Category: Tax News

Get up to date on all tax news from the IRS. The IRS is constantly updating us with law changes and new rules. Sometimes, it’s too much to keep up with. We’ll decipher the confusing lingo while you focus on staying current  on what’s really important.

If you have more questions about staying up to date with the IRS, leave a comment. Our tax team is ready to help!

Archive for the ‘Tax News’ Category

Dependents and Child Tax Credit and Benefits in 2025

Posted by admin on June 13, 2024
Last modified: June 12, 2024

Despite the recent tax reform removing the dependency exemption, opportunities remain to maximize your tax refund by leveraging tax benefits related to dependents. Such tax benefits and child tax credit in 2025 have the potential to lessen or completely eliminate your tax obligations greatly.

Certain types of tax credits mentioned are classified as refundable, indicating that you are eligible to receive a refund regardless of whether you have any tax liability to offset.

Exploring the tax advantages associated with having dependents is a complex but crucial task. At tax time, rest assured that the adept team at PriorTax will guide you through the process. our PriorTax dedicated tax professionals will inquire about your situation and identify the tax benefits you qualify for based on your responses.

Child Tax Credit in 2025

If you meet the criteria, you could qualify for the Child Tax Credit, a beneficial tax credit for your dependent children. Unlike a tax deduction, this credit directly lowers your tax bill by the exact amount.

In the tax year 2024, when you submit your 2025 tax return, families may be eligible for a Child Tax Credit of up to $2,000 per child aged below 17.

In order to qualify for the entire tax credit, tax paying individuals must have a modified adjusted gross income of $400,000 or less if they file jointly as a married couple, and $200,000 or less for other filing statuses.

Child Tax Credit in 2025

Child and Dependent Care Credit in 2025

If you are responsible for childcare expenses, there is a tax credit opportunity you could be eligible for during tax season. If you are employed or in the process of seeking employment, and you incur childcare costs for your dependent under 13 years old (with no age limit if they are disabled), you are eligible to claim the Child and Dependent Care tax Credit.

Explorable options for tax credits on childcare include expenses from nursery school, private kindergarten, after-school programs, daycare, and seasonal day camps like summer and winter programs. This specific credit offers a direct reduction in your tax liability corresponding to the amount spent on childcare, and it is classified as a nonrefundable credit.

In the fiscal year 2024, individuals can claim expenses of up to $3,000 for one qualifying tax filing person and $6,000 for two or more qualifying individuals. The credit amount is determined by a percentage of expenses, with a maximum credit of $1,050 for one individual or $2,100 for multiple individuals. However, this credit is scaled down for individuals earning over $15,000.

Other Dependent Credit in 2025

If you are not eligible for the Child Tax Credit and have a dependent child over 17 or are providing for a friend or family member, you can potentially claim the Other Dependent Credit, which offers up to $500 per qualifying individual.

Commencing a gradual decline once your adjusted gross income surpasses $200,000 (or $400,000 for those filing jointly), the tax credit becomes inactive for tax year 2024, showing nonrefundable characteristics.

Earned Income Tax Credit (EITC) in 2025

If your income falls below a specific tax threshold, you may be eligible for a unique tax credit. This credit is determined by factors such as your income level, tax filing status, and the number of qualifying dependents you have.

In tax year 2024, individuals may be eligible for a refundable tax credit can be based on the number of children they have. The amount of this tax credit can vary, ranging from a maximum of $7,830 for those with three or more children to $632 for those without children. A distinguishing feature of the Earned Income Tax Credit is that it is refundable, meaning that if the tax credit exceeds the total amount of taxes owed, the excess about can be refunded to the taxpayer.

In the past year, whatever financial decisions you’ve made, the committed tax experts at PriorTax are here to ensure they significantly impact your tax returns. Whether you prefer handling your taxes independently or entrusting them to a PriorTax specialist, rest assured that we are tax dedicated to maximizing your tax refund and securing every dollar you are entitled to.

Tax Tips for Graduates from Class of 2024

Posted by admin on May 23, 2024
Last modified: May 31, 2024

A hearty congratulations to the esteemed graduates of the Class of 2024. Commemorating your graduation is vital, but it is equally important to prepare yourselves, both mentally and financially, for the impending transition into the unforgiving real world with our tax tips for graduates.

