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!

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How Can You File Your Business Taxes?

Posted by admin on June 1, 2023
Last modified: June 2, 2023

Business tax filing can vary depending on the type of business structure in place. To ensure that your business taxes are done correctly, there are some key steps that should be taken first to establish what type of business setup has been used:

What timeline should you be following to do your business taxes?

Need a hand in filing your business tax online? First, let’s see when you need to file your taxes.

business tax

Sole proprietor or Single Member LLC:

For many gig and freelancers, operating as a single-member Limited Liability Company (LLC) or as a Solo Proprietor is preferred.

Partnership or Multi-Member LLC:

An LLC or a business formed as a “partnership-multi member” is not taxed as a corporation but instead has multiple owners.

S Corporation:

An entity with the legal status of a corporation may selected to be taxed as an ‘”pass-through entity,”‘ such as a partnership or LLC.

C Corporation:

When a large business requires its own separate legal identity, they often form a type of company known as a ‘Corporation.’ This entity exists independently of any owners and carries its rights and responsibilities.

Trying to figure out which form to file and when can be a complicated task, especially depending on the entity’s structure. Business taxes may either be paid by the owner or the business itself – this all depends on what legal setup has been established. Furthermore, every type of entity has its own IRS form and filing deadline that must be adhered to.

Business Tax Filing for Sole Proprietorships

Sole proprietorships are the most simple and straightforward type of business tax filing. You can confidently fill out Schedule C, which is only two pages long. This form is attached to the 1040 individual return, which is then filed with tax authorities. Being this simple, tackling this task via tax software or by hand is a safe bet.

To complete your taxes, the following documents are essential:

  • Schedule C: Profit or Loss From Business
  • Schedule SE: Self-Employment Tax

Additional paperwork will be needed should you specify a home office deduction or account for depreciation, such as:

  • Tax Form 8829: Expenses for Business Use of Home
  • Tax Form 4562: Depreciation and Amortization

Filing a business tax return on Form C is usually quite uncomplicated, but certain elements can be confusing. For example, you may need to grapple with the Qualified Business Income Deduction. Again, business tax is an area where it can be useful to have the professional help of an experienced service for filing taxes.

Business Tax Filing for Simple Partnership

It’s advised to avoid taking the DIY route when it comes to business partnerships. Those kinds of entity structures tend to be complicated, which is why you should use software or consult a professional instead. In addition, when filing individual income taxes, you’ll need to fill out a K-1 form to let the IRS know what part in the partnership you have and how much money was earned through it.

To comply with the K-1 filing requirement, it’s important to maintain a record of how much of the company each partner possesses according to their individual contributions. This is known as the basis of the partnership. Losses or profits for tax purposes must be allocated accordingly among partners based on their basis in the business.
Do you know when a tax return is considered simple? To understand this, it’s important to define a simple partnership.

So, how does one identify whether or not they have one?

Are you worried about having to report a Balance Sheet on your tax return? To be in the safe zone, confirm that these two statements are true: Your gross income is less than $250,000, and business assets are under $1 million. When both of these business conditions have been met, there will be no need to submit a balance sheet detailing all assets and liabilities as part of taxation. Doing so requires good bookkeeping skills for accurate documentation annually.

When running your own small business, nailing down the financial details is not easy. While keeping accurate books is essential, getting the bottom line accurately can be difficult. Attempting this manually isn’t recommended.

When should you seek help from a Dedicated Tax Professional?

Hiring an accountant in the business world shouldn’t be taken lightly. Doing so should be something other than a trial and error process, as even the slightest error can lead to serious repercussions further down the line. Avoiding such a “fake till you make it” approach is essential for successful financial management.

Prior Tax has free dedicated Tax Professional support to walk you through your business tax filing step by step from start to finish. Don’t hesitate to reach out and find your dedicated tax professional.

When it comes to tracking the financial side of your business, finding the right professional help can save you from costly mistakes. This is especially true when your company runs on an accounting method other than “cash”. Whether it’s accrual or hybrid accounting, hiring an accountant is wise. The complexities of these models can often be difficult to manage; even experts may make errors that could end up costing you problems in the long run.

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Category: Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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Fix your Tax Returns to Make Sure Your Federal Tax Return is Accurate

Posted by admin on May 25, 2023
Last modified: May 25, 2023

It’s not unheard of for additional information to arrive after you’ve already filed your taxes. This can be something like overlooked credits or tax form 1099 arriving too late in the season. Fortunately, the IRS has created an easy way to fix your tax return by amending it.

It can be difficult to ensure your tax return is accurate and complete. To help with this, it’s important to gather all necessary documents such as W-2s, 1099s, receipts, etc. Thus you can be sure that all the relevant data are input into the right schedules and forms before submitting.

How can you fix your tax return?

First, beginning the tax season can be daunting; however, getting ready is made much simpler by taking a few steps. Firstly, it’s important to assemble all your new paperwork. This includes any receipts for deductions and credits you are claiming, such as 1099s or W-2 forms that may have been missed initially. It never hurts to keep a copy of your previous year’s return handy too!

fix tax return

Second, once you have completed the first stage, forming 1040-X is your next task. From 2019 onwards, fixed federal tax returns can be submitted electronically as long as the initial one was sent this way. Those who filed theirs with TurboTax should log onto their account and pick out the tax return needing amendment; then, they must adhere to the onscreen directions.

The third and final task is determining what alteration needs to occur. To be able to accurately adjust the mistakes on your original tax return, you must get an unaltered copy of the same form from that year. With this in hand, you can modify those numbers which were impacted by making amendments – thus recalculating your taxes.

