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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2024 Tax Changes May Generate Better Tax Refunds

Posted by admin on December 21, 2023
Last modified: December 21, 2023

In the upcoming year of 2024 tax filing, prepare for a pleasant surprise as significant tax modifications are set to take effect. Brace yourself for potential financial gain, as your paycheck has the potential to grow generously if you find yourself in a lower tax bracket.

In a recent declaration, the IRS unveiled various significant modifications to the tax code. These alterations can potentially affect the amount of tax deducted from your earnings, causing potential implications for specific individuals.

In anticipation of the upcoming year, 2024 tax filing promises adjustments to the federal income tax brackets as well as an increase in the standard deduction. This significant modification is a direct response to the persistently soaring inflation that has kept the prices at an elevated level throughout the entirety of the current year.

Every year, the IRS implements modifications to the tax code as a means to accommodate inflation and prevent the occurrence of “tax bracket creep.” This phenomenon has the potential to push individuals into higher tax brackets despite the impact inflation has on their wages.

In the year 2024, it is possible that your chances of moving up to a higher tax bracket due to increased income could be mitigated by incorporating inflation into the tax code. It could result in a drop to a lower tax bracket. If your annual income remains steady from 2023 to 2024, you could see a slight increase in your take-home pay each payday.

How Changes in 2024 Tax Code May Affect Your Tax Refund

If the IRS increases federal income tax brackets, individuals may find themselves in a lower tax bracket compared to the previous year, especially if their income remains unchanged.

In 2023, let’s say you earned $47,000 and found yourself in the 22% tax bracket. However, fast forward to 2024; if your income stays the same at $47,000, you’ll now find yourself in the 12% bracket. This change in tax bracket implies that next year, you’ll be liable for a reduced amount of federal tax and will see a smaller deduction from your paycheck.

In the upcoming year of 2024, if your income surpasses that of 2023, the extent to which your earnings have grown will dictate your position. There exists the possibility that even with the recent alterations, you might still find yourself fitting into a lower tax bracket.

Regardless of the situation, it is crucial to acknowledge that in the current state of lingering inflation, the impact of high prices is being felt in various ways. Thus, even if one transitions into a lower tax bracket and receives a slightly larger paycheck in the upcoming year, inflation has already eroded the value of expenses for basic necessities such as housing, transportation, and groceries.

2024 New Income Tax Brackets

When it comes to calculating the amount of taxes you owe in a specific tax year, your federal income tax bracket plays a significant role. This bracket determines the percentage of your income that will be taxed, excluding any standard or itemized deductions.

2024 tax filing

2024 New Standard Tax Deduction

In the upcoming year of 2024, a notable change has been made to the standard tax deduction for single filers. This adjustment has resulted in an increase of $750 compared to the previous year, bringing the tax deduction to a total of $14,600. Similarly, married individuals who file jointly will also experience a change in their standard deduction for the upcoming tax season.

2024 standard tax deduction

When it comes to tax returns, many individuals opt for the standard deduction, which effectively lowers their taxable income. This is especially true for those who earn wages from a single employer as a W-2 employee, as it often allows them to maximize their tax refund. However, itemizing deductions may be a more suitable approach for self-employed individuals or those with particular deductions in mind.

Other Beneficent 2024 Tax Filing Updated

Starting next year, there will be a range of tax adjustments that have the potential to boost your monthly income. Those who are beneficiaries of Social Security will be pleased to know that a 3.2% cost-of-living adjustment is slated to take place in 2024. Furthermore, due to the fortuitous timing of New Year’s Day falling on a holiday, recipients can anticipate their first augmented SSI payment right around the end of December.

To assist taxpayers in maximizing their deductions and credits, the IRS unveiled many updates and enhancements for the upcoming year of 2024. Among these revisions are:

  • An amplified cap for the Earned Income Tax Credit.
  • Refinements to the gift tax exclusion.
  • An expansion of the foreign earned income exclusion.

PriorTax free Dedicated Tax Professional will keep you up to date and walk you through navigating through 2024 tax filing for your maximum tax refund from start to finish.