Transitioning into the next chapter of life can be both exciting and daunting. For recent graduates embarking on this journey, it is crucial to equip yourself with essential knowledge on managing your finances and taxes as you step into the real world.

Tax Tips for Graduates 1. Take Control of your Financials

Once you venture into independent living and begin receiving a consistent income from full-time work, embracing accountability for your commitments becomes essential.

Ensuring compliance with tax regulations involves several key steps. These include completing the W-4 form correctly, grasping the details of your withholdings, submitting estimated tax payments when you are self-employed or engaged as a contractor, and maintaining precise documentation of expenses that qualify for tax deductions.

Embarking on the journey of entrepreneurship requires meticulous tracking of your financial transactions. Utilizing a spreadsheet to document your business expenses, income, deductible mileage, and quarterly estimated taxes can streamline the process of managing your finances effectively and efficiently throughout the year.

Quickly transfer all this data to your PriorTax Self-Employed tax filing by collaborating with a dedicated tax specialist from PriorTax. This streamlined process ensures that you won’t need to input your details twice when tax season arrives.

tax tips for graduates

Tax Tips for Graduates 2. Start My Tax Advantage Savings Accounts and Plans

To set yourself up for financial success, consider the benefits of opening and actively funding tax-advantaged retirement savings plans and accounts like a 401K or Roth IRA.

By utilizing these accounts, you can prepare for upcoming financial endeavors while also significantly reducing your tax burden, both presently and in the long run.

Tax Tips for Graduates 3. Apply My Education Tax Deductions and Benefits

Remember to make the most of the educational tax breaks that you are eligible for. Whether you’ve already incurred qualifying education costs recently or are currently facing expenses related to pursuing an advanced degree, be sure to take advantage of the available benefits.

Upon receiving a 1098-T form indicating tuition payments made within the year, ensure to either download the information provided or input it into your records. Retaining receipts for education-related costs such as tuition, fees, books, supplies, and equipment is advisable to maximize education tax benefits and deductions when filing taxes.

Tax Tips for Graduates 4. Remember My Student Loan Interest Tax Deduction

Upon completing your studies, it’s likely that you’ll need to commence making monthly payments towards your student loans. A significant portion of these payments will go towards interest accrued on the loans. Fortunately, you have the option to claim a tax deduction of up to $2,500 on the interest paid. Your loan provider will furnish you with a Form 1098-E detailing the annual interest amount you’ve paid.

Tax Tips for Graduates 5. Accurately File My Tax Return

It is advisable to submit a tax return, irrespective of meeting the IRS filing threshold if federal taxes were deducted from your earnings. This could lead to a potential tax refund.

It is crucial to take action, particularly if you qualify for a refundable tax credit such as the Earned Income Tax Credit. Annually, more than $1 billion in unclaimed tax refunds are reported by the IRS, with the average unclaimed tax refund amounting to around $900. Remember, submitting your tax return is the key to receiving a tax refund.

Rest assured that you don’t need to stress about familiarizing yourself with these tax advantages. PriorTax will ensure they are fully utilized in your tax filing regardless of the financial decisions you took in the previous year. Whether you prefer to navigate your tax return independently or opt for the expertise of a PriorTax dedicated tax professional, rest assured that we will maximize your tax benefits and secure the largest refund possible – with a guarantee.

Key Tax Benefits and Policies in 2025 That might be gone in 2026

Posted by admin on May 16, 2024
Last modified: May 20, 2024

Tax Benefits in 2025: In the absence of Congressional intervention, numerous tax adjustments are on the horizon for 2026, encompassing elevated tax rates and diminished standard deductions. In the near future year is poised for significant tax modifications, all stemming from the repercussions of the 2017 tax reform legislation, which rendered numerous individual tax provisions impermanent.

In the near future, significant tax revisions are on the horizon for 2026. The impetus behind these changes stems from the legislation passed in 2017 aimed at tax reform. The majority of individual tax measures established were intended to be only temporary, with a set expiration date set for the year 2025. Should Congress choose not to extend these provisions, they will automatically revert to the regulations enacted 2017 come January 1, 2026.

tax benefits in 2025

2025 Tax brackets: The individual income tax rates of 10 percent, 12 percent, 22 percent, 24 percent, 32 percent, 35 percent, and 37 percent may go back to 10 percent, 15 percent, 25 percent, 28 percent, 33 percent, 35 percent, and 39.6 percent, with different income-level break points and brackets than now.