In preparing to fix your tax return’s fourth and final stage, grab any new schedules or documents you need to make changes. Unlike submitting a full tax return, only figures that have changed should be updated with the IRS; there’s no need to start from scratch again. However, in the event that any of your original filings will be subject to alteration due to an amendment, it is necessary to re-submit those schedules together with your Form 1040-X. Fortunately, Prior Tax can provide assistance in this process – a team of dedicated tax professionals are there to help you revise the required forms with ease.

To complete the process, you must fill out Form 1040-X. It is vital to explain precisely why you are filing this form. Furthermore, should you file the return on paper, be sure to attach any related documents supporting your cause and mail them off according to the instructions on Form 1040? When submitting an amended tax return, make sure to send it to the IRS service center, which handles your first filing. In addition, you must include payment for any extra taxes due; otherwise, the IRS may impose interest and penalties on the remaining amount.

Using PriorTax to fix your tax returns

At Prior Tax, we understand that the process of amending a return can be complicated. To fix your tax and file for tax amendment.

Don’t worry about filing taxes on your own – Prior Tax has got you covered! With Live Full Service, an expert will take care of everything, start to finish. Take advantage of Dedicated Tax Professionals for the right answers and a maximum refund guarantee. Or opt for confidence-building tax filing with Prior Tax easy filing process or with the help of our dedicated tax professionals. Whichever way you go, get a guaranteed maximum refund from Prior Tax.

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Category: Tax Deductions and Credits, Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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Take Advantage of Computer Tax Write-Off Opportunities

Posted by admin on May 18, 2023
Last modified: May 19, 2023

We can’t deny the usefulness of computers – they are everywhere, from our homes, businesses, and schools to soon enough. As such, you may be able to take advantage of computer tax write-offs. So let’s explore what’s available.

It’s a wonder that they haven’t taken control of the planet yet, considering how often people hit the “Remind me tomorrow” button when asked to update. Yet, no matter how much we can accept this inevitability, one concern continues to linger in our minds: can we deduct them from our taxes?

Reach out to your dedicated tax professionals for free consultation and tax filing from start to finish.

Did you know you can claim your computer as a tax deduction?

The simple answer: Yes. Any computer used for business-related activities can be written off as an expense.

In 2018, the Tax Cuts and Jobs Act (TCJA) removed an important deduction for W-2 employees: write-offs for business expenditures. Therefore, to cover costs associated with work such as a computer, it is recommended that you ask your employer to reimburse you.

Calling all freelancers and self-employed workers, laptops might be the perfect addition to your office. Before you make the purchase, however, take a moment to consider the details. Remember that you can only deduct the business-use portion of the laptop from taxes.

Are you one of the people using their own laptops to run a business? Then you need to accept the fact that it limits your possible deductions. To give an example, let’s assume that in a day, you spend two hours on your business and eight hours watching YouTube. In this scenario, 20% of the usage time of your computer is allocated for work purposes.

In a notable shift, the Internal Revenue Service (IRS) has removed “computers” from its list of “listed property.” Such property is any item that could be used for both personal and business purposes, like automobiles. As a result, there are now different IRS regulations to take into account.

business computer tax deduction

The exclusion of computers from the category affected two matters:


Firstly, it abolished the need for detailed recordkeeping when claiming the deduction. This is because taxpayers no longer have to keep track of their use of the computer in order to be eligible for this tax benefit.

Secondly, it conformed with conventional depreciation regulations that allow for greater convenience and flexibility; I will break down what this entails below.

Learning the Concepts of Computer Tax Depreciation

Now that you’re familiar with the tax filing process of calculating your business’s portion, it’s time to take a deeper dive.

The IRS generally states that computers are capitalized and depreciated over five years – this is known as depreciation. This method helps account for an asset’s decreasing value over its lifetime.

When it comes to depreciation, many people tend to think of cars. However, when you buy a car, the resale value tends to decrease with time. Why is that? This is because, over time, the car will gradually become subject to more wear and tear, which reduces its overall performance and puts it at a disadvantage compared to newer models in the market.

As with most technology, the value of a computer decreases over time. That is why depreciation comes into play – it spreads out the cost of purchasing a computer across its “useful life” to account for this decline in performance.

Do you want to be able to tax deduct the entire cost of your computer right away?

Well, the IRS has some solutions for that! Specifically, they have a few methods in place to help people who want to see their deductions before tax season. This is known as “accelerated depreciation,” and it allows folks to get their expenses back sooner rather than later.

Fortunately, you can avoid any hassle of figuring out depreciation when it comes to purchasing a computer, provided certain criteria are met. Maximizing your deductions when you purchase computers under $2,500.

By taking advantage of the IRS’s de minimis safe harbor election, it is possible to write off the cost of any tools or equipment that costs $2,500 or less in the first year of using the equipment. For example, should you acquire a computer for $2,500 and use it 20% of the time for business purposes, you may claim up to $500 as a deduction.

This process does not require you to depreciate it or include it as a fixed asset; rather, treat the expenditure like any other business cost. Additionally, a formal election should be included with your return every year – this cannot be carried over from one fiscal period to the next.

Taking advantage of Section 179 to Tax Deduct on Computers.

Section 179 has been established to motivate entrepreneurs to buy their company’s machinery and equipment, including computers. It allows you to deduct as much of your expenditure as desired in one year up until an overall limit of $1,040,000.

When it comes to selecting a tax strategy, one of the best options is to determine whether or not it’s advantageous to depreciate certain items.

Two things to consider when taking Section 179 for Tax Deduction:

First, though it is not possible to deduct a loss when claiming, those whose computers are used at least half for business can still take advantage of the allowance. Additionally, even for those who use their computer less than 50% for work, taking the benefit of de minimis or bonus depreciation is still an option. Let’s explore these two further.

