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

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.

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.

How to File Previous Year Taxes

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

In cases where people fail to file their previous year taxes, they can potentially encounter consequences from the IRS. This may include facing penalties and interest charges, having tax refunds held back, or having the IRS prepare a return on their behalf that could miss out on valuable credits and deductions.

If you ever find yourself in a predicament requiring the filing of previous year taxes, rest assured that the process is quite straightforward. A dedicated PriorTax Tax Professional will guide you through the necessary steps to tackle this task efficiently.

It is essential to comprehend the steps involved in filing taxes for previous years. While the process of submitting past tax returns may appear daunting initially, taking the time to understand and complete the necessary steps can be highly advantageous in the long run.

1. Get the Information Needed to File the Previous Year Tax Return.

To kick start the process, the first step is to reach out to the IRS and request your wage and income transcripts. These transcripts are crucial in pinpointing key information from Tax Forms W-2 and Tax Forms 1099, which you can leverage to complete a prior year’s tax return. Additionally, ordering a transcript allows you to review any estimated tax payments or credits that have been recorded in your account for that specific tax year.

When considering self-employment, investments, or any unreported income, ensure to gather relevant details. Assess potential deductions and credits for which you may be eligible. Make it a priority to submit your filings promptly and prepare to settle any outstanding taxes to prevent potential enforcement measures like a substitute for return, levy, or lien.

When submitting your belated return, it is important to note any unique handling requirements, such as time-stamping or submitting to an IRS compliance division. Assess the timeframe for which you need to file. To meet IRS compliance standards, you are typically asked to file returns for the current year and the preceding six years if you have multiple overdue returns.

previous year taxes

2. Submit My Previous Year Tax Return.

Ensuring the accuracy of your tax returns is crucial. Utilize PriorTax Previous Year Tax Filing to bring your previous years’ returns up to date. Verify your return by comparing it to your IRS transcripts to confirm that your entire taxable income was properly disclosed to the IRS, along with the inclusion of your total withholding/estimated tax payments during the calculation process.

In the event that you find yourself with a debt that you are unable to settle in full, it may be beneficial to explore the option of arranging a payment agreement. Additionally, if deemed applicable, it might be worthwhile to include a request for penalty relief along with your submission.

When dealing with the need to file multiple returns, the process can become more complex and challenging, leading to potential penalties and outstanding balances. In such situations, it is advisable to explore various options for penalty relief to address the complexity effectively.

Be sure to obtain documented proof of submission to safeguard yourself if the IRS fails to handle your tax return or if you face any compliance issues, such as receiving a notice for IRS collection, a Tax Lien, a Tax Levy, or an investigation for unfiled previous tax returns.

3. Track My Tax Return Processing and other Tax Compliance Procedures.

In order to confirm the processing of your return, reach out to our PriorTax Tax Professional to the IRS. This step is crucial, particularly if the IRS has already initiated procedures related to the unfiled previous year tax return, like submitting a substitute for a tax return.

Support for Filing Previous Year Tax Returns

Submitting overdue tax returns can feel overwhelming, but remember that you are not on your own in this process. From utilizing PriorTax’s previous year online E File and consulting our dedicated tax professional we are here to assist you in filing your previous year taxes. When you need assistance submitting an overdue tax return, exploring payment alternatives, addressing compliance matters, and engaging with the IRS, count on the support provided by PriorTax.

2024 Tax on Digital Assets and Digital Transactions using Venmo and Crypto

Posted by admin on March 21, 2024
Last modified: March 22, 2024

Another year has come around, bringing with it the annual task of navigating the intricacies of the tax code. Once again, we are faced with the complexity of 2024 tax rules as we explore benefits such as tax breaks for electric vehicles, workarounds for SALT deductions, incentives for retirees, and a fresh filing system for eligible taxpayers.

In the current transition period, while not as chaotic as during the pandemic, numerous new regulations are coming into force, with the possibility of certain adjustments occurring during the middle of the season.

Caution is advised to avoid financial repercussions: The interest rates on outstanding taxes and fines for tardiness have recently escalated to 8 percent from previous levels, emphasizing the importance of timely compliance.

