Category: Taxes for Prior Years

With PriorTax, it’s never too late to file taxes for prior years. In fact, you can prepare your tax returns with us all the way back to the 2005 financial year. Our tax team specializes in prior year tax returns and can help prepare them as quick as your current return. Most taxpayers are not aware that they can still claim refunds for their late tax returns. You can claim refunds three years past the deadline date.

If you have other questions about your prior year taxes, leave a comment on our blog and our team will give you the answers you need!

Archive for the ‘Taxes for Prior Years’ Category

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.

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.

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

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.

Standard Deduction for 2023 Tax Year

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

Individuals filing their tax returns in 2024 can benefit from a standard tax deduction in fiscal year 2023. Single tax filers are entitled to a standard tax deduction of $13,850, while joint filers can claim $27,700. Heads of household have a standard tax deduction of $20,800 available to them. 2023 Tax Filers who are 65 or older may have a higher standard deduction amount.

When considering ways to reduce your taxable income, the IRS provides two primary options: claiming the standard deduction or itemizing your deductions. Many individuals choose the standard deduction for its simplicity, even though itemizing could be more beneficial depending on individual circumstances.

Let’s begin by exploring the concept of the standard deduction, including who it benefits most and the specific standard deduction figures for the tax years 2023 and 2024. Additionally, we’ll delve into the extra standard deduction figures available for individuals aged 65 and above, along with guidance on computing it for dependents.

Standard Deduction 2023

What is the Standard Deduction?

When it comes to tax deductions, the standard deduction is a fixed amount recognized by the IRS. This deduction is subtracted from your adjusted gross income to reduce your taxable income. Your tax filing status typically determines the level of standard deduction you qualify for.

Among specific individuals, including those who have visual impairments or have reached the age of 65, there is typically a provision for an increased standard deduction, often referred to as an extra standard deduction. Conversely, those who are eligible to be claimed as dependents may receive a reduced standard deduction.

In the realm of tax deductions, the standard deduction is a common benefit accessible to many taxpayers, even in the absence of other qualifying deductions or credits. While the IRS typically allows individuals to claim this deduction without much scrutiny, specific scenarios might render some taxpayers ineligible for this tax benefit.

Consider this scenario: When married couples file their 2023 tax return jointly and have an adjusted gross income (AGI) of $125,000, they qualify for a standard deduction of $27,700. This deduction effectively lowers their taxable income to $97,300 ($125,000 – $27,700).

How the Standard Deduction Works for 2023 Tax Return

When it comes to filing your taxes, you have the choice between claiming the standard tax deduction or itemizing your tax deductions for 2023. Opting for the standard deduction allows you to deduct a set amount without needing to provide evidence to the IRS. On the other hand, itemized deductions provide an alternative method for lowering your taxable income.

Individual expenses permitted by the IRS, known as itemized deductions, serve as a means to reduce your taxable income. Some examples of these expenses are property taxes, specific unreimbursed medical expenses, and business mileage.

Opting for the standard deduction prevents you from claiming deductions on home mortgage interest or accessing specific tax benefits. However, if you choose to itemize your deductions, it is essential to retain all relevant tax deduction documents in case the IRS audits you.

Standard Deduction 2023

In the tax world, the 2023 standard deduction holds different values for various filing statuses. For single tax filers and married individuals filing separately, the deduction stands at $13,850, while it increases to $27,700 for those filing jointly. Heads of household are eligible for a standard deduction of $20,800.

Tax Filing Status 2023 Standard Deduction

  • Single $13,850.
  • Married, filing separately $13,850.
  • Married, filing jointly; qualified widow/er $27,700.
  • Head of household $20,800.

Additional standard tax deduction who is 65 of age or older

Individuals aged 65 and above, as well as those classified as blind according to IRS criteria, are eligible for an extra standard deduction that can be applied on top of their current standard deduction allowance.

The amount of additional tax deduction you qualify for is determined by your filing status and the specific criteria that apply to your situation.

