FEMA has declared a disaster in Maui and Hawaii counties. As a result of this declaration, those who live or operate businesses in the affected areas are eligible for federal tax relief.

In response to a declared disaster, it has been made possible for those affected to postpone their filing and tax payment deadlines. An example is when deadlines falling between August 8, 2023, and February 15, 2024, can be extended with special permission from the IRS.

The Internal Revenue Service (IRS) has issued a grace period extending to February 15, 2024, for all affected individuals and businesses who need more time to file tax returns between January 1, 2021 and April 18, 2023. This stipulation includes 2022 individual income tax returns, with an original due date of October.

Hawaii Wildfire

The February 15, 2024, deadline also applies to:

  • Quarterly estimated tax payments, which are normally due on September 15, 2023, and January 16, 2024.
  • Excise tax returns and quarterly payroll which are normally due on October 31, 2023, and January 31, 2024.

Businesses whose 2022 tax extension dates have elapsed or will soon elapse by September 15 (i.e., calendar-year partnerships and S corporations) and October 16 (calendar-year corporations) are eligible for the February 15, 2024 deadline for filing taxes.

On or after August 8, 2023, and before September 7, 2023, any late payroll or excise tax payments will receive abatement as long as the deposit is made by the said date.

When a taxpayer is subject to a late tax filing or late payment penalty notice from the IRS that had an original or extended due date during the postponement period, they should contact the number on the notification for the IRS to waive any charges.

Taxpayers affected by a covered disaster area can receive filing and payment relief from the IRS, provided they reside or have business in those areas. Those located outside of such regions should contact a dedicated PriorTax Tax Professional to benefit from this tax relief.

Who are Affected Taxpayers from Hawaii Wildfire?

Individuals and businesses affected by the covered disaster area, including tax-exempt organizations, are eligible for postponement of time to file tax returns, pay taxes, and perform other time-sensitive acts. This also extends to those who do not physically reside within the area but whose records necessary to meet a deadline lie within it. Thus, they, too, are entitled to some form of relief.

All those providing and receiving help during times of tragedy have the right to compensation for any damages incurred as a result of the disaster. That is why anyone affiliated with an official government or charitable organization assisting people affected by a disaster area is eligible for relief.

Taxpayers affected by the August 8, 2023 date will receive some relief from the Internal Revenue Service (IRS), as they can now file all relevant tax documents until February 15, 2024. This includes individual and corporate income tax returns, partnership and S Corporation returns, estate/gift/generation-skipping transfer taxes, annual information for tax-exempt organizations, and employment/excise taxes with either an original or extended due date up through February 15 of this year.

Taxpayers with estimated tax payments due between August 8, 2023, and February 15, 2024, now have an extension until February 15, 2024, to make those payments without facing any penalties for late payment. Those estimates must be paid before the end of that period to avoid penalty charges.

Declaring Casualty Losses from Hawaii Wildfire

For individuals impacted by a federally declared disaster, the option to declare casualty losses on their federal tax return for either the year of the occurrence or the previous year is available. Taxpayers who have selected this option and are reporting these losses on their 2022 returns have extended time until October 15, 2024, to make that choice.

Hawaii Wildfires have caused some taxpayers to seek out the disaster loss on their tax return. Make sure to state “Hawaii Wildfire” and the FEMA disaster declaration number, DR-4724-HI, at the top of your form. A PriorTax Tax Professional can assist individuals through this process from start to finish.

Other Possible Tax Reliefs

Taxpayers affected by disasters may find financial aid within their retirement plans or IRAs. For example, they could qualify for a special disaster distribution to spread the income over three years and avoid the extra 10% early distribution tax.

Those who pay taxes could qualify for a hardship withdrawal in certain instances. Every plan or IRA has separate rules and guidelines that must be adhered to by its participants.

The IRS may provide additional disaster relief in the future.

Taxpayers dealing with the repercussions of a disaster that the IRS has contacted in regard to a collection or examination should make their situation clear to the agency so that they can be given appropriate consideration.

Are You Receiving a Smaller Tax Refund

Posted by admin on August 17, 2023
Last modified: August 18, 2023

Could There be Unforeseen Instances in Getting a Smaller Tax Refund?

Reach out to one of our dedicated Tax Professionals at PriorTax should you believe the debt is not owed or there is a discrepancy in the amount taken from your refund. A Free dedicated Tax Professional could sort out the difference between your return and the original tax refund when you received a smaller tax refund.

The tax refund I received is less than expected. Why am I getting a smaller tax refund?

Are you concerned about the amount of your smaller tax return refund? We’ll assist you in understanding why the refund from your taxes is less than anticipated.