Greater standard deductions: The 2017 law more than doubled these breaks.

Greater child tax credits: In the past, child tax credits were set at $1,000, but in 2018, the amount was increased to $2,000.

Alternative minimum tax: Since 2017, the increased exemption amounts and expanded phaseout zones for the alternative minimum tax have significantly reduced the number of individual taxpayers required to pay the AMT.

The tax benefit in 2025 known as the 20% qualified business income deduction is aimed at self-employed individuals and those who hold ownership stakes in S corporations, partnerships, limited liability companies, and other similar pass-through entities.

The adjusted gross income (AGI) limitation: In tax laws, a welcomed change was implemented under the 2017 tax legislation, raising the adjusted gross income (AGI) cap on cash contributions to eligible charities from 50% to 60%.

The more significant lifetime estate and gift tax exemption: In the current year, individuals are entitled to a significantly larger lifetime estate and gift tax exemption amounting to $13,610,000 for those who pass away.

The cutback on high itemizations for upper-income taxpayers would return.

Restrictions on Popular Tax Deductions Also End After 2025.

Among them

Personal exemptions:  In the tax year of 2017, individuals were able to claim a deduction of $4,050 for both themselves and any dependents they had. To illustrate, a household consisting of three individuals could benefit from a total deduction of $12,150 through personal exemptions. However, this provision was removed entirely with the implementation of the 2017 tax law.

The maximum of $10,000 cap on tax deducting local and state taxes on Schedule A of the 1040: Introducing a $10,000 ceiling on the deduction of state and local taxes listed on Schedule A of the 1040 form promises to provide much-needed respite to individuals burdened with substantial property and state income tax obligations.

The 2017 law implemented changes to the home mortgage interest deduction. The 2025 tax deduction limit for interest on home acquisition debt has been reduced from $1 million to $750,000.

Incorporated into Schedule A, various 2025 tax deductions are subject to the 2% of Adjusted Gross Income threshold. Until 2025, the category of itemized deductions has been removed by the 2017 law. Items no longer eligible for deduction include unreimbursed employee expenses such as travel, meals, and education costs, brokerage and IRA fees, hobby-related expenses, and tax return preparation fees.

Theft and casualty losses: 2025 Tax deductions for theft and casualty losses are limited to those incurred in areas designated as federal disaster zones, as specified by existing regulations for reporting on Schedule A.

Job-related moving expenses: Now, only members of the military get the break.

Two important tax breaks are set to expire in 2025, marking the end of certain benefits not included in the 2017 legislation. Specifically, the extension of the Obamacare health premium credit to a broader group of individuals purchasing insurance through a marketplace will cease. 

Additionally, the exemption from federal income tax for forgiven student loan debt accumulated between 2021 and 2025 will come to an end. This exception contrasts with the typical taxation of income resulting from debt cancellation.

Maximizing My Tax Benefits in 2025 with a Dedicated Tax Professional

Our dedicated Tax Professional will walk you through this complicated process from start to finish for accurate tax filing and maximum tax return in 2025.

Tax Deduct My Summer Moving Expenses?

Posted by admin on May 2, 2024
Last modified: May 1, 2024

As the warm months approach, many people choose to relocate, which often leads to additional financial burdens. The moving expenses associated with relocation, such as fuel, packing supplies, moving services, and insurance, can quickly accumulate and impact one’s budget.

When the time comes to relocate, it is expected to encounter additional expenses such as closing costs and security deposits that coincide with the move. Managing these financial obligations simultaneously can create a significant burden.

In the past, individuals could claim moving expenses as deductions on their taxes if they met certain criteria. However, due to the Tax Cuts and Jobs Act (TCJA), most taxpayers can no longer deduct moving costs on their federal tax returns. Despite this change, a provision allows specific military personnel and their families to still qualify for this deduction.

What Moving Expenses Should I Tax Deduct?

In the event that you are a member of the armed forces on active duty under military orders, you are eligible to claim deductions for the expenses incurred during your relocation. Specifically, you can deduct the costs associated with moving to your designated residence but not those related to any previous trips made in search of suitable housing.

When it comes to practical applications, it is possible to subtract the expenses related to packing and transporting your belongings. However, expenses for purchasing new decorations that may complement your new living space are not deductible. Additionally, you can claim the cost of storage for a maximum of 30 continuous days following the move, especially if your new residence is not fully prepared.