2023 Standard Tax Deduction for Dependents

When submitting your tax return and being claimed as a dependent by another individual, the standard deduction you’re eligible for is based on your earned income. In the upcoming tax year of 2023, the options available to you are a fixed $1,250 or the total of your earned income plus $400. It’s important to keep in mind that if you choose the latter option, the sum cannot surpass the standard deduction allotted for your specific tax filing status.

Itemized vs. Standard Tax Deduction calculator

Posted by admin on February 29, 2024
Last modified: March 4, 2024

Explore our tool that contrasts the Standard Tax Deduction and Itemized Tax Deductions. In just a short amount of time, you can grasp the differences between these tax deduction types and receive an estimated calculation of your tax deductions by providing key information.

Should you be wondering about whether to opt for the standard or itemized tax deduction, this tool can guide you and even suggest strategic end-of-year tax strategies to boost your itemized tax deductions. Feel free to reach out to our dedicated Tax Professional for a personalized assessment of how you can maximize your tax refund.

Standard Tax Deduction

Pros and Cons of Choosing Itemized Tax Deductions?

Exploring tax deductions on your tax return has the potential to make a significant impact on individuals by lowering their tax liability. However, grasping the concept of itemized tax deductions is essential to determine if you qualify for the standard deduction or itemized tax deductions. It’s crucial to accurately discern which tax deduction method is most beneficial for you.

Consider this scenario: with minimal itemized deductions such as personal property taxes on your vehicle and without significant expenses like home mortgage interest, it becomes evident that opting for the standard deduction is the probable choice.

Pros of Choosing the Itemized Tax Deduction

Choosing to itemize tax deductions rather than opting for the standard tax deduction can prove advantageous from a tax perspective. By itemizing, you have the opportunity to include detailed expenses such as mortgage interest, medical bills, or substantial charitable contributions, among others. This approach has the potential to lower your taxable income even more if your itemized expenses exceed the standard deduction for the applicable tax year.

Additionally, should you find yourself nearing the standard tax deduction threshold, you have the opportunity to enhance your tax deductions by ensuring you collect receipts for extra itemized deductions that could potentially push you beyond the standard deduction limit.

Explore the benefits of leveraging our advanced tax deduction calculator to gain clarity on the potential tax deductions tailored to your specific situation. This tool empowers you to make an informed decision on whether the standard tax deduction suffices or if itemizing your tax deductions would be more advantageous for you.

By utilizing the calculator before the year-end, you can strategically plan out tax-saving maneuvers to maximize your itemized tax deductions before the year concludes.

Cons of Choosing the Itemized Tax Deduction

In terms of potential downsides, there are no significant issues to be concerned with. Individuals who opt for itemized tax deductions simply need to ensure they have all the necessary paperwork ready come tax season to avoid any oversights. For example, those who own a home should have their Form 1098 detailing mortgage interest payments, records of property tax payments, documentation of state income or sales taxes paid, as well as receipts for any charitable contributions made.

Rest assured that you don’t need to stress about understanding the nuances of itemized tax deductions. PriorTax is designed to guide you through the process by asking straightforward questions about your tax deductions, regardless of your knowledge of their classification. For further clarity on which expenses qualify as itemized tax deductions, utilize our standard versus itemized tax deduction calculator to gain insight.

You may need to collect additional paperwork when it comes to itemizing. Some may be attracted to a more straightforward method involving standard tax deductions. However, if your itemized tax deductions exceed the standard amount, putting in a bit more effort to gather the necessary documents can lead to cost savings. Utilize our comprehensive tax document checklist to streamline the process of compiling your documents for itemizing tax deductions.

What are the Pros and Cons of Taking the Standard Tax Deduction?

Pros of Choosing the Standard Tax Deduction

In considering your tax planning, it’s crucial to grasp the impact of each tax deduction on your overall tax picture. Many individuals choose the standard tax deduction when filing their taxes for several reasons.

To begin with, the efficiency of the process is notable. Furthermore, the annual adjustment of the standard tax deduction results from inflation and the decisions made by Congress. This adjustment helps lower taxpayers’ taxable income.

Different filing statuses, such as single, married, filing tax jointly, or head of household, determine the standard deduction amount, which is increased for individuals aged 65 or older and those who are visually impaired.