Second, deciding whether or not you should depreciate your computer can take time and effort. Although the IRS has structured their rules in such a way as to avoid requiring this, there are some instances in which it may make sense to go ahead and do so. In fact, taking this route can offer more wiggle room.

Tax planning for the upcoming year can include creating a sound strategy for the depreciation that may benefit you from both a cash flow and tax perspective. For example, instead of spending money on an upgraded printer for the sole purpose of taking a write-off now, delaying the purchase provides an opportunity to use up $400 in deprecation costs.

For those trying to reduce their computer’s value, bonus depreciation is hands down the most straightforward solution. A few other possibilities can be explored, but this is the easiest.

Using the Bonus Tax Depreciation

The Tax Cuts and Jobs Act has presented a great opportunity in the form of bonus depreciation. By taking full advantage of this new feature, you can receive a deduction for 100% of the cost associated with purchasing business-use items during the first year. In addition, there is no need to fill out any forms or submit documentation – bonus depreciation is automatic!

When it comes to simplicity, nothing beats claiming a deduction through the use of depreciation. All one needs to think about is when to take advantage of this special allowance – whether that be in the present or spread out further into the future. Note, though, with the Tax Cuts and Jobs Act (TCJA) lifting a prior limit on net operating losses (NOLs) – i.e., losses which may be applied against any future profits earned – deferring said claim is less essential than it once was.

In the event that you incur a net loss of $20,000 stemming from your claim of bonus depreciation on office equipment, this financial setback can be applied to any future gains in perpetuity.

Unfortunately, bonus depreciation has a minor downside that will only affect some freelancers and self-employed individuals drastically. This method must be used for all business assets belonging to the same grouping or “asset class”.

You can either choose to adjust the depreciation of your computer, which is expected to last five years or opt for a different schedule on other assets that degrade over a similar period. This could be anything from cars and trucks to more unusual business-related purchases such as planes and cows! Note that you can also select seven or 10-year asset schedules when it comes to boats, railroad cars, and farm machinery.

Should you find yourself subject to this bizarre limitation, you can still take advantage of Section 179 depreciation for your computer.

Tax Writeup on Depreciation with Section 179

Recent NOL legislation revisions have taken away many of the advantages associated with Section 179. In almost all cases, bonus depreciation is the more favorable choice over its predecessor. Nevertheless, it is still possible to take advantage of depreciating your laptop or desktop using Section 179.

If you acquire $4,000 worth of computer systems for your new home office and net $3,000 in income for the year (before computing the computers’ cost), a Section 179 election could be beneficial. This would enable you to offset any self-employment earnings and divide up the remaining $1,000 over the asset’s lifetime – depreciating it.

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Category: Tax Deductions and Credits, Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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How to Prepare Amended Tax Return

Posted by admin on May 11, 2023
Last modified: May 9, 2023

Need to Fix a Mistake on Your Tax Return? Here’s What You Need to Know

Amending your tax return is simple – all you need to do is e-file an amended tax return with Prior Tax. It requires just a few steps, but it can make all the difference in getting the credits and deductions you deserve.

Correcting errors and amending your tax return can be done using Form 1040-X. This form can help you report changes such as correcting your filing status, including or removing a dependent, claiming deductions or credits that were missed or even adding income that was forgotten. However, it is important to note this form should not be used for any clerical errors; these will automatically be corrected by the IRS.

Normally, it’s necessary to submit an amended return no later than three years after the original submission deadline. However, this could be extended to two years from the payment of taxes for that particular year, should that fall at a more recent date.

how to prepared amended tax return

Did you know that it’s possible to make corrections on prior tax return? 

The IRS allows taxpayers to amend their returns when mistakes or oversights have been made. Read on for more information about what’s involved in filing an amended tax return.

Knowing the proper time to file an amended tax return is key. In certain circumstances, this must be done, while in others, it’s unnecessary. Here are some scenarios that necessitate an amendment:

It suddenly dawns on your that a tax deduction or credit was not claimed, and the wrong filing status was declared.

It turns out there’s a missing dependency to be included in the return and an income source not previously accounted for.

Uncovering that an expense, deduction, or credit already claimed is no longer applicable is another issue to solve.

It’s important to ensure the IRS has finished with your tax return prior to submitting an amended one – that way, there will be clarity regarding which is the original and which is revised. A good indicator of this is a received tax refund; once you’ve gotten your rebate, you can be confident that the agency has dealt with your filing.

Do you ever need to submit an amended tax return?

Generally, it’s unnecessary to resubmit a tax form you have already filed with the IRS or amend your tax returns just because of some minor math or clerical errors. The Internal Revenue Service typically takes care of corrections for such mistakes on its end. It will send an additional bill for taxes or offer a refund in cases where the error was advantageous to the taxpayer.

Have you made any mistakes on your past tax returns? Filing an amended tax return may be the solution. The Internal Revenue Service (IRS) could audit previous years’ taxes, which might result in extra taxation. According to regulations, the IRS usually scrutinizes files filed within the last three years; however, addressing any potential issues before prior tax return(s) becomes a problem is preferable. Amending a filing can easily remedy errors that were previously made.

Submitting your amended tax return as soon as possible is highly recommended. Doing so can help reduce the possibility of owing taxes and any applicable penalties. Additionally, it will ensure that you are prepared for any issues that may arise with the IRS.

Are you aware of the time frame to file an amended tax return?

The Internal Revenue Service (IRS) dictates that an individual can only file an amended return to claim a refund within the following:

A period of 3 years from the deadline for primary tax filing, or within 2 years of paying the tax owed for that tax year – whichever date is latter. Unfortunately, requesting reimbursement after these specified timescales have passed is impossible.