In conclusion, it is also possible to subtract any expenses related to accommodations for relocating from your former residence to your new place. However, it is important to note that you are unable to deduct the expenses for meals. It is crucial to remember that any reimbursements received for these costs cannot be deducted. Only the expenses that have not been reimbursed are eligible for deduction.

In the case of active-duty Armed Forces personnel who are eligible, expenses for air travel to relocate to a new residence can be deducted. Alternatively, for those who choose to drive, expenses such as fuel and oil can be tax deducted at a rate of 22 cents per mile in 2023 and 21 cents per mile in 2024.

Tax deduct your moving expenses associated, such as fuel, packing supplies, moving services, and insurance, etc.

Who Can Tax Deduct Moving Expenses?

Commencing from the year 2018, individuals eligible to claim deductions for their relocation costs on their federal tax returns are required to belong to the Armed Forces in active service and be relocating based on military directives for a permanent change in duty station.

From 2018 until 2025, the deduction for moving expenses was removed for various taxpayers under the existing tax legislation. However, once 2025 passes, the law will switch back to its previous form. Subsequently, all taxpayers will regain the eligibility to deduct specific expenses related to moving and journeying to a new residence.

How To Tax Deduct My Moving Expenses?

Upon meeting the eligibility criteria for deducting relocation costs, the process involves claiming this deduction through Form 3903. Form 3903 is a crucial document that must be submitted along with your federal tax return. The aggregate sum calculated through Form 3903 will be carried over to line 14 of Schedule 1, designated for moving expense deductions. Subsequently, this figure carries forward to Form 1040, contributing to the reduction of your adjusted gross income.

Does Moving Expense Tax Deduction Apply to State Tax Returns?

In certain regions such as California, there remains a provision for a deduction in your state tax filing. Even if you are ineligible for a federal deduction, you can input your relocation costs in PriorTax. Should your state permit this deduction, a dedicated Tax Professional from PriorTax will assist you in including the permissible amounts in your state tax return.

What to do When I Missed the Tax Deadline

Posted by admin on April 18, 2024
Last modified: April 19, 2024

Once the tax deadline of April 15th has passed, fret not if you missed it. You still have the chance to file your taxes. Consider these approaches to complete your tax return and receive your refund promptly if you have missed your tax deadline.

Missed your Tax Deadline? Take Action Now without delay.

Rest assured, if you still need to complete your tax filing, there’s no need to worry. There’s still time to submit your documents. Around 80% of individuals anticipate a tax refund, and in the event of delayed filing, no penalties will be incurred.

You Will Want to File your Taxes As Soon As Possible

Annually, the IRS has noted significant unclaimed tax refunds exceeding $1 billion. It is important to be aware that regardless of whether you fall below the IRS income threshold for filing taxes as an individual ($13,850) or as a married couple filing jointly ($27,700)

missed tax

Use E-file with Direct Deposit

Don’t worry if you’ve missed the tax deadline, there’s still a way to easily file your taxes online using the services offered by PriorTax. E-filing allows the IRS to swiftly and efficiently process your tax return, ensuring that you receive prompt acknowledgment of its receipt.

Should you choose to submit your tax return by mail, please be aware that the IRS will require additional time to receive and handle your submission. Opting for E-Filing with direct deposit is recommended for the speediest processing of your tax refund. According to the IRS, they aim to issue the majority of tax refunds within 21 days of acceptance.

Pay Up Taxes to the IRS

If you have outstanding debts, it is advisable to submit your tax return promptly to prevent accruing larger penalties. Failure to file for an extension in April will result in penalties for both failure to file and failure to pay.

When it comes to filing your taxes, it’s essential to submit them on time to avoid facing hefty penalties. While a late filing may still incur a penalty, it will be less severe compared to not filing altogether. By filing promptly, you can minimize the amount you owe in interest. Remember, the longer you delay filing, the greater the interest charges you’ll accrue.

Delaying tax filing can occur when individuals are facing a tax bill they are uncertain about covering. To address this concern, implementing proactive measures can lead to more favorable outcomes and reduced expenses in the long run.

It is advisable to submit your filing promptly, make an initial payment based on your means, and subsequently inquire about a payment arrangement with the IRS. The IRS provides various avenues of assistance to accommodate your situation. You have the choice to seek a short-term payment plan, a prolonged installment agreement, an offer in compromise, or a temporary suspension of collections in certain circumstances.

