Category: Tax Tips and Tricks

Taxes are confusing and cause many taxpayers stress come tax season but PriorTax is here to help. Learn the tax tips and tricks to get you through the preparation process. You could be missing out on more money from the IRS which is why we want to help. We’ll let you know about hidden deductions and rare credits to report on your tax return to maximize your refund. Don’t hesitate to leave a comment on our blog if you have a question about your tax situation. Also, check back here for new tips and tricks throughout the tax season because our team is on the lookout!

Archive for the ‘Tax Tips and Tricks’ Category

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.

Summer Tax Deduction from Child Care and Child Activities during Summer Break

Posted by admin on May 9, 2024
Last modified: May 14, 2024

As tax day fades into the past, now is the perfect time to plan out your summer getaway. But the challenge of arranging summer childcare while balancing work responsibilities can be particularly demanding for working parents. When caring for children during the summer months, costs can quickly add up. Intelligent tax deductions can help through flexible spending accounts and dependent care credits from summary time for Summer Tax Deduction.

Summer Tax Deduction

Dependent Care Flexible Spending Accounts for Summer Tax Deduction

Should you have a Dependent Care Flexible Spending Account (DCFSA) provided by your employer, you can allocate up to $5,000 per household from your earnings to cover dependent care expenses ($2,500 for individuals who are married and filing separately).

One major advantage of utilizing a Flexible Spending Account (FSA) is the tax benefits associated with your contributions. When you contribute to an FSA, your funds are not subject to income or payroll taxes like social security and Medicare taxes. These accounts are also known as Dependent Care Assistance Plans or Dependent Care Reimbursement Accounts.

Who Qualifies for Dependent Care FSA?

When providing care, the individual in need should either be your child or, if dependent, should be younger than 13 years old or incapacitated.

Throughout the course of the year, the dependent child must not have been responsible for more than half of their own financial support.

  • A taxpayer must be younger than the child in order to claim the child as a qualifying dependent.
  • In order for married couples to qualify, both partners must have a minimum income of $5,000, with exceptions for spouses who are disabled, full-time students, or actively seeking employment.
  • Make sure to spend the allocated funds before the year ends to avoid losing them.

One important requirement is that you enroll in the payroll tax deduction system offered by your employer at the start of the calendar year. This crucial step must be noticed.

What Expenses Qualify for Summer Tax Deduction?

Child Care Providers.

For parents utilizing their FSA to cover childcare expenses, it is essential that childcare providers furnish their taxpayer identification number, either their Employer ID number or Social Security number, to ensure reimbursement. This requirement necessitates that providers accurately report the income from childcare services on their tax returns.

Summer Camps.

When it comes to summer activities, day camps are eligible for reimbursement, while overnight camps are not covered. This distinction benefits parents who opt for a range of day camp experiences, like soccer, tennis, and computer camps. However, it’s important to note that tutoring and summer school programs are not considered eligible expenses for reimbursement during the summer months.

Payments to Grandma.

If you decide to enlist the help of family members like Grandma or other relatives to look after your children over the summer months, you may be able to receive compensation through your Dependent Care FSA program. It is important that the family member has a valid Social Security number and declares the income on their tax filings. While other relatives may also be eligible, this does not apply if they are considered your dependents. Therefore, you cannot compensate your 16-year-old to watch over the younger children and still claim them as a dependent on your taxes.

Child and Dependent Care Credit

In the event that you are not enrolled in a Dependent Care Assistance Program, you are eligible to seek still reimbursement for the child care expenses previously reviewed through the Child and Dependent Care credit. Individuals with an Adjusted Gross Income (AGI) of $15,000 or lower can potentially receive a federal tax credit of up to 35% of the expenses incurred, with a cap of $3,000 per child ($6,000 in total). The credit percentage decreases as AGI rises, eventually stabilizing at 20% for those with an AGI of $43,000 or higher.