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Category: Tax Deductions and Credits, Tax for Business, Tax News, Tax Tips and Tricks, Tax Year 2023
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2024 Tax Filing

Posted by admin on December 14, 2023
Last modified: December 14, 2023

In anticipation of the upcoming 2024 tax season, it is crucial to proactively prepare for any potential alterations that could affect your tax filing process. Whether you are a seasoned tax filer or venturing into the world of tax filing for the first time, navigating the tax season can be quite daunting.

To ensure a smooth and stress-free experience for the upcoming tax season in 2024, we have curated this indispensable handbook. It will equip you with the necessary information to accurately and efficiently file your tax returns for the year 2023.

2023 Tax Filing Important Dates and Deadlines 

Marking the beginning of the 2024 tax cycle, January 23, 2024, signifies the commencement of the official new tax season.

If the tax deadline is approaching and you cannot file your taxes, it is crucial to take the necessary steps to request an extension. One way to do this is by submitting IRS Form 4868, which is known as the Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

Please be aware that while this affords you extra time for tax filing purposes, it does not grant you an extension for tax payment. Should you be unable to settle your taxes in full by April 15, it is crucial to establish a payment plan with the IRS to prevent any detrimental consequences, including wage garnishment or the imposition of a tax lien.

2024 tax filing

2024 Tax Law Changes and Updates

The upcoming 2023 tax return brings numerous modifications and revisions that might affect your financial situation. Among these alterations, the elevated standard tax deduction is a prominent highlight, as it undergoes regular adjustments to accommodate inflation rates. Individuals filing as single will witness a noteworthy increase of $900, resulting in a new standard deduction of $13,850.

Married individuals filing jointly can take advantage of a higher standard tax deduction for the 2023 tax year. This year, their standard deduction will see a significant increase of $1,800 compared to the previous year, totaling a generous $27,700.

Apart from the rise in the standard deduction, a few other factors could potentially influence your tax situation.

2024 Child Tax Credit

In the upcoming tax year of 2023, the Child Tax Credit will revert to its pre-COVID regulations, just as it did in the previous year of 2022. Consequently, the tax credit will no longer be entirely refundable, only allowing for a refund of up to $1,600.

To be eligible for the full credit, individuals must have a modified adjusted gross income (MAGI) equal to or less than $200,000 ($400,000 or less for those who are married and filing jointly).

2024 Income Tax Credit

In 2024, individuals filing taxes for the 2023 tax year can avail of the Earned Income Tax Credit (EITC), which ranges from $600 to $7,430. The amount eligible for this credit is determined by income level, number of dependents, and tax filing status. If individuals do not have qualifying children, they must be between the ages of 25 and 65 to claim the EITC.

Number of Qualifying Children and Maximum Credit Amount:

  • $600 Max Tax Credit with 0 Children
  • $3,995 Max Tax Credit with 1 Child
  • $6,604 Max Tax Credit with 2 Children
  • $7,430 Max Tax Credit with 3+ Children

2024 Annual Gift Tax

In the upcoming year of 2023, individuals can take advantage of the 2024 annual gift tax deduction, allowing them to gift up to $17,000 ($34,000 if married) without incurring any taxes.

Health Savings Account (HSA) in 2024

In the upcoming tax year of 2023, individuals are granted the opportunity to contribute to their Health Savings Account (HAS) up to a maximum of $3,850. This equates to a $200 increase compared to the previous year. For those who have chosen family coverage, the contribution limit is set at $7,750.

The benefits of HSAs are threefold when it comes to taxes:

  1. Individuals can deduct 100% of their contributions from their tax burden.
  2. Any interest earned within the HSA remains tax-deferred unless it is used for non-medical expenses.
  3. When funds are withdrawn for eligible medical expenses, they are entirely tax-free.

2024 IRA & 410(k) Contributions Tax Deduction 

In the upcoming year of 2023, individuals who contribute to their 401(k) plans will be thrilled to learn that the annual deferral limits have experienced a significant jump, with up to $2,000 to increase from 2022.

The contribution limits for taxpayers aged 50 or above have been revised, allowing them to increase their investments in traditional and safe harbor 401(k) plans. Specifically, individuals in this age group can now contribute an extra $7,500, a notable increase from the previous year’s limit of $6,500.