It is pretty normal for this to occur, often resulting from the IRS utilizing a portion of your refund money to cover any outstanding government debts that are owed.

In many cases, the IRS will use a portion of an individual’s tax refund to cover any unpaid government debts. These could range from overdue federal tax payments to student loan repayments and more. Other examples include past-due child support, outstanding state income taxes, fraudulent unemployment compensation wages or contributions due to a state fund, and SBA loan repayments.

HUD (Department of Housing and Urban Development ) loan repayments
Managing unpaid taxes comes under IRS jurisdiction, while any other debts are handled by the Department of Treasury’s Bureau of Fiscal Services (BFS). You may receive a notice from BFS detailing why your tax refund is less than what you expected should part or all of it be used to settle a debt.

When part or all of your anticipated tax refund is allocated to pay off a debt, BFS will provide notification to clarify the details. This notice will explain the initial refund amount, offset amount (the portion they are taking), and details of the agency that is receiving payment such as its address and phone number.

smaller tax refund

But, Did You Get More in Tax Refund instead of less?

You May Have Overpaid Withholding Taxes

Believe it or not, getting money back from the IRS is only sometimes good. That may seem odd, but it’s true. Receiving a refund can have implications that may ultimately cost you more in the end.

Nobody likes giving Uncle Sam a loan without collecting interest, yet this may be the situation you are in with your payroll taxes. Too much is likely being withheld, meaning you could be getting more of your money back. To ensure you’re not missing out, it’s wise to double-check your withholding amounts. That way, you can use the funds how and when you want to – rather than doing a last-minute scramble when tax season comes around.

One way to review your withholding taxes is with an IRS Tax Estimator. You’ll need to have pay stubs and any other paperwork related to income on hand. Once you put in all that information, it can tell you what your tax liability looks like.

Once you obtain results from this estimator, it’s possible to decide whether or not filing a new W-4 form should be submitted to your employer.

One way to guarantee success at tax time is to look into withholding. Doing this makes it possible to ensure the proper amount of taxes are taken out and avoid any unpleasant surprises when filing. Additionally, this can help you decide whether you should change the amount of taxes deducted from each paycheck.

Instead of allowing Uncle Sam to loan you money, make sure your withholding is accurate by periodically checking it. Waiting until the end of the year can lead to over-withholding and an unnecessary loan from the government.

How to Maximize Your Tax Refund with Form W-4

Posted by admin on August 10, 2023
Last modified: August 10, 2023

Maximizing your tax refund relies upon a few easy processes, research, and some preparation. Examining your tax situation, involving your partner when finishing up your tax form W-4s, and taking advantage of certain tax credits can assist in boosting the size of your refund. Additionally, PriorTax free dedicated Tax Professional can help you determine which credits give you the greatest tax refund.

Review your Form W-4 with our Tax Professional for Tax Refunds Over Looked

Before beginning a new job, your employer requires you to fill out Form W-4. This form conveys how much federal income tax needs to be taken from your paycheck. The quantity of taxes deducted from wages depends on the combination of income and credits declared in the W-4 document.

Are you reviewing your W-4? It’s time to decide. Are you aiming for a bigger refund or a bigger paycheck? With less taken out of each pay period, you can count on receiving larger wages throughout the tax year.

tax refund

Elements to review when amending your Form W-4 may include.

When filing your W-4, there are crucial elements to take into account. By claiming credits such as the Child Tax Credit or the Other Dependent Credit, you are reducing the amount of money being withheld from your paycheck.

When you are in the process of filling out a Tax Form W-4, there are several things that you must keep in mind. For starters, you may need to adjust the amount of withholding on your taxes should you have multiple sources of income, like an extra job or investments.

When filling out your W-4 form, there are a few points that you should bear in mind. These include the possibility of withholding extra money from each paycheck for income tax purposes.

By indicating more income on your W-4 form, your paychecks will be smaller since greater tax amounts will be taken out. This increases the possibility of withholding too much, which may result in a bigger tax refund.

When you anticipate certain credits or deductions, the potential implications are clear; bigger paychecks and possibly owing some extra tax or receiving a smaller refund. To make sure you enter accurate information on your W-4 form, consider using a our Prior Tax Calculator. It is designed to provide a reliable estimate of what should be entered.

Reconsider your Tax Filing Status.

The selection of a filing status can have an effect on getting a refund. Your filing status decides several important elements, such as your standard deduction, whether you have to file taxes, the credits available to you, and how much tax you pay or refund you get.

When filing their taxes, individuals have multiple statuses to select from. Most commonly, people opt for married filing jointly or separately, single person, or head of household designations.

Having an experienced, dedicated Prior Tax Professional on your side is essential to ensure the best outcome for you, from the beginning of the process through to completion. They will help you decide which options work best for your particular circumstances to maximize your tax refund.