Have you ever needed to make a correction to your tax return? 

Submitting an amended return is relatively simple, and this guide will provide all the steps necessary. Here’s what to do:

First off, it’s essential to gather the proper paperwork for preparing an amended return. You’ll need your original tax return and any necessary updated documents.

You may require new or amended documents, such as a W-2 or 1099 form to revise the income reported on your return. Additionally, should any overlooked tax deductions or credits come to mind, supporting documentation would be needed to apply them; this could take the form of receipts for charitable donations, amended Form 1098 Mortgage Interest Statement forms, and even Form 1098-T for education credits.

Obtaining a transcript from the Internal Revenue Service is an option for those who did not file a tax return using Prior Tax and don’t have a copy of it. The Get Transcript tool available on IRS.gov can be used for this purpose, which provides most of the necessary details from the return like income, deductions, credits, and so forth.

The next move is to obtain the pertinent paperwork.

For example, to amend a tax return, you must file IRS Form 1040-X. Additionally, any forms affected by your modification should also be kept on hand. For example, to alter itemized deductions, it’s vital to possess a copy of Schedule A for that particular tax year.

Amending your tax filing may require additional forms based on the type of income added. For instance, Schedule B is likely necessary when adding more interest or dividend income. When it comes time to change revenues or expenses from a trade or business, you’ll need Schedule C and Schedule SE. Meanwhile, Tax Form 8949 and Schedule D would be used for updating capital gains/losses. And so forth.

In order to file an amended tax return via Prior Tax, it is necessary to use the appropriate version of the program. So, for instance, when altering your 2020 tax return, one should employ the 2020 edition of PriorTax.

Even though you did not use Prior Tax to file your initial tax return, it is still possible to use it in order to complete an amendment. You will need to start by entering the same information into Prior Tax that was filed initially and then move forward with the amendment process.

After you have gathered the necessary receipts and documents, the next crucial task is to complete Form 1040-X. This particular form consists of three columns that must be filled out accurately.

Column A is where you enter all your figures and information as reported on your tax return.

The information in the third line of the return should be filled out accordingly. This is where you will enter the changes from your original return. Take, for instance, an amendment on your gross income to include $100 of interest income that had been left out initially – in this case, $100 should be written in Line 1, Section B. The total amount should then be placed in Section C; by summing up what was entered into A and B.

When filing Form 1040-X, Section III requires a thorough explanation of why an amendment to the original return is being made. Therefore, it’s important to provide detailed insight into the purpose of your revised tax filing.

Filing an amended return doesn’t have to be a difficult process. 

With Prior Tax, you can get help from free dedicated tax professionals without needing to memorize all the details. All you have to do is let our dedicated tax professionals know that you require a Form 1040-X, and they’ll make sure any adjustments to your income and deductions are accurately filled out on the right paperwork.

Lastly, send in your amended tax return. Once you have finished completing the necessary forms, it’s time to submit them. As of 2019, taxpayers are able to e-file their amended tax returns so long as the original return was filed electronically and your tax software partner supports sending amended documents in this manner.

Certain supporting documents are necessary to validate the changes for those filing an amended return. This could include W-2 or 1099 forms to report extra income, a Tax Form 1098 Mortgage Interest Statement that has been updated, or even a 1098-T for the purpose of claiming education credits.

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Category: Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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Amend Tax Return

Posted by admin on May 4, 2023
Last modified: May 5, 2023

Correcting Errors Made from Previous Tax Filing for Amended Tax Return

The Internal Revenue Service offers taxpayers the opportunity to fix any mistakes made on a previously submitted tax return by filing an amend tax return form. Through their straightforward procedure, amending your taxes is an achievable task. Take note of this article’s advice to learn how you can make changes to your annual fiscal obligations.

Filing taxes can be a complex process. All the paperwork, forms, and documents associated with filing a correct return can be overwhelming. To help with this, you need to collect all of your W-2s, 1099s, receipts, and other relevant materials prior to completing the data entry on the various schedules and forms.

Discovering that you missed important information after filing your taxes can be disheartening. Various credits or forms may have slipped through the cracks, but fortunately, the IRS provides a straightforward solution: amending your tax return. This process is simple and requires filling out some additional paperwork.

Amend Tax Return by Altering the Details

 It can be beneficial to file an amended tax return with the IRS in order to make corrections on a previously submitted return. Doing so may help you avoid potential interest and penalties due to underpayment of taxes, should these changes result in a larger amount owed.

Filing an amended tax return is often allowed by law in order to adjust:

 – your chosen filing status,

– gross income amounts,

– any reported dependents, and

– amend tax deductions and tax credits from prior tax returns.

In the case of accurate information with miscalculations, filing an amendment may not be necessary for your original return. Correcting any math mistakes should suffice to ensure accuracy.

When you file your taxes with Prior Tax, you can be sure that all calculations are 100% accurate. Even in mathematical errors, our software double-checks and rectifies them automatically. In case of any recalculations due to these issues, you will receive written notification from the IRS regarding its effect on your tax refund or bill.

amend tax return

Timing to Amend Tax Return – Limitations of Time

It is important to be aware of the limited time allowed for filing an amended tax return, as failure to do so within this timeframe may mean you won’t receive your refund from the IRS. To ensure that you receive any tax owed back, an amended return should be submitted before either of these deadlines:

The IRS allows for two rules regarding filing a tax return after the deadline. First, you have up to 3 years from its original due date to make your submission. For instance, in the event that your 2021 tax return is submitted on April 1, 2020, you have until April 18, 2023, to submit the amended version of your taxes to the Internal Revenue Service (IRS). 