In the realm of individual retirement accounts, specifically the traditional and Roth IRA, it is important to note the contribution limit for the year 2023. This limit stands at $6,500, although individuals who have reached the age of 50 or older are allowed to contribute up to $7,500. However, it is crucial to be aware of potential adjustments to your contribution amount in the case of a Roth IRA. These adjustments are dependent on your modified adjusted gross income (MAGI)

2024 Student Loan Interest Tax Deduction

With the resumption of student loan payments and the return of accruing interest, there is a potential opportunity to claim a deduction of up to $2,500 on your 2023 tax return. To be eligible for this deduction, individuals must have a MAGI of less than $90,000 (single, qualifying widow(er), or head of household) or $180,000 if they are married and filing jointly.

Step-by-Step Guide to Filing Taxes in 2024

Once you have assembled the essential paperwork, it is crucial to adhere to the comprehensive tax filing guide provided below. Following these step-by-step instructions will ensure a seamless and accurate procedure.

Opt for a tax preparation approach like utilizing tax preparation software or seeking advice from a tax professional. Should you opt for the traditional paper tax return, it is important to remember that the processing time may extend up to six months. E-filing is strongly recommended whenever feasible.

To ensure the accuracy and completeness of your tax return, it is important to input all relevant information into PriorTax. Remember to sign and date your return and attach any necessary tax documents, forms, and schedules if filing by mail. Remember, the deadline to submit your tax return is April 15.

When managing your taxes, don’t hesitate to contact the experienced Tax Professionals at PriorTax. PriorTax understands the importance of affordable tax preparation for individuals and small business owners, offering services tailored to your specific needs. Additionally, we are dedicated to assisting you in resolving any tax debt issues you may face. Take the first step towards financial peace of mind by connecting with your dedicated Tax Professional, free of charge.

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Category: Tax Deductions and Credits, Tax News, Tax Year 2023
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2023 Year End Charitable Donations for Tax Filing

Posted by admin on December 7, 2023
Last modified: December 7, 2023

Planning your 2023 Year End Charitable Donations for Tax Filing

Towards the year’s close, many individuals are looking towards charitable donations as part of their financial strategy. From November to December, philanthropy takes center stage as people use this time to make donations that could prove essential for charities reliant on contributions from individual donors. The two months leading up to the end of the year is typically referred to as “the giving season,” and it provides a valuable opportunity for those wishing to give back.

The end of the year is often a time of generosity and showing appreciation for all that has been bestowed upon us. A survey conducted by Fidelity reveals that three out of five people plan to participate in philanthropic activities before the year’s end. Charitable giving is one such avenue for Americans to assist those with less luck.

To ensure the charity you select is authentic, verify it has obtained 501(c)(3) status from the Internal Revenue Service. This information can easily be found by consulting the IRS’s database of tax-exempt organizations or obtaining help from a PriorTax Tax Professional. In addition, many nonprofits will advertise their 501(c)(3) standing on their website or other publications.

charitable donation

Increasing Necessity for Charitable Donations

This year, the deficit is very significant due to the ongoing economic repercussions of COVID-19. Consequently, many unemployed individuals have sought assistance from food banks and other charitable organizations. Simultaneously, due to social distancing regulations, revenue has diminished for various entities that typically rely on in-person contributions, including faith groups and art organizations.

Making charitable donations may be a way to lessen your tax responsibilities, but there are alterations in the tax code that affect how these contributions are factored in. Here’s an overview of what you need to understand about the charitable donations tax deduction.

Charitable Donations in 2023

The Tax Cuts and Jobs Act of 2017 has enabled generous individuals to reduce their taxable income in 2018 through 2025 potentially. For cash donations, donors may be able to subtract up to 60% of their adjusted gross income (AGI) when giving to certain organizations. Additionally, those donating stock can enjoy a reduction of 30% off their AGI for such contributions.

Charitable donations by individuals are not limited to nonoperating private foundations; they can also include public charities and other private foundations. Should the qualifying cash contributions exceed the 60% ceiling for the given tax year of the donation, it may be carried forward to future years for up to five years.

Regarding charitable giving, it’s not only about the act of giving but also considering how that action fits into your tax strategy. As a reminder, the Internal Revenue Service (IRS) usually releases its annual inflation adjustments in the late fall for the upcoming year. It’s important to keep this information in mind when planning out your donations and other taxation decisions.