Opt for long-term installment agreements, which provide a timeline of up to six years to fulfill your payment obligations. Alternatively, consider the short-term payment plan if you anticipate settling your dues within 180 days.

Rest assured, if you missed the tax deadline — submitting your taxes with PriorTax is never too late. Regardless of your financial decisions in the past year, PriorTax will ensure they positively impact your tax situation. Whether you prefer to handle your taxes independently or have a dedicated tax professional assist you, we are committed to securing every eligible dollar for you and guaranteeing the maximum refund possible.

States With Longer Tax Filing Deadlines

Posted by admin on April 18, 2024
Last modified: April 19, 2024

Delaware State Tax Filing

Mark your calendars, for the state tax deadline to file taxes for those following the calendar year is approaching – April 30, 2024. Remember, the payment deadline coincides with this date as well. Any underpayments will incur penalties and interest starting from April 30, 2024, regardless of any extensions granted to file.

To secure an extension for filing taxes, individuals can submit Tax Form PIT-EXT by April 30, 2024. The extension will be granted until October 15, 2024.

2023 Delaware State Tax Return Filing Deadlines

  • Individual Tax Returns: April 30, 2024
  • Delaware State Tax Extension Request: April 30, 2024
  • Individual Income Tax Payment: April 30, 2024
  • Individual Income Tax Returns for Extension Filers: October 15, 2024

Hawaii State Tax Filing

In anticipation of the upcoming tax year 2023, the Hawaii Department of Taxation has implemented a series of revisions. Notably, adjustments have been made to enhance the credit amounts available to taxpayers.

In addition to other tax benefits, a newly introduced tax credit for Pass-Through Entities (PTEs) in Hawaii enables partnerships and S corporations to fulfill their Hawaii income tax obligations at the entity level. Individuals who are part of the pass-through entity are eligible to receive a nonrefundable credit corresponding to the taxes paid by the entity.

2023 Hawaii State Tax Return Filing Deadlines

  • Individual Tax Returns: April 22, 2024.
  • Hawaii State Tax Extension Request: October 20, 2024.
  • Individual Income Tax Payment: April 22, 2024.
  • Individual Income Tax Returns for Extension Filers: October 20, 2024.
state tax deadline

Iowa State Tax Filing

The Iowa Department of Revenue has implemented several updates for the upcoming fiscal year, including using federal taxable income as a baseline for filing Iowa tax returns.

In Iowa, the recent change in tax regulations has eliminated the itemized and standard deduction options. This means that taxpayers in Iowa no longer have the choice between itemizing or taking the standard deduction on their state tax returns.

In light of recent developments, the criteria for the Retirement Income Subtraction have been broadened. Moreover, individuals who meet the eligibility criteria can now deduct an unlimited amount of retirement income.

2023 Iowa State Tax Return Filing Deadlines

  • Individual Tax Returns: April 30, 2024
  • Iowa State Tax Extension Request: April 30, 2024
  • Electronic Individual Income Tax Payment: April 30, 2024
  • Individual Income Tax Returns for Extension Filers: October 31, 2024

Louisiana State Tax Filing

The Louisiana Department of Revenue has introduced several adjustments in preparation for the upcoming tax year of 2023. Noteworthy alterations have been made to the list of tax credits and donations, with comprehensive information provided on the corresponding screens.

For drivers of electric or hybrid vehicles in Louisiana, an annual road usage fee must be paid to the Louisiana Department of Revenue (LDR) for vehicle registration. The fee can be paid independently or included as part of the annual tax return submission.

2023 Louisiana State Tax Return Filing Deadlines

  • Individual Tax Returns: May 15, 2024
  • Louisiana State Tax Extension Request: May 15, 2024
  • Individual Income Tax Payment: May 15, 2024
  • Individual Income Tax Returns for Extension Filers: November 15, 2024

New Mexico State Tax Filing

Residents residing in Dona Ana County are now eligible to receive a property tax rebate for low-income individuals, provided their modified gross income does not exceed $24,000. Additionally, the Working Families Tax Credit has been raised to 25% of the federal Earned Income Credit. Retired armed forces personnel have the opportunity to exempt up to $20,000 from their military retirement pay.