Even though you may have to pay more tax due to an amendment, filing a new return is unnecessary after the allotted time frame has passed. Bear in mind that any amendments filed outside this window will not be eligible for a refund from the IRS.

How to Amend Tax Returns: What You Need to Know

First, before you start amending an existing tax return, obtaining any new documents related to your income is vital. These can include a 1099 or W-2 that may have been missed in the first submission. Also, proof of eligibility, such as a receipt, will be useful if you claim a deduction or credit.

The second step to begin the process of amending your federal returns starting from the 2019 tax year, you can either electronically file with Prior Tax or paper-file. Those who get help from free dedicated Prior Tax Professionals to complete their original return can easily file by logging into their account and selecting the corresponding amend tax return that needs to be amended. To complete a paper filing, you will need IRS Form 1040-X, which is available for download on the official website of the IRS.

The third stage of the process is to work out which error needs to be addressed. Acquiring a blank form for the same year as your initial tax filing is essential in this situation, so you can accurately make alterations and evaluate how this will affect your overall return.

Do you need to file an amendment on a tax return that has already been submitted via Prior Tax? Well, we have the perfect solution for that. All one has to do is get in contact with their dedicated Tax Professional.

Forget about DIY taxes and get your returns done right with Free, Dedicated Prior Tax Professionals. Leave the tedious work to us – just answer simple questions, and we’ll handle the rest from start to finish. We’ll make sure you get your maximum refund guaranteed. Filing your taxes can be a hassle, but with Prior Tax, you can do it confidently, knowing that experts are by your side.

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Category: Tax Tips and Tricks, Taxes for Prior Years
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Self Employment Tax Write Off

Posted by admin on March 30, 2023
Last modified: March 29, 2023

When you work for yourself, the need to plan for taxes can’t be overstated. Therefore, we always suggest that freelancers store away 20-30% of their income to pay what they owe in taxes. This should cover taxes due from both income and self-employment sources. The key is planning ahead of the IRS and keeping better track of income and expenses throughout the year. As a freelancer, you’ll likely be able to deduct typical household expenses from your taxable income. For example, you can deduct any work-related expenses you spend on business-related items such as cell phones, Internet service, software, and office supplies. You may also be able to benefit from self employment tax write off some home office expenses.

Why Do self-employed pay more in taxes?

Are the tax regulations different for self-employed individuals? The short answer is a resounding yes. The more extended response is that there isn’t a huge difference, but it can certainly seem like it. Self-employed people have to pay increased Social Security and Medicare taxes, yet they are also allowed certain write-offs to counterbalance this additional expenditure. However, due to the absence of tax deductions being taken out, their overall tax bill might appear excessive.

Self Employment Tax Write Off

Are Self-employed paying more in FICA taxes?

Individuals working for themselves are subject to a higher FICA tax rate than those employed by a company. Specifically, the total percentage of Social Security and Medicare taxes they must pay is 7.65% greater than that traditional W-2 employees are required to pay – an amount that can add up significantly over time.

Self-employed claim business tax write-offs.

One of the major benefits for those who are their boss is the ability to take advantage of beneficial business tax write-offs. These write-offs often mean that a person who works on their ends up owing less taxes than someone with a W2 job. Unfortunately, however, only some know how to utilize these deductions advantageously.

Self-employed do not get tax withholding.

One unexpected challenge for freelancers, gig workers, small business owners, or independent contractors is that their taxes are often much higher than traditional W-2 employees. This is because most workers in this category don’t have any tax withheld from their salaries. As a result, when filing their taxes, many are surprised at how much they need to pay the IRS. On the contrary, W-2 employees usually have Social Security, Medicare, and income taxes are taken out of each paycheck throughout the year. Therefore they generally receive a large refund once it’s time to file their returns.

Those freelancing or operating as independent contractors need an employer to take care of their taxes. It can be a nasty surprise when realizing how much they owe as they file their taxes. Those who were used to the W-2 lifestyle they’re now paying more in taxes; however, it’s just that they are paying all of it in one go.

So, what taxes do self-employed need to prepare?

When it comes to filing taxes, self-employed individuals face the dilemma of paying two distinct types: income and self-employment tax. But just how much will be levied on your earnings? Generally speaking, all incomes are subject to income tax.

Are you aware of the income tax expenses?

Income tax applies to wages, business income, interest, rent, and pensions – almost any type of income. As such, self-employed individuals will likely be in the 10-22% range for their tax bill. The average rate is usually 14%.

Why you shouldn’t use your effective tax rate to budget?

There may be better ways to budget than the effective tax rate because the calculator results show a much lower percentage regarding federal income taxes. To explain this further, an example will be used – say you earned $50,000 from self-employment. The top income tax rate for this amount is 22%. This does not provide the whole picture, though, as other factors must also be considered – such as your standard deduction, which will reduce what you owe at tax time.

This information needs to indicate what your actual tax rate will be. It is rather meant to show how much of your income must be put aside when filing taxes.

Important tax breaks that will lower your taxes‍

Knowing how much will be taken off your income taxes can provide beneficial information. However, to understand why two rates may not match up, one must first know what is subtracted from a person’s taxable income. These subtractions include a standard deduction of $12,950, half of the self-employment tax amounting to $3,672, and a qualified business income deduction equaling $9,600.

Your standard deduction ($12,950)
Half of your self-employment tax ($3,672)
Your qualified business income deduction ($9,600)

After subtracting the necessary amounts, your taxable income should be approximately $22,000. This will likely place you in the 12% tax bracket.
To ensure that you can pay your taxes, allotting 5% of your total earnings ($48,000) is recommended. Nevertheless, this doesn’t mean that it’s all there is to taxation.