As the end of the year approaches, it’s a great opportunity for individuals to consider their tax situation and charitable giving. It is important to properly organize your charitable giving in order to maximize tax savings. Here are a few steps to consider when doing so:

Secure your Receipts

For those looking to get the tax deduction associated with charitable donations, it is important to make sure that you possess a receipt for all contributions. This applies no matter which form of donation you choose on December 31st, whether by cash, check, credit card, or even non-cash items such as clothing and furniture. Unfortunately, any kind of anonymous giving like coins thrown into a collection bucket does not qualify. It is essential to have proof to be able to use the donation as an offset on your taxes when filing with the IRS.

Check the charity’s policy before you load up the trunk.

When looking at eligible donations for tax deductions, the condition of the items is a significant element. The IRS does not indicate any specific prices related to the quality of the items, but charities do. Additionally, there are other regulations stipulated by the IRS concerning such donations. During the 2020 pandemic, many organizations ceased accepting physical goods as gifts; however, some have restarted retaking them. Be sure to confirm with your desired charity before delivering any goods.

Itemize your Charitable Donations for Tax Filing 

The government’s tax code makes a significant change for 2023, with the cash deduction rising to 60% from 50% while also increasing the standard deduction for married couples filing jointly to a total of $27,700. However, itemizing these deductions has become more difficult, and limits have been placed on how much homeowners can deduct in terms of real estate taxes and mortgage interest.

The combined total deduction rate for income, state, and property taxes has a maximum of $10,000. Because of these changes, it is now more difficult to surpass the standard deduction threshold in any given year through charitable contributions alone. Sax revealed that couples who take full advantage of the $10,000 state and local tax deductions and lack mortgage interest would have to donate at least $15,900 to itemize their deductions.

When filing your taxes, you can only claim a charitable donation deduction if you decide to itemize. To qualify for itemizing, add up all of your deductible expenses and make sure they exceed the standard deduction set by the IRS for 2023.

Taxpayers seeking to itemize their deductions in 2024 should note the following amounts: single taxpayers and married couples filing separately can deduct up to $13,850; those who file as head of household have a threshold of $20,800, while married couples filing jointly and surviving spouses may itemize up to $27,700.

When it comes to itemizing deductions for the 2024 tax year, the specifics are as follows: those who file single or married filing separately must have an amount of more than $14,600; meanwhile, head of household taxpayers must surpass a figure of $21,900; lastly, married filing jointly and surviving spouses need to be above $29,200.

Bunching Donations for Maximizing your Tax Refund

He advised those who were philanthropic and had the means to do so to bunch their donations. This would mean combining two years’ worth of charity contributions through money or stock giving. Doing this could help the donor slip into a lower tax bracket.

Qualified Charitable Distributions (QCD).

Retirees who don’t need their IRA funds can take advantage of the Individual Retirement Account (IRA) Charitable Rollover, which allows them to make tax-free contributions of up to $100,000 directly from their IRAs. This is a qualified charitable distribution and simplifies the process for those interested in donating to charities.

Whenever your need advise with Charitable Donations for Tax filing, find your dedicated tax professionals at PriorTax to walk you trough from start to finish for free.

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Category: Tax Deductions and Credits, Tax for Business, Tax Tips and Tricks, Tax Year 2023
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1099-K for TPSO Reporting Delay For Tax Year 2023

Posted by admin on November 23, 2023
Last modified: November 23, 2023

IRS Announced 1099-K Form for TPSO Reporting Delay For Tax Year 2023

The IRS has announced a postponement of Form 1099-K reporting requirements for third-party platforms in 2023. Instead, the current threshold of $5,000 will be implemented in 2024 as a gradual transition period.

For the upcoming tax season, the IRS has pushed back its initial reporting threshold for third-party settlement organizations (TPSOs) to take effect. The American Rescue Plan 2021 requires that transactions over $600 in Tax Year 2023 not be reported on IRS Form 1099-K by TPSOs or the payee. This decision affects popular companies such as Venmo and PayPal.

The IRS has ruled that the existing 1099-K reporting threshold for the tax year 2023 will remain the same, being payments of more than $20,000 in total from over 200 individual transactions.

Here are the Details of the 1099-K Form Reporting Delay

To minimize taxpayer misconception and confusion, the IRS issued Notice 2023-74, announcing that the new $600 Form 1099-K reporting threshold for third-party settlement organizations has been postponed until calendar year 2023. The decision was based on an analysis of feedback from taxpayers, tax professionals, as well as payment processors.