2024 Tax Updates from IRS to mitigate the significant inflation?

In response to soaring inflation, the IRS has implemented an increase of approximately 7 percent to the outer boundaries of the federal tax brackets. This adjustment ensures that individuals who receive salary hikes are not penalized by having more of their income subject to higher tax rates, even if their earnings are merely keeping up with the rising cost of living.

In the tax year 2023, there are adjustments to the tax brackets. Single taxpayers will enter the 24 percent tax bracket once their income exceeds $95,375, while married joint filers will reach this bracket at $190,751. Other tax brackets also see alterations corresponding to these changes. Notably, the standard deduction for single filers has increased to $13,850, an increase of $900.

In the year 2023, the maximum allowable contribution to 401(k) plans has increased to $22,500, compared to $20,500 in the previous year of 2022. Eligible individuals need to note that they can maximize their savings in their IRA for the year 2023 until they submit their tax returns.

2024 tax

Is IRS tracking digital payments with Venmo for 2024 tax?

Before the time comes, individuals such as independent contractors, freelancers, small business owners, and those juggling side hustles must diligently monitor and disclose their income to the IRS. Once they surpass the $400 threshold.

In order to encourage adherence, various online platforms and payment processors such as Venmo, PayPal, eBay, and Airbnb had plans to enhance the monitoring and reporting of sales transactions in the upcoming year. This increased scrutiny would involve the filing of the IRS. Form 1099-K, which would be submitted to both the taxpayer and the IRS.

The IRS has decided to delay the requirement for individuals earning income from online payment processors or marketplaces to receive tax forms for payments over $600 for the second year in a row.

In preparation for the upcoming tax season, it is important to remember that the familiar regulations remain unchanged. Individuals engaged in selling goods or services must provide 1099-K forms once their transactions reach over 200 and the total payments exceed $20,000 annually.

In preparation for the upcoming tax year 2024, the IRS has outlined a gradual reduction of the threshold for reporting payments. Initially set at $5,000 in total annual payments with no minimum transaction requirement, the threshold is expected to eventually settle at a permanent level of $600. Despite these adjustments, individuals may continue to receive forms for payments exceeding the lower thresholds.

In light of the complexities that can arise from distributing an influx of new forms to individuals who may not anticipate them or have any outstanding tax liabilities, the IRS has announced a need for additional time to address potential issues. Efforts are being made to streamline the process and verify that Form 1099-Ks are dispatched only to the appropriate recipients.

I’ve Traded Crypto During 2023. How do I report Crypto for Tax Return?

To ensure compliance with tax regulations, individuals must disclose capital gains and losses, alongside interest and dividend earnings, from the sale of stocks, bonds, and investments on their tax returns. In order to facilitate this process, brokerage firms are obligated to furnish tax documents like the 1099-B and 1099-DIV to monitor these financial transactions, which are subsequently reported to the Internal Revenue Service (IRS).

Changes may be coming for brokerage firms regarding the reporting of cryptocurrency and digital asset transactions. A proposed rule set to take effect in 2025 would mandate the submission of a new documentation, termed the 1099-DA, specifically for digital assets. Until now, such transactions have not been subject to this reporting requirement.

However, taxpayers must still fulfill their obligations for the upcoming tax year of 2023 and beyond.

No matter if an individual receives a tax form or not, they bear the duty of disclosing all their earnings. Additional guidance on this process can be located in the 1040 instructions, along with the resources provided by the Taxpayer Advocate Service and IRS online platforms.

When dealing with cryptocurrency transactions made within a conventional investment vehicle such as a Bitcoin ETF, the trades are recorded and monitored through the familiar 1099-B system, similar to how transactions involving exchange-traded funds or stocks are handled.

Types of Crypto Taxes in 2024

Posted by admin on March 21, 2024
Last modified: March 22, 2024

Taxable Crypto Transactions

Exploring the various crypto transactions and crypto taxes consequences is essential for individuals navigating the world of cryptocurrency. This analysis centers on the tax implications of crypto activities in the United States as outlined by the IRS. Our comprehensive resources on international crypto taxes offer valuable insights to global taxpayers in this evolving landscape of digital assets.