In preparation for the upcoming tax season, the New Mexico Taxation and Revenue Department announced updates to the tax regulations for the year 2023. A notable addition includes a fresh deduction tailored for specific expenses linked to operating a licensed cannabis business in New Mexico. This deduction mirrors the amount of any qualifying expenditure that could typically be claimed as a federal income tax deduction but is restricted by Section 280E of the Internal Revenue Code.

2023 New Mexico State Tax Return Filing Deadlines

  • Individual Tax Returns: April 30, 2024 when you E-File
  • New Mexico Tax Extension Request: April 15, 2024
  • Individual Income Tax Payment: April 15, 2024
  • Individual Income Tax Returns for Extension Filers: October 15, 2024

Oklahoma State Tax Filing

Incorporated into the updated Form 511-CR, the Tax Credit for Adoption Expenses took the place of the previous Deduction for Adoption Expenses. Moreover, the scope of the Credit for Qualified Clean-Burning Motor Vehicle Fuel Property was broadened to cover additional equipment used to adapt hydrogen fuel cell-powered motor vehicles.

Incorporated into Tax Form, 511 is now the inclusion of a paper check refund option, along with a designated section for Dependents on page 1 of the form. Furthermore, an allowance for deducting bonus depreciation on qualified property or qualified improvement property falling under Section 168 of the Internal Revenue Code has been introduced.

2023 Oklahoma State Tax Return Filing Deadlines

Virginia State Tax Filing

In the year 2023, Virginia embraced the policy of rolling conformity with the Internal Revenue Code (IRC). This new approach enables Virginia to promptly align with federal tax amendments in the IRC upon their enactment by Congress.

Introducing an exciting opportunity for tax savings with the recently unveiled Firearm Safety Device Tax Credit. This nonrefundable credit offers individuals up to $300 in tax relief for investing in one or more firearm safety devices from a certified dealer. Additionally, the National Guard Income Subtraction cap has been raised from $3,000 to $5,500, potentially benefitting officers ranked O6 and below.

2023 Virginia State Tax Return Filing Deadlines

  • Individual Tax Returns: May 1, 2024
  • Virginia Tax Extension Request: May 1, 2024
  • Individual Income Tax Payment: May 1, 2024
  • Individual Income Tax Returns for Extension Filers: November 1, 2024

2024 Crypto Tax

Posted by admin on April 4, 2024
Last modified: April 4, 2024

The specific 2024 crypto tax rate you pay on cryptocurrency transactions is influenced by how long you hold the asset and your total income. Suppose you are a taxpayer in the United States. In that case, short-term capital gains arising from cryptocurrency held for less than a year are taxed at regular income tax rates varying from 10% to 37%, depending on the total income level you’ve earned and tax bracket you are subject to. Conversely, long-term capital gains from cryptocurrency profits held for over a year are taxed at rates between 0 and 20%.

When engaging in mining, staking, lending, or making payments for goods and services in the crypto world, these activities are categorized as regular income. They are subject to taxation based on your crypto tax bracket. The crypto tax rate you are liable for will be determined by your total income, falling within 10-37% range.

Regarding cryptocurrencies, the IRS categorizes them as property and enforces corresponding tax regulations. US taxpayers are subject to a crypto tax rate aligned with either short- or long-term capital gains, similar to stocks, or standard income tax rates based on the method of acquisition of the cryptocurrency.

2024 crypto tax

How Does US Taxes on Crypto Assets?

How does crypto gets taxed in the US? Understanding the tax implications of cryptocurrency is essential for users to effectively navigate the complexities of their financial strategies. In the United States, the IRS categorizes crypto earnings as either income or capital gains, depending on the specific taxable event involved in generating the profits.

No matter the particular cryptocurrency involved—Bitcoin, Ethereum, or alternative coins—the IRS enforces equivalent tax regulations on all cryptocurrency transactions.

Tax Form 8300 for Crypto Transactions more than $10,000 for 2024 Crypto Tax

Commencing on January 16, 2024, the IRS has offered clear guidance by indicating that enterprises involved in particular online transactions only need to utilize Tax Form 8300 once additional regulations are released.

In response to an upcoming tax reporting law that took effect on January 1, 2024, there were growing apprehensions within the industry. The new legislation required individuals engaged in a trade or business to report transactions exceeding $10,000 using Form 8300.