Look into Claiming the Earned Income Tax Credit

Reap the rewards of the Earned Income Tax Credit. Are you a working family, an independent contractor, or someone with moderate to low income? Then you may be eligible for the Earned Income Tax Credit. This tax break reduces taxable liability and could result in a sizable refund!

In order for you to be qualified, the following criteria must be met: you should have a valid Social Security number and be either a U.S. citizen, a year-long resident alien, or a non-resident alien married and filing jointly with an American citizen or resident alien. Additionally, there must be verifiable income from self-employment, an employer, or working on a farm, not including any person being claimed as a dependent or child of another individual. Lastly, those in the age range between 25 and 65 living in the United States for at least half of the year are eligible.

And in order to receive the EITC, you must file a tax return, even if you owe no taxes, which you can read more about here.

Have you Claimed the Child and Dependent Care Tax Credit?

Make sure you take advantage of the Child and Dependent Care Credit. Available to those with a qualifying child or dependent, this credit is based on a percentage of what you paid for care-related expenses.

As of the 2022 tax year, a maximum amount of $3,000 in expenses can be claimed by one individual and $6,000 by multiple. It is important to remember that any dependent care benefits provided by an employer must be factored into this deduction total.

Important Qualifications

Are you the parent of an individual who is 13 or younger? Or do you have someone dependent on you due to physical or mental impairments and living in your household for the majority of the year? How about your spouse, who is unable to look after themselves and reside with you throughout the year? These may all be qualifying individuals.

Some Other Criteria Must be Considered.

In order for you, as a parent or guardian, to be eligible for the credit, there are various conditions that must be fulfilled. 

It is necessary that your filing status is not married, filing separately, and none of the caregivers are your spouses or parents of the child. Moreover, each dependent being claimed must have a valid Social Security number. As well you must provide the full name, address, and Social Security number of all care providers.

The American Rescue Plan set to be effective in 2022 brings forth some noteworthy modifications to the Child and Dependent Care Tax Credit. The plan markedly enhances the expense amount that can qualify as creditable, lessens the impact of income levels on it, and makes it completely refundable. This implies that you can claim this tax credit regardless of whether or not you owe the government taxes – something that has yet to be possible.

In a nutshell

Picking the right tax filing status related to your circumstances can reduce your taxes and amplify the tax refund you will receive. Utilizing our Prior Tax Calculator is an ideal way to forecast what needs to be entered on your W-4 and adjust the return amount when tax preparation rolls around. Should you qualify, claiming the Earned Income Tax Credit can lessen your tax bill and potentially generate a refund even when no taxes are owed?

Ensure you get the most from your tax return by leveraging a dedicated PriorTax Tax Professional. With our support, get started-to-finish service and never worry about filing with confidence. Our Free Dedicated Tax Professional helps you through the process with expert guidance and assistance. Answer straightforward questions and benefit from our guarantee of maximum refunds. However, you choose to handle it, know that PriorTax will take care of everything so that you can relax this tax season.

Student Loan Interest and Tax Form 1098-E

Posted by admin on July 20, 2023
Last modified: July 21, 2023

Are you aware of the Tax Form 1098-E for Student Loan Interest? For individuals currently repaying a student loan, Tax Form 1098-E may be mailed out from each lender. This document displays the amount of interest paid for the year. Taking advantage of tax deductions on federal tax returns is possible with this tax form, but more is needed to guarantee qualification to do so.

How can Tax Form 1098-E help you?

The Tax Form 1098-E will be sent to you by lenders when you have made payments of $600 or more in student loan interest during the year. This amount is taken from all loans a borrower has with the same lender, though it can be broken down into each separate loan. The sum shown in box 1 of Tax Form 1098-E shows a person’s total interest payments for that tax year.

How Can You Get Tax Deduction from Student Loan Interest?

Knowing the right moment to tax deduct student loan interest is important. This particular tax deduction can be taken as an adjustment while working out your adjusted gross income, otherwise known as AGI. It’s worth noting that you are not expected to itemize your tax deductions for this option to be available.

In order for your student loan interest payments made during the year to be tax deductible, they must have been taken out by you, your dependents or your spouse in order for them to take classes. When filing taxes separately or as a single filer with an adjusted gross income over $85,000 for 2022, or $175,000 when married and filing jointly, it is impossible to claim any student loan interest deduction. Modified adjusted gross income (MAGI) takes the AGI figure and returns certain tax deductions.

Preparing and filing your taxes doesn’t have to leave you exhausted. PriorTax takes the heavy lifting out of any calculations; all you need to do is answer some simple questions and leave the rest up to us, quick and easy. Our free and dedicated PriorTax Tax Professional will take care of putting all your answers onto the relevant tax forms.

student loan interest

How Much of Student Loan Interest is Tax Deductible?