Find your PriorTax dedicated Tax Professional to walk you through your crypto tax filing from start to finish to file your taxes and maximize your tax refund accurately.

Crypto Tax From Crypto Losses

In taxation, it is important to recognize that losses incurred in cryptocurrency investments can serve as a valuable means to counterbalance the taxes applied to profits derived from the sale of various capital assets. For individuals with a tax filing status of single or married filing jointly, the losses can be used to offset up to $3,000 of income.

Individuals have the opportunity to lower their tax burden by accounting for cryptocurrency losses on their tax returns. This strategy allows them to lessen their overall tax liability by decreasing their taxable income through the inclusion of losses from crypto investments.

Crypto Taxes on Lost or Stolen Crypto

Unfortunately, when you find yourself without lost or stolen cryptocurrency, there is no specific process for claiming losses related to theft. The IRS clarified 2018 that deductions for losses are only permitted in cases of federally declared disasters, using Form 4684 (Casualties and Thefts).

crypto taxes 2024

Crypto Taxes on your income

US taxpayers must adhere to tax regulations when it comes to dealing with cryptocurrencies. Income generated from certain crypto-related activities is subject to taxation at the prevailing rates of 10-37%.

  • Cryptocurrency mining
  • The sum from Crypto Staking
  • Receiving Cryptocurrency from selling goods and/or services
  • Crypto taxes from selling crypto and trading crypto

The IRS considers the following crypto transaction as taxable events:

  • Trading one crypto for another crypto (e.g., BTC for ETH)
  • Using crypto for buying goods or services (e.g., BTC for a Tesla)
  • Exchanging crypto for fiat currency (e.g., BTC for USD)
  • Other form of selling or disposal of crypto

In the eyes of the Internal Revenue Service (IRS), cryptocurrency is categorized as property and is subject to taxation based on this classification. US taxpayers are required to pay taxes on their cryptocurrency holdings at rates equivalent to those applied to short- or long-term capital gains from stock investments or standard income tax rates, depending on the method through which the cryptocurrency was obtained.

When it comes to cryptocurrency investments in the United States, the tax implications differ based on the duration of asset holding. Short-term capital gains on crypto assets held for under a year are taxed at variable rates from 10% to 37%, depending on the individual’s income and tax bracket. Long-term capital gains held more than a year on profits from crypto have a 0-20% rate.

Crypto Taxes for Moving Crypto Between Digital Wallets

When transferring cryptocurrency from one wallet to another, there is no tax implication as long as the transfer involves only moving the tokens without engaging in trades with other cryptocurrencies or converting them into regular fiat currencies at the time of transfer.

Crypto Taxes When Buying Cryptocurrency with Stablecoins

In the realm of stablecoin fluctuations, the slight changes in value typically do not significantly affect the overall tax responsibility. However, it remains crucial to include details of stablecoin activities in your tax filings. Similar to trading fiat currency, engaging in transactions involving stablecoins within the cryptocurrency realm carries comparable tax considerations.

Crypto Tax from Crypto Staking

When it comes to crypto staking taxes, it is important to consider both income and capital gains. The proper procedure includes declaring the staking rewards’ fair market value at the time of receipt and calculating capital gains or losses when the staked assets are eventually disposed of.

Crypto Taxes for Adding/Removing Liquidity from DeFi Protocols

Engaging in a DeFi liquidity pool may have tax implications that should not be overlooked. Depending on the situation, exchanging your digital assets for a liquidity pool token, which symbolizes your ownership in the pool, could result in a taxable event subject to the usual capital gains regulations. Conversely, when you stake your tokens in the pool and then acquire rewards tokens, taxes are typically incurred when you collect those rewards.

Exiting a liquidity pool and assessing gains or losses presents an additional tax consideration. The absence of clear IRS directives regarding liquidity mining has generated ambiguity. Comparisons to the IRS’s treatment of airdrop and fork coin income have fueled speculation that similar categorization may be applied to liquidity mining rewards, potentially classifying them as income instead of capital gains.