Consider this scenario: Imagine you have two children and incur $1,000 in qualifying childcare costs for each child. As a result, you are eligible to receive a federal tax credit of $200 per child. This tax credit directly reduces the amount of taxes you owe.

Should I choose DCFSA or the Tax Credit?

Suppose you find yourself in a federal tax bracket of 22% and decide to contribute $5,000 to your DCFSA. This contribution can lead to savings of $1,100 on your federal income tax and potentially reduce your state taxes. 

Furthermore, by opting to contribute to a Dependent Care Flexible Spending Account (DCFSA), you can lower your Medicare tax by 1.45% and potentially reduce your Social Security tax by up to 6.2%, as these amounts would not be considered taxable wages on your W-2 Form.

Suppose you decide to utilize the child and dependent care credit, rather than opting for a dependent care assistance program, to account for your expenses. If the credit is set at 20%, the $10,000 spent on child care will result in a $2,000 reduction in federal income taxes.

Lower-income individuals may be eligible for the more generous 35% tax credit. However, those in this income bracket typically do not owe federal taxes, and the credit cannot be refunded.

To the majority of guardians, opting for the DCFSA income exclusion proves most advantageous. Regardless of your decision, seize the tax-saving advantages offered by child care and day camp costs during the upcoming summer months.

In the previous year, regardless of the financial decisions you undertook, Apex Tax Services is here to optimize your tax benefits. Whether you prefer taking charge of your tax filing or entrusting a skilled and dedicated Tax Professionals from PriorTax, we guarantee that you will receive the maximum refund you are entitled to.

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.

You May Soon Benefit from $8.8 billion in Inflation Reduction Act Home Energy Rebates

Posted by admin on April 25, 2024
Last modified: April 29, 2024

Recently, the Department of Energy approved the first state application for federal funding through the Home Energy Rebates program. A substantial $8.8 billion in funding under the Inflation Reduction Act has been designated to help consumers enhance the energy efficiency of their homes.

Consumers have easy access to financial assistance, with potential benefits reaching up to $14,000 per household or even more, depending on the state’s program structure.

home energy rebates

More Details About the Home Energy Rebates

Thanks to the Inflation Reduction Act, consumers may begin receiving rebates linked to household energy efficiency in just a matter of months. Federal authorities are disseminating $8.8 billion in funds for Home Energy Rebate programs to states, territories, and tribes, who are required to submit requests for financial support. Notably, the U.S.

Anticipation is building within the DOE for the upcoming launch of New York’s consumer program, which Karen Zelmar, the Home Energy Rebates program manager, believes will be open by the start of summer. New York ranks fourth in total funding allocation for the program, followed by California, Texas, and Florida.

Incentives offered by the government, with a potential value of $14,000 or higher per household, vary depending on the state’s specific program. These benefits serve as rebates for individuals who choose to enhance the efficiency of their homes or rental properties through specified upgrades.

These rebates have been introduced to support efficiency projects such as the installation of electric heat pumps, insulation, electrical panels, and Energy Star-rated appliances. The amount and qualification criteria are determined by various factors, including household income, resulting in higher rebates for those with lower to middle incomes.

How to Access the Home Energy Rebates

It is important to note that consumers are typically unable to double-dip on benefits. For instance, experts say a consumer who receives a rebate for purchasing an electric heat pump would generally not be able to factor in the energy savings from the same heat pump when determining eligibility for a broader household rebate.

According to experts, consumers can combine rebates with state and local utility programs. Those looking to upgrade before home energy rebate program implementation could explore alternative funding options under the Inflation Reduction Act, including tax incentives for enhancing home efficiency.

In order to receive rebates, they must be provided to customers directly when making a purchase. This could occur at the retailer, where customers may receive an immediate discount on the price or through a contractor who offers a rebate on the project cost at the time of sale, according to insights shared by Zelmar.

As industry experts have pointed out, the specific procedures for rebates can differ depending on the state. For additional support, find your free dedicated PriorTax Tax Professional.