In a recent development, the Infrastructure Investment and Jobs Act has introduced a requirement for individuals who receive $10,000 or more in cryptocurrency during their business activities to report such transactions to the IRS, despite the familiar nature of the reporting form.

When it comes to crypto transactions, applying this general guideline can be difficult because of the challenges associated with collecting essential information, predominantly caused by the pseudonymous characteristics of cryptocurrency transactions.

In light of unclear guidance from the IRS concerning the legislation, businesses dealing with crypto transactions over $10,000 are temporarily exempt from filing Form 8300 until the uncertainties are addressed. As soon as the IRS releases more information, this guide will be revised promptly to reflect the updated guidelines.

How to File my 2024 Crypto Tax

In accordance with IRS regulations, individuals are obligated to declare their cryptocurrency activities. This includes any buying, selling, exchanging, or discarding of digital assets, all of which are considered taxable capital gains or losses. Additionally, earnings from crypto mining, staking, and yield farming are subject to income tax.

First, Track your profits and losses

In the initial phase, it is essential to assess gains and losses when engaging in cryptocurrency transactions such as selling or trading. Each of these actions initiates taxable events. The first step is to determine the disparity between the asset value at the time of disposal and its cost basis in order to calculate the gains or losses incurred.

Second, Work Through the Tax Form 8949

In the second phase, it is necessary to fill out Form 8949 from the Internal Revenue Service. Form 8949 should be utilized for reporting any profits or losses from cryptocurrency transactions. This particular form is intended for documenting all crypto exchanges made throughout the year.

Third, Prepare Your Schedule D

Next, you will need to connect Form 8949 with Schedule D. Form 8949 should be attached to your Form 1040 Schedule D, where you will consolidate information on capital gains and losses. Make sure to categorize your short-term and long-term gains and losses separately.

Finally, Gather Income and Earnings from Crypto

Upon reaching final step, it’s crucial to account for earnings from cryptocurrency activities such as mining and staking. This crypto income should be classified as ordinary income and reported on Form 1040 Schedule 1 under the section “Additional Income and Adjustments to Income”.

How Does the IRS Audits My 2024 Crypto Tax

The IRS monitors cryptocurrency transactions through exchanges, third-party reports, and blockchain analysis. Let’s take a closer look at the methods employed by the IRS to monitor crypto transactions and ensure regulatory compliance.

When it comes to reporting transactions to the IRS, third-party platforms and exchanges play a crucial role by providing users with transaction data. In addition, the IRS employs blockchain analysis to track public cryptocurrency transactions through the expertise of blockchain specialists.

When it comes to investigating cryptocurrency platforms, the IRS has a tool known as John Doe Summons. This legal mechanism enables the IRS to request information from platforms regarding users who meet certain criteria, such as engaging in a particular volume or value of transactions.

In the pursuit of uncovering tax evasion in crypto transactions, the IRS utilizes subpoenas to obtain user data from various platforms. These legal tools are essential for the IRS to collect relevant information and identify individuals involved in dubious financial activities. Notable exchanges such as Coinbase, Circle, Kraken, and Bitstamp have been recipients of these crucial subpoenas that aid IRS investigations.

Ensuring full compliance with tax regulations entails operating under the assumption that the IRS closely monitors all your cryptocurrency transactions. It is crucial to strategize and prepare for this level of oversight.

What to Consider For Tax Filing Extension in 2024?

Posted by admin on April 4, 2024
Last modified: April 4, 2024

Should you require additional time for tax preparation, consider utilizing PriorTax Free request for tax extension or complete and submit Tax Form 4868. This tax form will enable you to request an automatic tax extension for filing taxes until October 15, 2024. Alternatively, you can opt to make an electronic E-File tax payment with PriorTax and designate “extension” as the purpose of the payment. If you need support from a free dedicated tax professional, reach out to PriorTax Support via phone or email now.

It’s important to keep in mind that while obtaining a Form 4868 extension allows for an extended tax filing deadline to submit your tax return, it does not grant additional time to settle any outstanding tax liabilities.

In the event of overdue taxes, the IRS enforces interest charges that accrue on a daily basis. Individual taxpayers are subject to a 3% interest rate imposed by the IRS, in addition to the federal short-term interest rate determined by the government quarterly.

tax extension

There Are Other Tax Penalties To Consider As Well

In the event that an individual fails to submit their tax return by the specified deadline, which includes any tax extensions granted, they may face the consequences of the failure-to-file penalty.