What do you need to know about self-employment tax?

Two government programs, Social Security and Medicare, collect a self-employment tax from working individuals that don’t have an employer. In these cases, the tax is collectively known as “self-employment taxes,” with a combined rate of 15.3%. This type of tax differs from income taxes because it only applies to business income reported on a 1099 form. On the other hand, those people who do have employers are subject to “FICA taxes,” which are automatically deducted by their employer from their paychecks.

Why not all business income is subject to self-employment tax?

Not all business income is liable for self-employment tax – only net business income. This means that the remaining amount is subject to taxation after any relevant deductions, such as inventory purchases or phone bills. To this end, utilizing write-offs can be an excellent way to reduce total taxes due on income earned from a trade or profession.

For the most accurate prediction of your taxes, you must use the net monthly self-employment income in the corresponding calculator.

How to find tax write-offs with PriorTax?

Do you need help getting the most out of your tax write-off options? PriorTax offers a range of services to ensure self-employed workers take advantage of all available deductions. Our team provides an end-to-end solution so that you get everything when it comes to filing your taxes.

How to budget for self-employment taxes?

Creating a budget for self-employment taxes is essential in the United States. This is due to the “pay-as-you-go” tax system that requires taxes to be paid as money is earned, not when filing taxes. Therefore, to avoid penalties and interest, anybody expecting to owe more than $1,000 in taxes should make estimated payments during the year. Doing so ensures they are not fined when they file their final tax return.

Money management can often feel like a daunting task, especially when money is tight. Nevertheless, setting aside funds for tax payments can be achieved with the right strategies and avoiding certain financial pitfalls. Here we present some time-tested methods that have proven effective for keeping yourself on track financially.

Discover how to maximize your income. For those starting as self-employed, a W-2 job often serves as the initial point of reference for what constitutes a competitive wage. Yet things can feel uncertain when they take the plunge and become their own boss.

One common mistake that is made is neglecting to consider things such as taxation, leading to an underestimate of their price and therefore undercharging for their services.

There is no doubt that it’s time to raise your rates. It is important to add a mark-up to every invoice you issue so that you can cover the self-employment taxes. Always underestimate yourself, and make sure you are paying attention to your services. Each time you submit an invoice, ensure that there is sufficient payment for the work performed.

Establishing a payment plan that suits you best

Surprising to some, there is no obligation to make estimated tax payments on the exact due date. Instead, paying as often as required is possible to stay on top of things.

Many individuals favor making regular biweekly or monthly payments to avoid holding onto their taxes for too long. Plus, with a set schedule, it becomes easier to become accustomed to the process and avoid relearning the procedure each quarter.

Gaining control with auto transfers

Like enrolling in a gym membership without much thought, taking advantage of auto transfers is an easy way to put money away for yourself. In addition, many banking institutions provide the opportunity to move funds from one account to another automatically – making saving for taxes effortless and stress-free.

Change it up with a new bank

Instead of making your savings account too easily accessible, why not open an account at a totally different bank? That way, you’ll need extra effort to transfer money. On the other hand, all it takes is a single click of the button, and funds are moving back and forth – so adding an extra layer might be desirable.

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Category: Tax Deductions and Credits, Tax for Business, Tax Tips and Tricks, Tax Year 2022, Tax Year 2022
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Property Tax 2022

Posted by admin on December 27, 2022
Last modified: February 13, 2023

Welcome to the exciting world of property taxes! In this article, we’ll be discussing how assessors calculate your annual property tax liability.

Are you thinking about buying a new home? If so, then there are a lot of things to take into account. One of the most important factors for many people is the community they’ll be living in. But another important consideration is how your property taxes will contribute to supporting your local area through things like schools and infrastructure. In the United States, all 50 states have laws requiring most property owners to pay real estate taxes. These taxes can vary from state to state.

When you’re searching for a new home, it’s important to keep property taxes in mind. They can add a significant amount to your overall homeownership costs. Here’s some basic information on property taxes, including a state-by-state breakdown, to help you get started.

What Are Property Taxes?

There are a few things to know about paying your real estate taxes. They’re based on the assessed value of your home, and rates can vary by state. But generally speaking, this is a tax that homeowners pay to their county or local government. So, when budgeting for your annual expenses, be sure to factor in your real estate taxes.

As a homeowner in the United States, you are likely responsible for paying property taxes on a monthly basis, along with your mortgage payments. Once you pay off your loan, you may receive a bill for the tax from local government periodically throughout the year. The money collected through property taxes goes towards supporting the community, including infrastructure improvements, public services and local public schooling.

property tax

What Are Property Taxes Based On?

The value of your home is important for many things, including your property taxes. It’s important to know that the assessed value for property taxes may not always match the actual value of your home. This can affect how much you owe in taxes. Property tax amounts can vary depending on the state and county you live in, as well as the overall value of your home. This includes both the land and any structures on it.


The first thing you need to know is that all calculations are based on a unit called a mill, which is equal to one-thousandth of a dollar. With that in mind, let’s take a look at the three values that are used to find your annual property tax liability:

  • the state tax rate
  • the assessment ratio (the portion of the property value subject to tax),
  • and the property value.

States Ranked By Property Tax

State Property Taxes ranked from the lowest to highest

*$217,500 is the median home value in the U.S. as of 2019, the year of the most recent available data.