RRC Recovery Rebate Tax Credit for a Limited Time Only

Posted by admin on April 25, 2024
Last modified: April 29, 2024

May 17th, 2024, is the last day to claim your 2020 Recovery Rebate Tax Credit you might have missed out on from 3 rounds of full COVID-19 Stimulus Payments. If individuals are seeking the Recovery Rebate Credit for the tax years 2020 or 2021 when completing their Form 1040, Individual Income Tax Return. It is important to note that the IRS is empowered to deduct their refund to settle specific federal and state debts. 

How to Recover a Missing Stimulus Payment by Utilizing the Recovery Rebate Credit. 

The government distributed a total of $931 billion in stimulus checks during the years 2020 and 2021 to support individuals during the height of the COVID-19 outbreak. Despite this significant effort, some individuals have yet to receive their allotted funds even after a considerable period has passed since the disbursement of the last stimulus payments.

For those individuals awaiting stimulus funds, payment may be received by filing for a “recovery rebate” tax credit when submitting their federal tax returns for 2020 or 2021.

To determine your eligibility for the 2020 or 2021 recovery rebate credit, it is essential to verify whether the IRS provided you with a stimulus or partial payment. If you have concerns about missing out on entitled funds, contacting the IRS or finding your dedicated PriorTax Tax Professional is the best course of action. Throughout 2020 and 2021, three sets of pandemic stimulus checks were distributed.

Recovery Rebate Tax Credit

Exploring Eligibility for Recovery Rebate Credit and Stimulus Payments.

If you missed out on a stimulus check or only received a partial payment, there is a chance for additional cash through the recovery rebate tax credit. From filing a federal tax return and claiming the tax credit, you may be eligible for this extra financial support. The income requirements align with those set for the stimulus payments, ensuring fairness and consistency in the process.

If you find that the IRS has issued a stimulus check but has gone missing, it is important not to apply for the recovery rebate credit. Instead, reach out to the tax agency and request them to track the payment.

Are You Not Eligible for the 2020 or 2021 Recovery Rebate Credit?

If you have already received the complete stimulus payments, you won’t be able to receive any additional cash. Furthermore, if you can be a dependent by someone else, you are not eligible to claim the tax credit. Moreover, only U.S. citizens or individuals classified as “resident aliens” are eligible for the recovery rebate credit.

Certain credits may be ineligible if you do not possess a Social Security number. However, in cases where one is married and their spouse holds an SSN, some exceptions could potentially make one eligible for the credit even if they are not registered in the Social Security system.

1st Round and 2nd Round of Stimulus

In the initial two installments, the stimulus payments depended on the tax details from either 2018 or 2019. People were eligible for the full stimulus amount if their adjusted gross income (AGI) – defined as income minus specific deductions – did not exceed $75,000 ($150,000 for couples filing jointly). Any income surpassing these thresholds gradually reduced the stimulus payments by $5 for every $100 earned above the limits.

In the initial round of stimulus disbursements, single individuals received $1,200, while married couples were granted $2,400, along with an additional $500 for each qualified dependent. Subsequently, the second wave of stimulus payments distributed $600 to singles, $1,200 to couples, and $600 per dependent.

If your annual income exceeded $99,000 ($198,000 for those married), the initial stimulus payment did not extend to you. As for the subsequent stimulus payment, once your AGI hit $87,000 for singles and $174,000 for couples, your eligible amount dwindled to $0.

3rd Round of Stimulus

The IRS considered tax information from either the 2019 or 2020 filing year to determine eligibility for the third round of stimulus checks. Those with an adjusted gross income (AGI) of $75,000 or less ($150,000 for married couples) were entitled to the full payment amount. Single individuals received $1,400, while married couples were eligible for $2,800, with an extra $1,400 allocated for each dependent.

In the event that you exceed the threshold income yet fall short of $80,000 ($160,000 for couples), a partial third stimulus payment is dispensed.