If taxes are not paid by the tax payment deadline, a failure-to-pay penalty will be imposed. The IRS will apply a 0.5% charge monthly on the outstanding taxes, up to a maximum of 25% of the unpaid amount.

If both penalties are incurred within a month, the 5% failure to file penalty will be offset by the 0.5% failure-to-pay penalty.

Already Have Extended Time to File My Taxes?

You might have extra time to file your tax return—here’s who qualifies

In the United States, the majority of citizens are expected to submit their 2023 federal tax return by April 15. However, specific circumstances, such as residing in designated regions or serving in the military, could extend this deadline for some individuals.

In circumstances where military personnel are in combat zones, the deadline for federal tax filing and payment is extended by 180 days following the conclusion of their active service in that area, surpassing the usual April 15 deadline. Eligible individuals can also request further extensions if they are currently on active duty.

Exceptions from Requesting Tax Extension

In light of the recent natural calamities affecting various states in 2023, the Internal Revenue Service has introduced an extension for federal tax return deadlines. This initiative aims to provide residents with additional time for the preparation and submission of their tax returns. Below is a compiled list of the states eligible for this assistance, presented in alphabetical order.

Different states have various deadlines for filing income taxes, with the majority falling on April 15, 2024. To request an extension beyond this date, it is essential to reach out to each state individually.

California

In the wake of intense storms and flooding that hit San Diego County starting on January 21, residents in California now have an extended deadline until June 17, 2024, to submit their federal tax returns.

Connecticut

In light of the recent intense storms and floods that struck Connecticut starting on January 10, residents in the affected areas, including New London County, the Mohegan Tribal Nation, and Mashantucket Pequot Tribal Nation, will now have an extended deadline of June 17, 2024, to submit their federal tax returns.

Maine

Residents in various Maine counties hit by the recent severe storms and flooding from December 17, 2023, onwards are now granted an extended deadline of June 17, 2024, to submit their federal tax returns. This relief measure applies to individuals residing in Androscoggin, Franklin, Hancock, Kennebec, Oxford, Penobscot, Piscataquis, Somerset, Waldo, and Washington counties.

Michigan

Residents residing in various counties in Michigan who experienced the aftermath of severe weather conditions, including storms, tornadoes, and flooding commencing from August 24, 2023, are granted an extension until June 17, 2024, to submit their federal tax returns.

Rhode Island

Residents residing in Providence County, Rhode Island, who have faced the impact of intense storms, floods, and tornadoes that commenced on September 10, 2023, are eligible for an extended federal tax return deadline until June 17, 2024.

Tennessee

Residents in Tennessee impacted by the severe storms and tornadoes that started on December 9, 2023, are now being granted an extension until June 17, 2024, to submit their federal tax returns.

Washington

Spokane County, Washington, residents impacted by the wildfires that started on August 18, 2023, are now granted an extension until June 17, 2024, to submit their federal tax returns.

West Virginia

Individuals in West Virginia who have been impacted by the recent severe weather events, including storms, flooding, landslides, and mudslides that started on August 28, 2023, now have an extended deadline of June 17, 2024, to submit their federal tax returns.

Those Who Live Abroad Can File Tax Return or Tax Extension a Little Bit Later

Individuals residing in foreign countries have the option to delay their tax filing, although the deadline for tax payments remains April 15. American citizens and resident aliens who are living and employed outside the U.S. and Puerto Rico are granted a natural extension of two months for filing taxes, up until June 17, 2024.

In contrast to the aforementioned states, tax payments must be submitted by April 15 to avoid incurring interest and penalties on late payments.

Last Day for Business Tax Filing for 2023 Taxes in 2024

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

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

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

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

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

2024 business tax

Business Tax Filing Deadlines You Need For?

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

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

Partnerships

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

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

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

S Corporations

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

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

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

LLC

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

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

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

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

Need More Time? File A Business Tax Extension

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

Tax Form 7004 is due.

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

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

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

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

Updates on Student Debt Forgiveness: February 2024

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

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

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

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

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

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

student debt forgiveness

Who Qualifies for February 2024 Student Debt Forgiveness?

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

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

What Do You Need To Do?

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

What Is The SAVE Student Debt Forgiveness Plan?

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

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

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

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