Please be aware that if married couples decide to file separately, they won’t be able to claim the standard deduction if one spouse chooses to itemized deductions. It is necessary for both spouses to agree on either itemizing tax deductions or taking the standard tax deduction.

Cons in Choosing the Standard Deduction

Opting for the standard tax deduction simply for convenience might lead to overlooking opportunities to deduct expenses and potentially lower taxable income. The decision between standard and itemized tax deductions ultimately comes down to crunching the numbers.

When faced with the decision between standard and itemized tax deductions, it ultimately comes down to the numbers at hand. Opt for itemized deductions if they exceed the standard tax deduction amount, and choose the standard deduction if it provides greater benefits. In cases where your standard deduction aligns closely with your itemized deductions, ensure to review and consider any additional itemized deductions that could potentially tip the scale in favor of itemizing.

Rest assured that deciphering between standard and itemized tax deductions is not a concern you need to dwell on. Rest easy knowing that PriorTax can maximize your tax benefits, regardless of your financial decisions made the previous year. Whether you prefer to handle your taxes independently or seek the expertise of a PriorTax Tax Professional, rest assured that we are committed to securing every dollar you are entitled to and aiming for your most substantial tax refund possible.

Standard vs Itemized Tax Deduction

Posted by admin on February 29, 2024
Last modified: March 4, 2024

If you have ever carefully listed out your itemized tax deductions before, especially if you own a home, consider a different approach now. With the updated standard tax deduction amount for your specific filing status, you might find it more advantageous to take the standard deduction instead of itemizing your tax deductions.

The latest data from the IRS reveals that approximately 90% of individuals filing taxes are now opting for the standard deduction, a shift largely attributed to changes implemented through the Tax Reform legislation in 2017. If you find yourself uncertain about the most advantageous choice for this tax year, consider utilizing our convenient tax deduction calculator or reaching out to our specialized tax experts for personalized guidance throughout the entire process.

In just a short amount of time, grasp the modifications in the standard deduction and itemized deductions, and receive an approximate calculation of your deductions depending on the information provided. Additionally, this tool advises you on whether to opt for standard or itemized deductions and offers suggestions on year-end tax strategies to enhance your itemized deductions.

In general, when your standard deduction outweighs your itemized deductions, opting for the standard deduction is usually the more advantageous choice.

Should I take the standard vs. itemized tax deduction

Contemplating whether to opt for the standard deduction or dive into the itemized deduction realm? The decision of which one will yield a greater tax benefit for you is contingent upon your specific situation. Let’s delve into different scenarios where either the standard or itemized deduction would be most advantageous.

Itemized Tax Deduction

When you should take the standard deduction

Understanding the complexities of tax preparation may appear overwhelming at first, yet rest assured, assistance is within reach. The choice between opting for the standard deduction or itemizing largely hinges on your eligibility for various deductions. The standard deduction represents a fixed sum determined by your tax filing status, offering supplementary advantages for individuals aged 65 and above or with visual impairments.

The current standard tax deduction is:

  • $13,850 for single filers
  • $13,850 for married, filing separately
  • $20,800 for heads of households
  • $27,700 for married, filing jointly

Each year, the IRS updates the standard deduction figures to account for inflation. As a result, it is important for you to review your expenditures annually in order to determine the best strategy for your situation if you have itemized deductions such as mortgage interest and property taxes.

In the upcoming tax year of 2023, significant inflation adjustments have been implemented, marking one of the largest increases in decades at 7.1%. This adjustment may lead to the standard deduction surpassing your itemized deductions for the year, making it more advantageous to opt for the standard deduction.

In plain terms, choosing the standard deduction is the best decision when the total of eligible itemized expenses falls short of the standard deduction threshold. When contemplating whether to go with the standard deduction, it is crucial to evaluate itemized deductions like mortgage interest, medical costs, and charitable contributions to inform your tax-filing decision-making process.

When you should take the itemized deduction

Wondering about the right time to consider itemizing deductions? It becomes beneficial when your qualifying expenditures, such as medical expenses, mortgage interest, or donations to charity, exceed the standard deduction threshold. By itemizing deductions, you could potentially reduce your tax liability if these eligible expenses surpass the standard deduction amount.