Crypto Tax on Airdrops and Hard Forks

According to official IRS guidelines, airdrops and hard forks are subject to taxation. The taxable income should be based on the digital currency’s fair market value (FMV) when it is received. The timestamp on the transaction ledger or blockchain determines the date of receipt.

Crypto Taxes on Bankruptcies

If you find yourself in possession of cryptocurrency that loses value due to another entity’s bankruptcy following the resolution of a cryptocurrency company’s insolvency proceedings, you may offset the loss incurred by using the initial purchase price of the cryptocurrency against any gains you have made.

Should you experience an excess loss, you can deduct it from your usual income sources, like salaries, up to $3,000 for single filers or those married filing jointly ($1,500 for married filing separately). Any leftover loss beyond this threshold can be rolled over to the next tax year for application.

Crypto Taxes on Crypto Gifts and Crypto Donations

In the case of receiving cryptocurrency as a gift, the aspect of gifting taxes is not triggered at the onset. Tax implications arise when the cryptocurrency is sold, leading to potential capital gains or losses for the recipient. If the digital assets are sold at a profit, the recipient’s cost basis aligns with that of the donor. Conversely, suppose the cryptocurrency is sold at a loss. In that case, the recipient’s basis is determined by taking the lower value between the donor’s basis and the fair market value at the time of receipt.

There are no tax implications to consider when presenting cryptocurrency as a gift. However, receivers need to be aware of the donor’s original asset value. If you choose to contribute cryptocurrency to a charitable organization recognized under section 501(c)(3), you can claim a tax-free deduction.

Crypto tax from Crypto Mining

The taxation rules surrounding crypto mining vary depending on the geographical region. In the United States, individuals engaged in crypto mining can anticipate taxes on their mining rewards as income and on the capital gains generated from the sale of mined coins. There are differences in how taxes are imposed on hobbyist miners compared to professional miners running mining operations as a business. Professional miners may be eligible for certain tax deductions based on business activities.

Crypto Taxes on DeFi

When engaging in DeFi crypto staking, the returns generated may be liable for taxation under either capital gains or income, depending on how they are received. These returns can come in the form of additional tokens or an appreciation in the value of the tokens already held. Some DeFi platforms offer interest or incentives by depositing extra coins directly into the lender’s wallet.

Crypto Tax on DAOs

In instances where a US taxpayer receives cryptocurrency from a decentralized autonomous organization (DAO) in exchange for goods or services, it is obligatory to disclose this as income. Any gains made from selling these assets later on are liable to be taxed as capital gains. Moreover, if the distributions include governance tokens or non-fungible tokens (NFTs), they are also considered taxable income. Profits derived from vending these allocated assets are similarly subject to capital gains taxation.

Crypto Taxes on NFTs

When it comes to selling NFTs, it’s important to note that taxes are inevitable for US taxpayers, and there is no way to sidestep them legally. The IRS classifies NFTs as property, and depending on the nature of the NFT, it may fall under the category of collectibles, which could mean facing higher tax rates.

In line with the different categories, proceeds, and deficits arising from the sale of NFTs are required to be disclosed on tax documents, with tax rates contingent upon how long the NFT was held and the individual’s total income. The IRS announced a novel strategy for taxing NFTs as collectibles in March 2023, resulting in specific NFT profits being subject to a flat 28% tax rate, diverging from the usual capital gains rates.

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

New IRS rules for Venmo Tax for the 2023 tax filing in 2024

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

In your side gig, you rely on Venmo to handle transactions. Are your earnings from such ventures receiving increased scrutiny from the IRS Venmo tax this year? 

No. At present, there have been no changes.

To ensure transparency and accountability, individuals have long been required to disclose their earnings to the IRS once their income surpasses $400. To enhance adherence to tax regulations, digital payment platforms and online marketplaces such as Venmo, PayPal, eBay, and Airbnb were expected to intensify their monitoring and reporting of sales transactions starting in 2023. This information would be detailed in the IRS Form 1099-K for Venmo Tax, which would be furnished to both the IRS and the taxpayer.

The IRS has once again delayed the requirement for online payment processors and marketplaces to issue tax forms for payments over $600, which affects individuals earning income through these platforms.