To reduce potential confusion, the IRS has declared that 2023 is to be viewed as a transition year regarding the new law. The agency will only require reporting if a taxpayer receives more than $20,000 and they have engaged in more than 200 transactions during that year. This has been put into effect due to the estimated 44 million Forms 1099-K being sent out to unsuspecting taxpayers who may not owe any tax.

In order to ensure stakeholder certainty and help individual taxpayers comprehend the intricacies of the new provision, the IRS is proposing a phase-in for the $600 reporting threshold in 2024. This would involve setting a threshold of $5,000 for tax year 2024 as stipulated by the American Rescue Plan (ARP).

In response to the valuable input of those within the tax community, the IRS is mulling over potential updates to Form 1040 and its associated schedules for 2024. Making changes to this essential form – which serves over 150 million taxpayers annually – requires much consideration and analysis, hence why these changes are planned for 2024 to gain further feedback from stakeholders.

Beginning in 2022, the American Rescue Plan has mandated that any third-party settlement organizations (TPSOs), including digital payment apps and online marketplaces, must report payments of more than $600 for goods and services on a Form 1099-K. This form will be sent to taxpayers and the Internal Revenue Service (IRS) to assist them in correctly completing their tax returns. Prior to this regulation, only transactions that amounted to more than $20,000 through at least 200 sales per annum were required to submit such paperwork.

1099-K

The IRS Temporarily Delayed the New 1099-K Requirement.

When it comes to personal transactions such as presents for a birthday or special occasion, sharing the cost of a car ride or dinner with someone, or paying another person for a household expense, there is no need to file any reports. These payments do not incur taxes and should not be recorded on Form 1099-K.

Though it may seem odd, many individuals who make casual sales of goods and services – like used clothes, furniture, and other household items – might receive a Form 1099-K in the mail, even if these sales produce no taxable income. In fact, it is not uncommon for those selling such goods to take a loss.

The IRS has determined to push back the date for the reporting requirements and set a threshold of $5,000 for 2024 in light of the difficulty in identifying these transactions. They are asking for input on the dollar amount as well as any other aspects on how to focus on taxable trades. In particular, they seek feedback concerning the chosen threshold of $5,000 for the 2024 tax year.

PriorTax understands the importance of properly managing the expansion of information reporting that is to take place due to the new thresholds set for Form 1099-K. In addition, it is vital that both taxpayers and our tax professionals have all the necessary resources to help them understand and comply with these changes. This increased reporting leads to a higher rate of tax compliance.

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Category: Tax and Life Changes, Tax for Business, Tax News, Tax Tips and Tricks, Tax Year 2023
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2024 New Tax Brackets

Posted by admin on November 16, 2023
Last modified: December 21, 2023

Significant Changes for 2024 New Tax Brackets.

The Internal Revenue Service has taken steps to ensure that the new 2024 tax brackets reflect the current consumer price index. This 5.4% upward adjustment is especially notable compared to the 7% increase from last year, one of the most considerable adjustments the IRS has made in recent years. The new limits for 2024 will be set according to this formula and should accurately account for inflation developments in our current economy.

In anticipation of 2024, taxpayers should be aware of new income limits for IRS tax brackets. To account for inflation, these thresholds have been adjusted from previous years, which may provide a much-needed financial break to those filing taxes in 2024. Here’s how to keep up with your bracket.

Year after year, taxpayers are affected by changes to tax brackets and other areas, such as retirement fund contribution limits due to inflation. This variation helps prevent so-called “bracket creep,” which is when a person’s earnings puts them in a higher income tax bracket while their basic standard of living remains unchanged. To combat this situation, annual adjustments are made by the Internal Revenue Service (IRS).

Taxpayers may benefit from the higher thresholds, as more of their taxable income will likely fall into a lower tax bracket. Therefore, these earners can get some respite from taxes when filing their 2024 taxes in early 2025.

New Tax brackets for the 2023 tax year, taxes which are due in 2024

2024 tax filing

The New 2024 Tax Brackets

For tax year 2024, U.S. taxpayers can expect an uptick in their federal income taxes. With seven rates set by the 2017 Tax Cuts and Job Act, people filing either individually or as married couples will see a 5.4% increase in their brackets across each of these bands: 10%, 12%, 22%, 24%, 32%, 35% and 37%.