What is the tax deduction for interest expenses? No matter the total sum paid in interest, you are eligible to deduct up to a maximum of $2,500. Those benefitting from this tax break should report the deductible amount on Schedule 1 as an alteration to their taxable income. Tax Form 1098-E provides a comprehensive breakdown of the reported amounts. However, it is still possible to include further student loan interest payments, which were not featured on the form. These additional payments must have been made towards a qualified loan for them to be eligible for tax deduction.

Checking the Box 2 from Tax Form 1098-E

If Box 2 of the Tax Form 1098-E is ticked, it indicates the quantity mentioned in Box 1 does not include the loan’s initiation fees and/or any capitalized interest. Nevertheless, this should apply to loans obtained before September 1st, 2004.

When you take out a loan, the lender may charge you a fee known as the origination fee. This amount is usually determined as a percentage of your loan and is factored into the total funds disbursed. Additionally, you can include a portion of this fee in your tax deductions for student loan interest. By dividing the origination fee by the years it takes to pay off the loan, one can determine how much they can claim every year when filing their taxes.

When it comes to unpaid interest, should the lender opt to add it onto the principal loan balance (capitalization), the deductible portion of that amount must be figured out similarly to when dealing with an origination fee.

Ensure your taxes are done correctly with the help of a Dedicated PriorTax Professional. Give us a call at 877-289-7580 during our regular office hours to get one of our specialized tax professionals on your side. Alternatively, you can take only 10 minutes to answer simple questions and be guided through the process of filing your taxes confidently using PriorTax. Whichever way suits you best, we guarantee that you will receive the maximum refund possible.

Should I Re-File My Tax Return by Amending Tax Return?

Posted by admin on June 8, 2023
Last modified: June 9, 2023

The government may pass legislation that influences current and future tax rules. But it’s possible that these modifications could also affect taxes from past filings. How should one go about re-filing taxes by amending tax returns to take advantage of the new updates, and is it worth the effort?

Do I Have the Option to Revise My Taxes by re-filing them?

Have you ever finished filing your taxes only to discover afterward that an error had been made or fresh data was available, which would alter your return? You most likely asked yourself in a moment of worry, “Do I have the choice to revise my taxes?”

Re-filing taxes by amending tax returns is a common scenario, and this article offers insight into the process and potential tax breaks to take advantage of. To start, here’s what you need to know about amending your taxes.

re-file tax returns

Are you in need of making changes to a previous tax return?

  •  You may have to file an amended return to:
  •  Modify the reported income on your taxes.
  •  Alter the filing status.
  •  Revise deductions made.
  •  Update or amend any existing tax credit claims.

Re-filing tax by amending tax returns can have significant benefits that shouldn’t be overlooked. Not only will it ensure that your tax return is accurate, which could increase your refund or lower the amount you owe, but it may also help avoid future IRS notices and audits.

Tax changes for 2019 through 2022

The end of 2017 saw a number of changes to the tax law, which took full effect in 2018. Most notably, the corporate tax rate dropped dramatically from 35% to 21%, permanently. However, other implemented changes will have a short-term effect as they are set to be reverted back to pre-2018 levels by 2025.

Recent tax changes include the following:

2020 and 2021 Stimulus payments

Have you yet to receive your stimulus payments for either of the last two years? Even though the payments initially function as an advance on a potential tax credit, there are still ways to receive them. You can still get your hands on them by re filing your taxes by amended tax return with the IRS.


As of December 31, 2018, the Internal Revenue Service has significantly changed the taxation process for alimony payments. Before this date, individuals who paid alimony had the right to deduct it from their taxable income, while those who received payments were obligated to include it in their taxable income.

Charitable contributions

Regarding donations for a good cause, taxpayers could receive a special tax break in 2020 and 2021. This year, individuals can claim up to $300 as a deduction from their standard deduction related to cash contributions made to charity. This tax deduction amount increases to $600 for married couples filing jointly in 2021. Starting in 2022 and onward, the only way deductions will be available for donations is by itemizing your taxes on Schedule A.

Lifetime Learning Credit

Beginning in 2021, the income limits to qualify for the tax credit known as the “Lifetime Learning Credit” were raised and will remain at that same level throughout 2022 too.

  • Single Tax Filers: $80,000 to $90,000
  • Married Couples Joint Tax Filers: $160,000 to $180,000

Mortgage insurance premiums

Thanks to the CAA passing at the end of 2020, taxpayers can take advantage of deducting their 2021 premiums on their mortgages but not for the tax year 2022.