As we approach tax season, it’s important to remember that the traditional regulations remain in place. Those engaged in selling goods or services must issue 1099-Ks once their sales exceed 200 transactions and reach $20,000 in total payments throughout the year.

In preparation for the tax year 2024, the IRS has announced its intent to reduce the threshold to $5,000 for total payments made yearly without setting any transaction minimums. This adjustment will be incremental until it reaches the permanent threshold of $600 for total payments. Despite these changes, individuals might continue to receive the necessary forms for payment amounts exceeding the newly established lower thresholds.

In light of the situation, the IRS has determined that additional time is necessary to address any potential challenges that could surface with the distribution of numerous new forms to individuals who may not anticipate receiving them or who may not have any tax liabilities, including Venmo Tax.

Contact your PriorTax dedicated Tax Professional to walk you through the latest updates on Venmo tax and Crypto tax, including any taxes you may own from past years in any digital payments and crypto transactions.

venmo tax

Venmo tax and Crypto tax rules for 2023 and 2024

It is convenient when utilizing Venmo to transfer funds, request payments, or receive money. Nevertheless, engaging in specific transaction types through Venmo may lead to potential tax obligations.

Fortunately, individual payments made through the platform generally do not result in tax obligations. However, if Venmo is utilized for business-related transactions, it is essential to anticipate potential tax liabilities.

Unsure of how taxes are applied to transactions made on Venmo? Delve into this guide for insights. Discover the types of Venmo transactions subject to taxation by the Internal Revenue Service and key considerations for tax preparation. Additionally, explore anticipated tax adjustments affecting Venmo and similar payment platforms expected in 2024.

What is the $600 tax rule for digital payments

Introducing a recent regulation, the $600 tax provision is poised to impact third-party payment services such as Venmo, PayPal, and Cash App. Users who generate over $600 in earnings on these platforms during a tax year will be subject to Form 1099-K reporting. Although initially scheduled for implementation in 2023, the rule has been postponed, meaning users will feel its effects in the 2024 tax season.

Will Venmo Payments be taxed in 2024 for filing 2023 tax return?

It is mandatory to report and pay taxes on income received via Venmo for the year 2023 and beyond. Nonetheless, the IRS has postponed the introduction of updated Form 1099-K threshold regulations.

In the upcoming tax year of 2023, individuals can anticipate receiving a 1099-K tax form if their Venmo payments for goods and services exceed $20,000 and involve a minimum of 200 transactions. Nevertheless, it remains crucial for taxpayers to report any Venmo income that falls below these thresholds and ensure compliance with tax obligations, irrespective of whether a 1099-K is received.

Do I pay taxes if I sold cryptocurrency and bitcoin using Venmo?

Upon completing a cryptocurrency transaction or buying or selling bitcoins on Venmo, you can expect to be provided with a statement detailing your gains and losses. It is important to note that when selling crypto on any platform, the profits incurred are liable to capital gains taxes. In some instances, you might mitigate some gains by utilizing capital losses. Seeking guidance from a tax specialist is advisable to gain a clear understanding of the regulations in place.

Clean Vehicle EV Tax Credit for 2023 Tax Return

Posted by admin on March 7, 2024
Last modified: March 8, 2024

Start saving money on gas today with the Clean Vehicle Credit offered through the Inflation Reduction Act. This EV tax credit provides a dollar-for-dollar reduction of the taxes you owe, giving you the opportunity to save up to $7,500 as tax credit when buying a new electric vehicle or up to the lesser of $4,000 or 30% of the purchase price for a used electric vehicle.

Exploring eco-friendly transportation goes beyond mere savings; it signifies a commitment to cleaner journeys and a step forward towards a more sustainable driving experience. To assess your eligibility for this credit, we have compiled essential information such as its definition, functioning, and existing criteria.

What is the Clean Vehicle EV Tax Credit?

The Electric Vehicle EV Tax Credit, designed to reduce taxes for individuals buying electric vehicles, initially provided up to $7,500 for new EV purchases as outlined in Section 30D of the Internal Revenue Code. With the passing of the Inflation Reduction Act in 2022, significant modifications were made to the regulations governing electric vehicles bought between 2023 and 2032, establishing the new Clean Vehicle Credit program.