The New 2024 Tax Brackets for married couples filing jointly

Filing jointly as a married couple in the United States has distinct tax consequences; depending on one’s taxable income, various rates apply. For instance, any income up to $23,200 would be taxed at 10%, while any above $731,200 would see the highest rate of 37%.

When it comes to taxes in the United States, there often needs to be more understanding about how they are calculated. Contrary to popular belief, the highest tax rate an individual may be subject to isn’t applied to every dollar of their income. Instead, progressive tax rates are used, which means that each tax bracket a person falls under will have its applicable rate.

For the 2024 new tax bracket, the federal government has shifted some of taxpayers’ income into lower tax brackets. For instance, single filers with taxable income up to $11,600 will pay 10% in taxes that year – a full $600 more than they would have paid in 2023 when the same bracket was limited to the first $11,000.

2024 New Tax Brackets for Single Filers

In order to keep up with inflation, U.S. tax law dictates that income limits for each bracket must increase annually. As of this year, those limits have gone up by 5.4%.

The marginal rate is the maximum taxation that you are liable for. However what counts is the effective tax rate, which encompasses all of the taxes imposed on different parts of one’s income. Essentially, this amount reflects a person’s actual rate of taxation.

The new 2024 tax brackets for head-of-household filers

For head-of-household filers, their 2024 tax brackets have been established. Individuals filing taxes as a head of household will face a 10% rate on their first $16,550 taxable income. Any income above that threshold will be taxed at 37%, beginning at $609,350.

2024 New Tax Standard Deduction

As of 2024, taxpayers will see an increase in their standard deduction, according to a report from IRS. Specifically, married couples filing jointly will see an extra $1,500 – bringing their total up to $29,200. This is a boost of 5.4%.

For the upcoming tax season, taxpayers who are unmarried and filing separately will receive a standard deduction of $14,600 – an improvement of $750 from last year. Meanwhile, heads of households can count on a boost in their standard deduction to $21,900 – up by $1,100 compared to 2019 taxes.

How to Determine Your New 2024 Tax Bracket

When it comes to taxation, understanding your marginal tax bracket is crucial. You’ll need to calculate your highest taxable income as accurately as possible to do this.

Consider a married couple bringing in an annual gross income of $150,000. After subtracting the 2024 standard deduction, they are left with taxable income worth $120,800. Therefore, the marginal tax rate applicable to them would be 22%.

However, their effective tax rate is much lower:

When it comes to taxes, individuals get a break when it pertains to their first $23,200 of income. While their effective tax rate is significantly lower than average, people who make between $23,200 and $94,300 will still be expected to pay 12%, amassing a total of $8,532 in taxes. Those with incomes ranging from $94,300 to $120,800 would be lucky enough to enjoy a much lower effective tax rate. For this bracket, taxes amount to 22%, which adds up to $5,830. Together, their federal income taxes would come to $16,682 – an effective rate of 14%.

Higher FSA, HSA Limits in 2024

In an effort to help taxpayers cover medical expenses, new regulations have been issued by the IRS, increasing limits for tax-advantaged accounts. Such accounts provide people with financial assistance when paying for related costs.

The Internal Revenue Service announced that in 2024, the limit for Flexible Spending Accounts (FSAs) will be increased to $3,200 from the current level of $3,050. These accounts allow individuals to set aside pre-tax dollars, which can then be used to pay for short-term health care expenses.

IRS recently announced modified limits for contributions to Health Savings Accounts (HSAs) for those with a high-deductible health care plan. Single taxpayers will be able to contribute up to $4,150 in 2024 – an increase of 7.8% from present limits. Similarly, families now have a contribution limit of $8,300 – a rise of 7.1%.

Individuals aged 55 and over can add an extra $1,000 to their health savings accounts (HSAs), a figure that remains unchanged from the previous year.

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Category: Tax and Life Changes, Tax Deadlines, Tax Deductions and Credits, Tax for Business, Tax Tips and Tricks, Tax Year 2023
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Disaster Area Tax Extension Deadline on October 16

Posted by admin on September 28, 2023
Last modified: September 28, 2023

October 16 2023 tax extension deadline has moved from May 15 2023 for disaster area taxpayers in California, Georgia and Alabama.