RankStateReal Estate Tax RateAnnual Property TaxAverage Home Price
1Hawaii0.28%$606 $615,300 
2Alabama0.41%$895 $142,700 
3Colorado0.51%$1,113 $343,300 
4Louisiana0.55%$1,187 $163,100 
5D.C0.56%$1,221 $601,500 
6Delaware0.57%$1,240 $251,100 
6South Carolina0.57%$1,238 $162,300 
8West Virginia0.58%$1,269 $119,600 
9Nevada0.60%$1,310 $267,900 
10Wyoming0.61%$1,319 $220,500 
11Arkansas0.62%$1,358 $127,800 
12Utah0.63%$1,362 $279,100 
13Arizona0.66%$1,446 $225,500 
14Idaho0.69%$1,492 $212,300 
15Tennessee0.71%$1,548 $167,200 
16California0.76%$1,644 $505,000 
17New Mexico0.80%$1,740 $171,400 
18Mississippi0.81%$1,751 $119,000 
19Virginia0.82%$1,779 $273,100 
20North Carolina0.84%$1,833 $172,500 
20Montana0.84%$1,818 $230,600 
22Indiana0.85%$1,853 $141,700 
23Kentucky0.86%$1,866 $141,000 
24Florida0.89%$1,934 $215,300 
25Oklahoma0.90%$1,952 $136,800 
26Georgia0.92%$2,006 $176,000 
27Oregon0.97%$2,116 $312,200 
27Missouri0.97%$2,111 $157,200 
29Washington0.98%$2,134 $339,000 
29North Dakota0.98%$2,138 $193,900 
31Maryland1.09%$2,370 $314,800 
32Minnesota1.12%$2,429 $223,900 
33Alaska1.19%$2,599 $270,400 
34Massachusetts1.23%$2,667 $381,600 
35South Dakota1.31%$2,857 $167,100 
36Maine1.36%$2,953 $190,400 
37Kansas1.41%$3,060 $151,900 
38Michigan1.54%$3,343 $154,900 
39Ohio1.56%$3,390 $145,700 
40Iowa1.57%$3,407 $147,800 
41Pennsylvania1.58%$3,442 $180,200 
42Rhode Island1.63%$3,548 $261,900 
43New York1.72%$3,749 $313,700 
44Nebraska1.73%$3,754 $155,800 
45Texas1.80%$3,907 $172,500 
46Wisconsin1.85%$4,027 $180,600 
47Vermont1.90%$4,135 $227,700 
48Connecticut2.14%$4,658 $275,400 
49New Hampshire2.18%$4,738 $261,700 
50Illinois2.27%$4,942 $194,500 
51New Jersey2.49%$5,419 $335,600 
property tax by state
Source: WalletHub

State Property Tax Exemptions

As a homeowner in the United States, you are generally required to pay property taxes. However, there are some exceptions where certain properties may be exempt from this tax. This is different from a tax deduction, which only lowers the amount of taxes that an individual or group owes. Property tax exemptions can include qualifying individuals such as senior citizens, STAR participants, those with disabilities and veterans. Certain eligible government entities, nonprofit organizations and religious groups may also fall under an exemption.

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Category: Tax News, Tax Tips and Tricks, Tax Year 2022, Taxes for Prior Years
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Amended Tax Return

Posted by admin on December 21, 2022
Last modified: February 13, 2023

Key Takeaways When Getting Amended Tax Return

If you filed your income tax return with missing or inaccurate information, you could amend the tax return using the tax form 1040X with PriorTax and our Tax Service Professionals. Here is how to file a 1040X form with the IRS, when you should amend a tax return, and other rules you should know. When filing your tax form 1040X, you may wonder what to put on your amended return.

Use the tax form 1040X to report major changes, like adjusting filing status, adding or dropping a dependent, filing for tax deductions or credits you missed, or adding taxable income that you forgot to itemize. In addition, tax form 1040X is generally used to address errors regarding your filing status, income, claims for deductions or credits, or tax liabilities.

Once you have indicated you are preparing a modified return, PriorTax Tax Service Professionals will assist you in completing tax form 1040X and any supporting forms and documents as you make changes to your income and deductions. Sign up to PriorTax to create your account to enter your information, or sign in again to start editing your return. Then, you can reach out to our Tax Service Professionals to walk you through this process. The filing does not accelerate the process and can slow it down; tax amendments are made only to modify or fix things in an accepted tax return.

amended tax return

Generally, you should file a tax amendment form with IRS and/or a state amending return if you need to add more information, delete information, or make a general correction on a return on your income tax that you have completed filing already via mail or electronically. Unfortunately, some state tax agencies do not permit you to e-file your individual income tax amendment; you may need to mail your completed, amended state return to your state to complete it. Previous years’ amendments may also be completed at no cost. Note that with PriorTax, you could eFile your past 3 years of federal taxes.

Suppose you are owed a tax refund on the tax returns for the current year. In that case, the IRS says that, generally, you should wait to get your refund before filing a tax amendment for an amended tax return, especially if you are filing for a refund extension.

How Soon to Act for An Amended Tax Return?

If you are filing tax form 1040X to claim your refund, you typically must do so within three years after filing your original return or two years after paying the taxes, whichever is later. However, you could amend your taxes if your original return was prepared using tax form 1040 or tax form 1040SR. To file your amended tax return, you can e-file or download the 1040X form with PriorTax and with the help of our Tax Service Professionals.

To add or change the number of dependents who qualify, you must print and mail the amended tax return for each affected year to the IRS. However, you do not have to file an amended tax return if some tax forms are not attached because, in such cases, DOR would contact you if additional information is needed.

Are There Penalties for Filing Amended Tax Return?

No penalties are assessed on the additional taxes if you voluntarily file the amended return and pay any taxes due.