In accordance with the Inflation Reduction Act, similar to past regulations, individuals who acquire a brand-new plug-in electric vehicle or a fuel cell car starting from 2023 can potentially be eligible for a tax credit aimed at promoting clean transportation, which could amount to a maximum of $7,500. Noteworthy changes include the introduction of income thresholds, manufacturer sales price conditions, and final assembly prerequisites, which needed to be included in earlier guidelines.

Commencing from the upcoming year of 2023, there is an opportunity to avail of an EV tax credit when acquiring a second hand electric vehicle. This credit is calculated as less than $4,000 or 30% of the vehicle’s purchase price. Additionally, specific criteria such as income, manufacturer sales price, and final assembly apply to used electric vehicles.

EV Tax Credit

Is There a Difference Between State Electric Benefits and Federal EV Tax Credits?

Indeed, the Federal EV Tax Credit, overseen by the IRS, serves as a pivotal component in diminishing the expenses for taxpayers investing in electric vehicles. Enacted through the Inflation Reduction Act, this credit is designed to alleviate your tax burden by decreasing the amount owed in taxes.

It is important to note that in addition to the widely recognized federal tax credit for electric vehicles, there are also state-specific incentives available for buyers. One such example is the Clean Vehicle Rebate Project (CVRP) in California, which offers rebates to encourage the purchase of electric vehicles.

You will receive state rebates by mail when you buy an electric vehicle and fulfill certain state-specific criteria. These rebates are separate from any tax returns you may file.

How Does the Clean Vehicle EV Tax Credit Operate?

The Inflation Reduction Act of 2022 marked a notable change in approach, particularly regarding vehicle acquisition, from 2023 to 2032. As stipulated by the IRS, individuals and businesses alike can benefit from the federal EV tax credit.

Within the system are specific income limits that must be adhered to, ensuring that there is a structured approach rather than a chaotic free-for-all.

It is crucial to emphasize that this credit cannot be refunded, thus preventing individuals from receiving more money than their tax liabilities. Nonetheless, it does provide the benefit of a one-to-one reduction in tax obligations.

EV eligible for the Clean Vehicle Tax Credit?

Are you curious about whether your car is eligible for the EV tax credit? Determining eligibility is a challenging process, but fear not – let’s dive into the details for you.

Meeting certain criteria is necessary for a vehicle to qualify for the EV tax credit, including having a battery capacity of seven kilowatt-hours or more and satisfying specific mineral and battery component standards, among other considerations.

Criteria for qualification will now vary based on your financial standing, the retail price set by the manufacturer, and the location of the electric vehicle’s final assembly within the United States. Additionally, eligibility encompasses pre-owned electric vehicles, enabling you to receive credit for them as well.

Getting the Clean Vehicle EV Tax Credit in 2024?

Taking advantage of the federal EV tax credit is essential to maximizing the benefits available to you. Many people tend to miss out on potential tax credits, making claiming them an important step in optimizing your benefits. Ensure you are well-prepared when filing your taxes by having all the necessary information and forms ready. This includes specifics regarding your vehicle’s battery capacity, weight, where it was finally assembled, and the VIN.

Make sure to have those details handy when you decide to apply for the credit and submit Form 8936, the Qualified Plug-in Electric Drive Motor Vehicle Credit (Including Qualified Two-Wheeled Plug-in Electric Vehicles), along with your tax return.

Rest assured that you won’t need to stress about determining which forms to submit for the Clean Vehicle Tax Credit. The tax professional, a dedicated team member at PriorTax will guide you through a series of straightforward questions regarding your EV acquisition. By cross-referencing your income details from documents such as W-2s and 1099s, they will accurately calculate the electric vehicle credit applicable to you.

Explore the option of seeking guidance at PriorTax while having your tax return examined by a PriorTax Tax Professional before submission. Alternatively, entrust your taxes to a PriorTax dedicated tax professional for seamless preparation. A fresh addition this season allows for face-to-face consultations with a nearby professional for efficient tax filing.