In certain scenarios, it is possible for taxpayers to find themselves in a situation where their itemized deductions match the standard deduction amounts set at $13,850 for single filers and $27,700 for married couples filing jointly. To overcome this, individuals could consider strategies such as increasing their charitable donations towards the end of the tax year or ensuring they include all eligible charitable contributions when filing their taxes, thereby elevating their total itemized deductions above the standard deduction threshold.

Exploring potential qualifying expenses can be made easier by consulting our article on often-overlooked deductions. Utilize our calculator that compares standard and itemized deductions for a clearer picture. Additionally, our team of dedicated tax professionals at PriorTax will tailor their guidance to your specific circumstances without requiring you to distinguish between standard and itemized deductions.

Tax Deadline for Businesses You Need To Know

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

Tax Deadlines for Businesses such as C Corps, S Corps, and Partnerships, including LLCs.

When it comes to tax filing deadlines for business partnerships (such as multi-member LLCs) and S-Corps, the usual timeframe is by March 15 unless they follow a fiscal year. You can extend this deadline by six months to September 15 (or five months after the initial due date) by submitting Form 7004.

As of the fifteenth day of March 2024, it is the deadline for certain types of businesses to submit their taxes. Entities such as partnerships, multi-member LLCs, and S-Corporations must ensure they file either Form 1065 or 1120S by this date if they operate on a calendar year basis.

When operating a business that follows a fiscal year, it is essential to submit your tax return by the 15th day of the third month after the conclusion of your tax year. For instance, if your business adheres to a tax year from April 1 to March 31, the tax filing deadline for your business tax return would be June 15 instead of March 15.

What Should I Do if I Miss the Tax Filing Deadline for Businesses?

In the event that a tax deadline is overlooked, there are various options available to rectify the situation. The appropriate course of action is contingent upon the specific missed deadline and your financial circumstances, such as owing taxes or expecting a refund.

What Will Happen If I Miss the Tax Filing Deadline and Owe Taxes?

If you miss the tax filing deadline and have tax obligations, it is important to file your tax return promptly. Delaying the filing will result in accumulating interest, penalties for failure to file, and penalties for failure to pay until you settle the balance due by filing the return.

Did you Miss The Estimated Tax Payment Deadline?

If you fail to meet a tax deadline for making an estimated tax payment, it is important to rectify the situation promptly. The consequences, in terms of penalties and interest imposed by the IRS, are contingent upon the amount owed and the duration of the delay. Nonetheless, mitigating the repercussions can be achieved by remitting your payment as soon as possible.

The Best Way to File My Tax Return for Businesses

For those in search of the quickest method to submit their tax return, the most efficient and precise way is through electronic filing. Opting for E-Filing with PriorTax ensures speed and enhances security compared to traditional paper filing methods.

With the convenience of electronically filing your tax return, there’s no need to fret about the document going missing in the postal system or reaching the IRS after the deadline. Instant confirmation of the IRS receiving and initiating the processing of your return gives you peace of mind.

How Much Time Do I Have To File My Back Taxes from the Missing Tax Filing Deadline and Owen a Tax Refund?

In the event that you fail to meet the tax filing deadline and have a refund due to you, there are important considerations. If you have overpaid for the tax year 2023, there are usually no repercussions for submitting your tax return late. Nevertheless, it is advisable to submit your return at the earliest opportunity.

Typically, there is a three-year window from the tax return deadline for claiming a tax refund. This rule applies to the 2023 tax returns, with the deadline set in 2026. If left unclaimed beyond this period, the tax refunds usually revert to the ownership of the U.S. Treasury.

What if I Made Mistakes and Need to Fix My Taxes?

In the event that an error is discovered and a tax re-filing or fixing your taxes becomes necessary, it’s important not to panic. Mistakes are a common occurrence in the process of tax filing. Should you realize that certain income was omitted or a specific tax credit was not claimed after submitting your tax return, there is no need to redo the entire process. Instead, you can file an amendment using Form 1040-X, ensuring that you provide copies of any forms or schedules that require modification or were initially left out of your original submission.