Anyone can file an amended tax return with PriorTax, even if they used another vendor or mail in their original return. However, an amendment should be filed only if the IRS or a state has already accepted your return and you need to make changes because of a bug, omission, or statutory update.

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Category: Tax Tips and Tricks, Taxes for Prior Years
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Income Tax Calculator

Posted by admin on December 16, 2022
Last modified: February 13, 2023

2023 Income Tax Calculator

PriorTax uses the personalized and most up-to-date income tax calculator to accurately estimate your federal income tax refund, or the tax you owe, in just a few short, easy steps. PriorTax income tax calculator will calculate a rough approximation of your tax refund or the amount you owe.

To find your estimated tax refund or amount due, it is first necessary to identify your eligible taxable income. Then, it can use the taxable income to calculate your average tax rate. Finally, the effective tax rate describes the average rate you will pay on taxes.

income tax calculator

Calculating Your Tax Credit

Unlike deductions and adjustments, which are applied to your income, tax credits are applied directly to your tax liability, meaning the amount of taxes you owe. Some credits are refundable. Taxpayers can reduce their tax burden – and the amount of taxes they owe – by taking deductions and credits.

Calculating your Tax Deduction

Each deduction you claim can lower the amount of taxes you owe, leading to a lower tax bill overall. If your itemized deductions are smaller than the standard deduction, the PriorTax income tax calculator will use the standard deduction. Unfortunately, the standard deduction also does not allow for many itemized deductions, like state and local income taxes, business expenses, home mortgage interest, real estate taxes, etc.

Deductions for State and Local Taxes Paid, known as the SALT deduction, allows taxpayers to deduct up to $10,000 in the form of any property taxes paid by state and local governments, in addition to any income taxes paid by states or their sales taxes. If a taxpayer makes more than the amount allowed by the standard deduction, one must pay a higher amount under the AMT or the standard income taxes.

How PriorTax Income Tax Calculator Works

To begin using the income tax calculator, type your yearly salary into the salary box and steadily work through the rest. Once you complete the steps and are confident, you have entered all of the accurate information, hit the “Submit” button, which will show the breakdown of your taxes. Once you click the button, you will see an itemized breakdown of your tax payments for each year and a detail of those payments. PriorTax income tax calculator is based on the information you provide about your filing status, income, retirement contributions, withholding, deductions, and dependents.

Our income tax calculator accurately estimates the current year’s average tax rate as the federal income tax liability divided by total gross income. In addition, PriorTax income tax calculator automatically determines if standard or itemized deductions (based on your inputs) would produce more considerable tax savings and uses the larger of these two values in the estimated computation of taxes owed or due.

You can learn more about the thresholds and rates used by our income tax calculator. You may also be eligible to write off other items, like student loan interest or half your self-employment taxes, as you prepare your income tax return, effectively reducing your taxable income.

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Category: Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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How to eFile Back Taxes

Posted by admin on December 1, 2022
Last modified: February 13, 2023

Haven’t Filed Your Previous Years Taxes Yet?

Have you not filed your previous years tax or file your tax from last year? Don’t worry. PriorTax can help you file a return for any prior year. You may even e-File your previous 3 years taxes online with PriorTax. Then, reach out to our Tax Service Professionals to guide you through the back taxes filing steps.

There can be many reasons as to why someone might not file their taxes. Maybe you were unaware that you needed to, maybe you couldn’t afford the tax bill, or perhaps other things in life got in the way. Whatever the case maybe, it’s important to file back taxes as soon as possible after the deadline has passed.

In some cases, it may be because they owe a tax bill that they can’t afford to pay. But skipping out on filing your tax altogether will only make matters worse, as the IRS will charge you interest and penalties for each month you’re late. So instead of avoiding filing your return, it’s best to contact the IRS and work out a payment plan that you can afford.

how to file pervious years taxes

How to File Previous Years Tax and What you should do if you didn’t file last year tax?

It’s not too late to file your taxes from last year. You can still do the right thing and submit your return as soon as possible. Keep in mind that you will need all the required documents for the tax year you are filing before you begin. And, if you’re missing some information, the IRS may be able to help. They maintain records of all returns filed in the past 10 years. You can request a transcript of a previous tax year by filling out Tax Form 4506-T Request for Transcript of Tax Return. However, for filing previous 3 years taxes you may e-File back taxes with us with the help of PriorTax Tax Service Professionals.

The IRS may file a substitute tax return if you have not filed a tax return. However, they will not be as concerned with getting all your deductions and credits as you would be. This could result in a smaller refund than you deserve.

You might not get your refund at all. There’s no punishment for not filing taxes early, but you only have three years from the deadline to submit your return. Otherwise, you could lose your refund entirely.

You also need to ensure your IRS tax forms (and instructions) are correct. Verify that all of your forms are for the year you are filing.

If you must file a prior-year return, the previous years taxes are listed on the main menu by tax year. In most cases, you may be able to do so retrospectively, as long as you did not file your back taxes return. If you are filing previous taxes just for that tax, you can just file Form 5329.

To file previous years taxes return with back taxes, you need your W-2s or 1099 forms that you received in those tax years to report your income. Whenever you file previous years taxes returns, you will need any forms showing your income from the previous tax year for which you are filing taxes. You may have to print out the tax forms and mail them to the address listed on your 1040 instructions for the tax year you are filing. But if you are filing previous 3 years taxes, you may e-File any back taxes with us with the help of PriorTax Tax Service Professionals.

PriorTax can help you E-File a previous years tax return.

Do you need help on how to file previous years tax? PriorTax can make it easy for you. We can complete a return for up to three years after it was due. Unfortunately, the IRS and states do not allow electronic filing for prior year returns, so you will need to print and mail your return once you have finished it.

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Category: Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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