The IRS has recently announced an tax extension deadline for disaster-area taxpayers in certain parts of California, Georgia and Alabama. Taxpayers from those areas have until October 16, 2023, to make tax returns and payments. This deadline was previously set for the 15th of the month of April.

Millions of taxpayers take advantage of the opportunity to request an extension from the IRS every April. By submitting Form 4868, these individuals have bought themselves six additional months to complete their 2022 tax returns before the due date.

When it comes to the tax extension deadline, you should be aware of a few things. While filing a tax extension may grant you more time to submit your return, it does not give you an additional window to pay your taxes – they were still due in April. Consequently, make sure you file by October 16 at the latest or else you could face additional charges and fees.

tax extension deadline

Automatic Tax Extension Deadline to October 16 for disaster areas

Earlier this year, IRS has declared an extension to the tax filing deadline for individuals and businesses in damaged areas of California, Georgia and Alabama. This change allows citizens in these regions until October 16 of, 2023 to take care of their federal taxes, which was previously set for May 15.

For areas hit by disasters, relief is being provided to those designated by FEMA in three states. Depending on each disaster, there are four distinct declarations with their respective start dates and other details listed on IRS’s Tax Relief in Disaster Situations page. This document contains a comprehensive list of localities eligible for this assistance as well as pertinent information specific to these situations. (https://www.irs.gov/newsroom/tax-relief-in-disaster-situations)

Recent relief has delayed certain tax filing and payment deadlines until October 16 for most calendar-year 2022 individual and business returns, including those for individual income tax, various business returns, and returns of tax-exempt organizations. By postponing these respective due dates from their original dates of April 18, March 15, and May 15, respectively, taxpayers have been given more time to submit relevant documentation.

The October 16 deadline has been extended for taxpayers wishing to make 2022 contributions to their IRAs and health savings accounts.


As a bonus, those employed as farmers who usually submit their tax returns on March 1 will now have an extended period of time to complete this task.

Those who owe estimated taxes for 2022’s fourth quarter are in luck, as they now have until October 16 to make this payment, originally due on January 17, 2023. This means that individuals can avoid making this full payment earlier and instead include it when filing their return before October 16.

By October 16, 2023, estimated tax payments due on April 18, June 15 and September 15 must be paid. Quarterly payroll and excise tax returns that would usually be due on January 31, April 30, and July 31 are also required to meet this deadline.

When you contact your free dedicated tax professional, taxpayers in areas affected by natural disasters can find information regarding various returns, payments, and tax-related actions that are eligible for additional time. Extension paperwork is not required to be filed, nor do they need to call IRS to receive an extended period of time.

Individuals with an address of record in an affected disaster area will get filing and penalty relief from the IRS automatically. They don’t need to call for this assistance. That being said, any person who gets a late tax filing or payment penalty notice from the IRS with due dates inside the postponement period should contact them using details on the notice to request abatement of the penalty.

The IRS is taking extra measures to help those affected by the disaster who may not necessarily live within the affected area. However, they still need access to their necessary records during the postponement period. Those taxpayers can contact PriorTax’s free dedicated tax professionals for support and assistance. This includes individuals or organizations that are affiliated with a government or philanthropic organization and helping with disaster relief activities.

Victims of a federally declared disaster area who sustained uninsured or unsalvaged losses can select to declare such damages on either the present year’s return or the preceding year’s return. Find your dedicated tax professional for more information and to walk you through the process from start to finish.

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Category: Tax Deadlines, Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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Penalty, Consequences and Important Next Steps from Missing the Tax Extension Deadline

Posted by admin on September 21, 2023
Last modified: September 22, 2023

Do you need to catch up on the annual tax filing deadline? What are the penalty from missing the tax extension deadline, repercussions, and what should be done next? Tax Day is an expected event that occurs every year, generally on April 15. But even when you know it’s coming, making sure your income tax return is ready in time can be difficult.

Do you need more time to organize all of your income tax documents? Extensions can be the perfect tool to give you some extra days. In this article, we’ll explain the fundamentals so you can get everything sorted out for your return.

Penalty for Missing the Tax Deadline?