Pass-through deductions

Recent changes to the tax code have significantly increased the maximum income thresholds for owners of sole proprietorships, partnerships, LLCs, and S corporations when claiming a 20% deduction on qualified business income. These deductions will be phased out starting in 2022.

  • Single Tax Filers: $170,050
  • Married Couples Joint Tax Filers: $340,100

Retirement savings limits

For those saving for retirement, it is good news that contribution limits to certain accounts are rising. For a 401(k), the amount got raised to $20,500 for 2022.

Required Minimum Distributions (RMDs)

Thanks to the SECURE Act, the age at which RMDs must begin has now been raised permanently from 70 1/2 to 72. While 2020 saw an exemption from this requirement, 2021 and 2022 will require minimum distributions yet again.

Renewable Energy Investment Tax Credit

Enacted in 2021, the Renewable Energy Investment Tax Credit provided a 26% credit to taxpayers. Subsequently, legislation passed in 2022 transformed this tax incentive into the Residential Clean Energy Credit with an increased rate of 30%. This program is set to be effective through 2034, after which it will cease.

Student Loans

From 2020 to 2025, employees have the opportunity to benefit from a special part of the CARES Act. This provision allows employers to give up to $5,250 towards an employee’s existing or future college debt without it affecting their taxable income. It is a great incentive for those struggling with large amounts of loans and needing help repaying them.

Shared-Responsibility Payment

The individual mandate, commonly called the “Shared-responsibility payment” under the Affordable Care Act, is no longer in effect.

The 7.5% Deduction

In 2019, Congress passed an extenders bill that enabled taxpayers to qualify for a 7.5% deduction floor for that year’s tax returns. And in December of 2020, this financial benefit became permanent with the passage of what is known as the Consolidated Appropriations Act (CAA). This act made it so individuals and businesses would be eligible to take advantage of this 7.5% deduction.

The Standard Deduction: 

In order to keep up with inflation, a higher standard deduction has been put into effect for 2021 and 2022. Specifically, this allows taxpayers to adjust their income by an amount determined by law so that they can pay less in taxes.

  • Single Tax Filers: $12,550 for 2021, $12,950 for 2022
  • Married Couples Joint Tax Filers: $25,100 for 2021, $25,900 for 2022
  • Head of Household Tax Filers: $18,800 for 2021, $19,400 for 2022

In general, taxes can significantly burden income and capital gains earned throughout the year. In order to encourage individuals to partake in beneficial actions, Congress has issued a variety of tax breaks. These provide Americans with an opportunity to lessen their overall tax liability.

Limiting your tax payment is possible by filing an amended return. Before taking this step, be sure to have a strong understanding of the applicable tax reforms, extensions and credits.

It is important to note that certain states chose to remain independent of the federal tax policies. Sates like Texas, California, etc. have decided against changing their laws in order to make them more beneficial for their citizens.

How to file an amended return?

First step we recommend is to reach out to our dedicated tax professional for a step by step support on re-filing your tax returns from start to finish.

Are you wondering the best way to submit an amended return? Here’s what you need to know. The process of re-filing taxes by amending tax returns begins by filling out Form 1040-X, Amended Tax Return. You must also attach documents that weren’t filed with your initial return but should have been included.

Beginning with the 2019 tax year, an electronic filing option has been available to amend federal returns. By taking advantage of it, you will be able to adjust your return and gain a clear comprehension of your taxes. It provides people with a straightforward way to ensure their taxes are accurate for that particular year.

In order to reclaim any refunded taxes, it is essential to abide by IRS regulations. This involves filing an amended return within either three years of when your original return was submitted, or two years from when outstanding tax payments were made – whichever date falls later.

Earned Income Tax Credit (EITC) in 2023

Posted by admin on April 6, 2023
Last modified: April 5, 2023

All About EITC: Who is Eligible to Receive and Critical Information to Consider.

Americans who are either self-employed or wage earners may be eligible for a tax break known as Earned Income Tax Credit (EITC). Over 25 million taxpayers claim it each year, yet many people are unsure whether they qualify or why. This article will cover who is eligible to receive EITC and what you should know before filing your taxes. Also make sure to get in touch with your dedicated free tax expert today!

Are you aware of the benefits of Earned Income Tax Credit?

The Earned Income Tax Credit (EITC) is an incentive issued to people with an earned income that meets certain criteria. It provides a reduction in your tax bill, dollar-for-dollar. Although there are other prerequisites, these are relatively straightforward and easy to understand.

It applies to earnings from tax form W-2 or tax form 1099.

Any money received as a result of work is considered “earned income”, which can come in the form of wages from an employer via a W-2 form or earnings through self-employment with 1099.