Stimulus Payment Checks are Not Subject for Tax

It is important to realize that stimulus payments are not subject to taxes. The IRS has released information specifying that the funds do not need to be reported as part of your total income or be taxed. Nevertheless, many individuals still lack a complete understanding of the impact of stimulus payments on their tax situation.

Providing financial aid in advance of tax filings, the stimulus payments functioned as prepayments on tax credits. As a refundable credit, the recovery rebate credit can lower your tax liability or result in a refund being issued to you.

It is crucial to note one last key detail: In usual circumstances, any extra funds received from the IRS must be returned if you were overpaid. However, the recovery rebate credit operates under a unique system. Suppose you initially received a stimulus payment according to your past tax details but now do not meet the eligibility criteria based on your present tax filing. In that case, you will not be required to reimburse any stimulus funds.

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

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.

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.

E-Filing My Previous Year Tax Return

Posted by admin on March 28, 2024
Last modified: April 2, 2024

It is a common obligation for individuals to submit their annual income tax return to the IRS. Notably, the Internal Revenue Service (IRS) maintains a registry of individuals obligated to file taxes but failing to do so, leading to potential repercussions for non-compliance and missing previous year tax return. In more severe instances, repercussions and ensuing complexities may arise as a result.

When individuals neglect to submit their overdue previous year tax returns, they may face repercussions from the IRS, such as incurring penalties and interest, having refunds withheld, or having the IRS file a return on their behalf that excludes many potential credits and deductions they could have claimed.

Understanding the process of submitting taxes from previous years is crucial. Though it may seem overwhelming at first to grasp the ins and outs of filing past year tax returns, the effort put into filing is truly beneficial.

Equipped with proper advice from a free PriorTax dedicated Tax Professional, you will swiftly regain your footing and experience the comforting assurance of being in good standing with the IRS. 

previous year tax return

Can I File Previous year Tax Return?

Should you still need to submit a federal income tax return from previous years, you may be questioning your obligation to file those tardy returns now. In the majority of instances, the response to this query is affirmative. However, if you still need to meet the stipulated filing criteria, the necessity to file a tax return for a prior year is waived.

Other reasons you’d need to file Previous Year Tax Return

In certain tax scenarios, there may be a need for you to submit tax returns for previous years, particularly when you have outstanding special tax obligations, such as the following:

  • Unfiled Self-employment tax on $400 or more income
  • Household employment taxes
  • AMT (Alternative Minimum Tax)
  • Additional Taxes on qualified plans
  • Social Security and Medicare taxes on:
  • Tips that wasn’t reported
  • Tax Benefits you’ve missed out on, like recapturing taxes from the First-Time Homebuyer Tax Credit
  • Wages with no withholding taxes
  • Unreported Social Security and Medicare or Railroad Retirement Tax
  • Group-term life insurance 
  • Archer MSA
  • Medicare Advantage MSA distributions
  • HSA (Health Savings Account) Distributions

Benefits of Filing Previous Year Taxes

In situations where filing is not mandatory, it is advisable to consider submitting a tax return for previous years, even if it is past the deadline. Doing so allows you to receive a refund of income tax withheld or any refundable credits for a period extending back up to three years.

In the event that you are a business owner, you might qualify for a net operating loss carryover if your business expenses surpass your income in a specific year. Moreover, settling self-employment tax arrears and fulfilling the necessary filings will prompt the IRS to transmit the payment details to the Social Security Administration.

In the event that payment is not made, credit will not be received for outstanding balances once an individual applies for Social Security benefits.

Free Support When Filing Previous Year Tax Return

Navigating the process of submitting tax returns that are past due may seem daunting, yet it’s important to know that you don’t have to tackle it alone. With the help of PriorTax’s online E File system for prior years and the expertise of our experienced dedicated tax professional, we are committed to guiding you through the process of filing your overdue taxes.

Seeking help with filing a delayed tax return, looking into payment options, dealing with compliance issues, and communicating with the IRS? Find reliable support with the services offered by PriorTax.