When it comes to rectifying errors on your tax return, IRS Form 1040-X plays a crucial role. Assisting you in navigating the amendment process, the experts at PreTax can guide you through the necessary steps to ensure your tax return is accurate.

To prevent any setbacks, it is essential to submit Form 1040-X only after your initial Form 1040 has been approved. If you seek to claim a tax credit or refund from a past year, it is imperative to file within three years of submitting your original return or within two years of paying the tax, depending on the later date.

Accurate Tax Filing for Maximum Tax Refund

Posted by admin on February 15, 2024
Last modified: February 16, 2024

Accurate Tax Filing for Maximum Tax Refund for Past Tax affecting the Current Tax Year

Taking a second look at your previous tax returns may lead to a pleasant surprise of a larger tax refund. Whether you filed your taxes independently or with a dedicated Tax Professional for the past three years, PriorTax is here to meticulously assess those past returns and guarantee that no potential tax deductions or tax credits are overlooked for accurate tax filing

How to Find Money Others Miss.

In past tax years, it’s possible that you may have missed out on claiming all the tax credits or tax deductions that you were eligible for, which includes

accurate tax

Missed: Education Tax Credits

As a student or a parent of a student, our primary goal is to ensure that you are making the most out of the benefits provided by the American Opportunity Tax Credit, the Lifetime Learning Tax Credit, and any available tuition tax deductions.

By providing education tax credits, the burden of higher education costs is eased as eligible students and their households see a reduction in their tax obligations. In certain situations, taxpayers may even be eligible for a tax refund.

American Opportunity Tax Credit

With the enactment of the Protecting Americans from Tax Hikes (PATH) Act of 2015, the American Opportunity Tax Credit (AOTC) was solidified as a lasting provision. This tax credit builds upon the foundation set by the Hope Credit, aiming to alleviate the financial burden of education and make college accessible to individuals from lower-income backgrounds.

Lifetime Learning Tax Credit

The Lifetime Learning Credit (LLC) offers a valuable opportunity to non-degree-seeking students throughout their post-secondary education. This credit allows workers to enhance their job skills, ultimately leading to higher earning potential. Unlike the AOTC, the LLC focuses explicitly on reducing income tax for eligible individuals, making it an ideal option for those with tax obligations.

The list of acceptable expenses that qualify for either the Lifetime Learning Tax Credit or the American Opportunity Tax Credit is extensive.

– Tuition After deducting tax-free contributions like scholarships, fellowships, Pell grants, veterans assistance, and employer assistance, the remaining amount of tuition is determined.

– Student fees and expenses required for enrollment

– Books, course-related materials and supplies if it is required to enroll or attend the shcool

– Education such as games, sports, and hobbies or non-credit programs and courses that directly help to improve skills for jobs.

Missed: Inaccurate Tax Filing Status

When it comes to maximizing your tax benefits, choosing the right filing status is crucial. By selecting the optimal filing status, individuals and families can take advantage of various tax credits and deductions.

According to the IRS (Internal Revenue Service), it is crucial to note that accuracy is not always guaranteed. Ensuring that your tax return is correct is essential, as any discrepancies could result in additional taxes, interest payments, or even penalties.

In the event that you have provided inaccurate information on your original return, it is advisable to make amendments. This includes any errors made regarding filing status, dependents, total income, deductions or credits. However, it is important to note that amendments are not necessary for math errors, as the IRS will rectify those themselves.

When it comes to accurate tax filing, the IRS highly recommends that married couples take advantage of the benefits of filing joint tax returns. By choosing to file together, couples can benefit from various tax breaks offered by the IRS. However, there are rare occasions when it may be more advantageous for married couples to opt for separate tax returns.

Missed: Overlooked Earned Income Tax Credit

Working families can receive thousands of additional dollars through the Earned Income Tax Credit (EITC). Factors including income, marital status, and the size of the family determine eligibility for this credit.

Get in touch with a PriorTax dedicated Tax Professional to find all issues for accurate tax filing this year and make tax amendments from past tax years for maximum tax returns.