It’s refundable

The earned income credit doesn’t just lower your taxes but pays you back as well. This is known as the refundable amount – that being, should the credit be greater than what you owe in tax, you’ll receive a refund for the difference.

Earned Income Tax Credit (EITC) tax credit is for low and moderate-income families and individuals.

Designed to provide financial relief, the low-to-moderate-income worker’s and family’s credit seeks to help those struggling to make a living wage. Primarily intended for individuals attempting to support their households on an insufficient income, this tax break can be an invaluable asset.

Who is eligible for the EITC?

Want to know if you are you eligible for the Earned Income Tax Credit (EITC)? To find out, take a look at the following requirements from the Internal Revenue Service (IRS):

– You need to have earned income in the form of wages or self-employment income. The amount should be no less than $1.

– Your adjusted gross income should be at most $59,187 in 2022 (the amount may vary depending on your filing status and a number of dependants).

– Investment income must reach at most $10,300 this year.

– A valid Social Security number is required.

– Not filing Form 2555

First Requirement: Earned income from working

When it comes to earned income, this includes wages, salaries, tips, and any net income generated from self-employment activity. For freelancers who are employed full-time, this kind of income is able to be claimed via the EITC regardless of what type of profit – even as small as $1 – was made. However, the credit is calculated based on your post-deduction net earnings.

Let’s imagine that you own a web store and have earned a total of $10,000 from sales over one year. The cost to run your business amounted to $3,000:

– Purchasing stock

– Paying platform fees

– Ensuring photography for the products

– Organizing and sending out orders…etc.

By subtracting these expenses, you are left with a net income of $7,000.

What doesn’t count as earned income?

In contrast to earned income, unearned income does not qualify for the EITC (Earned Income Tax Credit). This is because unearned income includes such sources as investments, dividends, stock sales, passive incomes like rents or royalties, and government benefits. Consequently, relying exclusively on these sources would mean being ineligible for the Earned Income Tax Credit.

Second Requirement: Adjusted gross income must be below a specific limit.

The second criterion for eligibility is having an adjusted gross income below a predetermined level. This figure represents your overall income minus any deductions, such as student loan interest, retirement contributions, and health insurance payments for self-employed individuals. It serves to lower your taxable income.

How the income limit for the Earned Income Tax Credit works?

Establishing the income threshold for the Earned Income Tax Credit (EITC). In order to be approved to receive the Earned Income Tax Credit, you need to consider a couple of factors.

For those filing jointly with three children, a maximum of $59,187 is allowed. Yet, those who file singly, as heads of households or widows, may find their threshold much lower than that. Similarly, couples without kids or those with only one or two may also experience decreased income limits.

2022 Income Limit for EITC:

2022 Income Limit for Earned Income Tax Credit

2023 Income Limit for EITC:

2023 Income Limit for Earned Income Tax Credit

Third Requirement: Investment income must be under a specific limited amout.

To meet Requirement #3, your investment income must remain beneath a certain level. This consists of taxable and tax-exempt interest as well as capital gain distributions. It is important to remember that when calculating your Adjusted Gross Income (AGI), investment income is included in the total. Therefore, your overall income needs to stay under the threshold for your individual situation, but also make sure that your investment income is at most $10,300 for 2022 or $11,000 for 2023.

So how does AGI and other investment income work together towards your eligibilty for EITC?

Explaining the Relationship between AGI and Investment Income Limits

Here’s an example. A single mother with one child has an income limit of $43,492. Let’s say she has a total income of $30,000; her eligibility for the EITC would depend on where this number comes from:

– She will qualify for the credit is her income is entirely from earned sources such as a day job or freelance hustle.

– She will still be eligible with $29,000 in earned income plus an additional $1,000 in investment income.

– However, she will not qualify with lesser earnings ($20,000) combined with a higher investment yield ($30,000); even though the AGI limit is met here, being over the investment limits disqualifies her.

Fourth Requirement: A valid Social Security number

When filing, taxpayers who provide an Individual Taxpayer Identification Number (ITIN) or Adoption Taxpayer Identification Number (ATIN) will not be eligible for the credit. Sadly, this prevents undocumented citizens from availing of the reward. Furthermore, to claim the benefit, a married couple must be US residents or citizens.

Can you still claim the EITC if you were a US citizen or a resident for a fraction of the year?

Are you married, and only one of you has been a US resident for the whole year? You may be eligible to claim the EITC, depending on the circumstances. In order to qualify, your spouse must have been present in the United States for at least six months that same year. This usually transpires when moving into or out of the country.

Fifth Requirement: Not filing Form 2555

This document informs the IRS about foreign earnings that may be exempt from US taxes. The Foreign Income Exclusion can be claimed when a taxpayer’s “tax home” is located abroad and their taxes are paid to another country instead of America.

W2 Tax Form for 2022

Posted by admin on January 20, 2023
Last modified: February 13, 2023

It’s almost time for 2023 tax season to begin, and with it comes an important date – Jan. 23, 2023 – which marks when taxpayers can start filing their 2022 taxes. Those who work full-time can begin this process once they receive their W2 Form for 2022 from their employer. This document is critical as it provides the information needed to submit your taxes correctly and calculate any potential tax refund.

What is W2 Form for 2022?

Are you familiar with Form W2 Form for 2022? This official tax document, also known as the Wage and Tax Statement, is provided to employees at their employer’s conclusion of each tax year. The information it contains is incredibly valuable, displaying your annual wages and any taxes paid on those earnings.

It is important to note that the W2 Form for 2022 contains various components you should pay attention to. From Social Security and Medicare taxes to compensation data required for certain credits or deductions – all are included on the form. In addition, the lower section of the document outlines state-specific income and tax information.

At tax time this year, when utilizing our dedicated tax professionals, you’ll need to reference several of the boxes in the W2 Form for 2022 when completing and submitting a 2022 income tax return.

w2 form 2022

What information can I find on my W2 Form for 2022?

The W2 Form for 2022 document contains all the necessary information to file taxes for American taxpayers. To give an overview, here is a breakdown of each box and the data found about you and your employer.

Boxes A-F: The boxes located in the top left corner of the W-2 are designated with letters from A to F and hold pertinent information that is used to accurately identify both yourself and your employer; this includes legal name, address, Social Security Number, tax identification number as well as a control number which is exclusively used by your employer’s system to single out your W2 Tax Form for 2022.

In Boxes 1 and 2, you’ll find the necessary information most taxpayers need for 2022 – total wages, tips, other compensation, and federal income tax that was withheld. Then, moving on to Boxes 3 through 6, you can see what part of your income has been subject to Social Security and Medicare taxes, along with any taxes paid for both in 2022.

In Boxes 7 and 8, the amount of tip income reported by both you and your employer will be reflected. Meanwhile, Box 9 may appear grayed out but it is nothing to worry about; this was used in the past for reporting advance payments for Earned Income Credit which ended in 2010 yet remains on tax forms.

Boxes 10 and 11 provide insight into any dependent care benefits or deferred compensation you may have received in 2022.

Box 12 includes a variety of additional income or reductions to taxable income, marked by a code with either one or two letters. For these items to be included when filing your taxes, you must consist of certain codes from the 28 available options.

Located in the 13th slot is the section to show income that doesn’t require federal tax payment. For example, it includes contributions made to a sponsored retirement plan such as 401k account, third-party absence pay such as private insurance, or money earned as a statutory employee. The 14th field is an additional space for employers to include other applicable taxes information, such as tuition help or union dues.

A critical part of your W2 Form for 2022  can be found in Boxes 15 through 20. This section provides information about your income and withholdings relevant to state taxes and the ID number that belongs to your employer.

Usually how long does it take to get my W2 Tax Form for 2022?

As mandated by legal requirements, you must receive your Form W2 by Jan. 31, 2023 at the latest. This is usually done via postal mail; however, certain companies offer employees W-2 forms through online portals. It may also come from an external payroll service like ADP or Gusto, so be aware of that as well.

Jan. 31 has come and gone, but you still need to receive your W2 Form for 2022. 

Don’t worry yet – you can do a few things in this situation. First, check around for any emails your employer might have sent with instructions for accessing the electronic version of the form. IRS Publication 15A does allow employers to provide electronic versions, so it’s worth double-checking your spam or junk mail folders in case something got filtered out by mistake.

To obtain your W2 Form for 2022, begin by reaching out to the human resources or payroll department. Ask them whether they sent it and, if it didn’t arrive, request that they send another one.

Should the employer fail to assist, you may contact the IRS directly for more information about your W2 Form for 2022.

When the April. 15 (or the 18 for 2023) deadline has passed, and you still need to receive your W2 Form; there are a few steps to take. 

As April 18 approaches – the day taxes are due this year – and you still need to receive or access your W-2 form, there are a few choices for filing your 2022 tax return.

One solution is to fill out Form 4852 as an alternative so that you can guess your income and withholding tax. But be mindful that any discrepancies between the information on your return and your W2 Form will necessitate an amended return submission.

Benefits to Efile taxes when online tax filing for 2022

Posted by admin on January 7, 2023
Last modified: February 13, 2023

Efiling your taxes has become increasingly popular in recent years. The majority of taxpayers now file their tax returns electronically, and it’s no wonder why. Filing electronically is quick, easy, and processed faster than mailing your return. Plus, the IRS recommends Efiling as the best way to file your taxes. Here’s a breakdown of the benefits of Efiling your taxes

In today’s digital world, electronic tax filing is expected to be an alternative to older, manual processes. Businesses can now do more than paper-based, laborious, time-consuming tax preparation or software-based filing with PriorTax. Online tax filing via Efile has brought greater flexibility in filing taxes and is much more convenient as one taxes can now be filed at one’s convenience, home or work.

PriorTax Assigned Tax Service Professionals 

You do not need to use expensive tax-prep software to file taxes electronically. Even if you are not fiscally competent and not in a straightforward situation, you can fill out tax forms with one of our assigned tax professionals step by step on the spot. Online tax filing with PriorTax will identify tax forms and documents you will need to start the filing process with confidence.

Audit Protection with PriorTax

PriorTax can even provide an audit defense during the filing process should your tax return be selected for audit by the IRS.

efile taxes

Benefit 1. Filing Taxes Online or Efile tax is simply the easiest way

Taxes don’t have to be a pain. In the past, you had to make an appointment with your accounting office and wait around while they did the math. But now, you can file online from anywhere. All you need is an internet connection. You can even do it from your phone! With web-based tax programs, there’s no need to go to a physical office. And with locally downloaded programs, you can take your taxes with you wherever you go.

Filing your taxes online is quick, easy, and convenient. With step-by-step instructions, you can be confident that you’re completing everything correctly and won’t face any penalties for inaccuracy. You can even start filing, save your progress, and come back to it later. Online filing is simply more convenient.

Benefit 2. Efiling your tax gets your Tax Return through Direct Deposit

Choosing to file electronically and get your tax refund through direct deposit is the fastest way to get the money as soon as the IRS begins processing returns. Because Efiling reduces processing time, individuals and businesses receive their refunds faster (e.g., within three weeks of Efiling). In addition, you are more likely to get a refund more quickly if you file your return electronically instead of by mail, simply because doing so saves a trip to the post office and time spent in the mail. 

Benefit 3. Efile taxes for faster processing

There are many advantages to filing your taxes electronically. One of the biggest advantages is that you will receive confirmation almost immediately that IRS has received your tax return. Additionally, processing your refund will likely be faster since electronic filing means that IRS does not need to sort or transcribe your tax return at their service center. Everything related to your tax return will be processed faster when you file online. You won’t have to read confusing instructions for each form or try to figure out which number goes in which box. Instead, electronic filing asks simple and intuitive questions, clarifies where inputting information is required, and automatically fills out all necessary forms.

There’s no need to write your name a million times when you file with an electronically signed return. Instead, simply draw your signature on your device’s trackpad, copy and paste it when indicated, and submit your return. The information is sent directly to the IRS immediately, eliminating the wait for postal delivery, IRS mail room sorting, and eventual approval.

Efiling your taxes means receiving any refunds you are owed much faster. Direct deposit is automatically wired to your bank account once the IRS processes your information, rather than waiting for a physical check to come in the mail. This way, you don’t have to rely on the postal service for timely delivery. It usually takes 1-3 weeks to get your refund after you file your taxes electronically and request a direct deposit. But it can vary based on how you filed, what credits you claimed, and how you want to receive your refund. You can learn more about when to expect your refund here.

Benefit 4. Simple and secure electronic records of tax forms

Keeping records of your taxes for up to seven years is a best practice. After that, there is a risk of identity theft when old tax records are disposed of improperly. On the other hand, the stack of past taxes will grow larger each year and take up more space. Efile taxes provides a solution by storing years of history securely online without taking up physical space. This makes information easy to retrieve when needed.

Benefit 5. Accuracy of filing taxes online

Taxes can be confusing, but accuracy is key. Incomplete or incorrect information given to the IRS can result in big penalties – even jail time. PriorTax takes care of everything for you so you can feel confident that your taxes are done right.

Efile your taxes early.

Someone who files early on their taxes will be already in the system, either processing their return or receiving a refund. If you discover that you owe the IRS money, filing early gives you extra time to get back on the road to paying the tax. 

People who file early stand a better chance of discovering errors and fixing them before the deadline, which could result in larger tax refunds. People who tend to wait until later to file taxes are more likely to make mistakes, like missing out on valuable credits and deductions. 

If you filed in mid-January, you would only owe taxes due after filing. The good news is that if you submit your taxes early but then you make an error, you will have extra time to fix it and still be on track for your required filing deadline. For these reasons, if you are not in a state of mind where you can file your taxes properly early, opting for the Tax Extension is a good idea that will buy you some additional time.

Child Tax Credit 2022

Posted by admin on November 7, 2022
Last modified: February 13, 2023

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 you through this process to maximize your tax refund in 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.