Failing to submit a tax return or extension by the specified deadline can result in the IRS imposing a failure-to-file penalty. This penalty is 5% of your total amount of unpaid taxes for every month (or partial month) that goes by without you filing. In extreme cases, this fee can reach as high as 25% of your total taxes owed.

Suppose you have an amount of $10,000 in taxes to pay. The IRS may impose a penalty of $500 per month should you fail to file your taxes on time.

Filing a late tax return without expecting to owe penalties may not incur a penalty from the IRS, but should you think that you might have to pay, consulting a tax professional is wise. In this situation, you will likely face interest and penalties as consequences of delayed filing.

tax extension deadline

Tax Extension Deadline for Filing 2022 Taxes

There are two key dates to consider when considering the tax extension deadline. April 18, 2023, is a date that all taxpayers should mark on their calendars – it’s both the original filing deadline as well as the deadline for submitting an extension request. By filing for an extension, you will have more time to complete your taxes, but any taxes owed still need to be paid by April 18.

The October 16, 2023, tax extension deadline is quickly approaching. But what would you do if you missed the April or October deadline? Can I get more time? To help make sure you’re well informed, contact your dedicated tax professional from PriorTax for free.

What will Happen Missing the Tax Extension Deadline?

Regarding punishment for not making the April tax filing and payment deadline, you may be subject to two different fees: the failure to file a penalty and the failure to pay the fee (in cases where money is owed). Fortunately, those who submitted an extension and followed through with their taxes by their extended deadline are exempt from the failure to file a penalty.

For those of you who let the October deadline come and go without filing, it will result in failure to file penalties that have taken effect as of the original filing date (generally October 15). This could also mean potential failure to pay penalties stretching back to April 15, typically the payment due date.

To help avoid accumulating additional fees or interest, filing a tax return as soon as the October 16, 2023 deadline passes is highly recommended. The sooner you submit it, the better to minimize any extra costs.

Getting Even More Time after the October Tax Extention Deadline?

The October 16, 2023, tax filing extension deadline is firm – no exceptions. So, for anyone who needs to file their taxes for the 2022 tax year, this is the final opportunity to do so without incurring failure to file interest and penalties Charges.

Do you need assistance paying your tax bill? The IRS offers a payment plan option, which allows you to break up the cost into smaller payments. Find your dedicted tax professional for free to learn more about on boarding on an installment agreement with the IRS and get the information you need to stay on top of your taxes.

Tax Installment Agreement

In the event that you are unable to pay your taxes all at once, there is a way to spread it out over time. An installment agreement with the IRS allows individuals to make payments on their tax debt in manageable increments. This type of plan also reduces the failure-to-pay penalty by half, though the IRS does require an administrative fee for establishing such an arrangement.

A successful installment agreement may be easily achieved through the IRS Online Payment Agreement tool, though some instances can require added proof of income and assets. When this is the case, the Internal Revenue Service will limit expenses to a level that is considered reasonable when determining how much can be afforded every month.

Request Your Prior Year Tax Refunds Today Before You Lose Them

Don’t let your tax refund slip away. Even though getting a refund after the due date is still possible, you want to make sure you get all the money.

You have a limited amount of time to request a refund from your tax return, as mandated by IRS regulations. Generally, it is three years from when your taxes are due; for instance, say you still need to file your 2022 return by April 18, 2023, then in 2026, you would no longer be eligible for any tax refunds. After this deadline has passed, it is considered that you have given up on claiming back what belongs to you, and instead, it goes to belonging to U.S. Treasury.

Even though you may not have a tax debt, the IRS still requires you to file a return. Missing documents from prior years can be obtained from your employer, bank, or other third-party sources such as an educational institution or loan provider. Get in touch with a dedicated tax professional from PriorTax for free to walk you through this process from start to finish.

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Category: Tax Deadlines, Tax News, Tax Tips and Tricks, Taxes for Prior Years
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October Tax Extension 2023

Posted by admin on September 14, 2023
Last modified: September 14, 2023

What You Need to Know Before the October 16 tax extension deadline. Tax extension could give you extra time for filing but not for paying. Make sure you file by the October 16th date to avoid any additional charges.

Prior to tax day, the IRS receives millions of extension requests by way of Form 4868. While this does give filers an additional six months to submit their 2022 return, that extra time doesn’t make paying taxes any easier. So be sure you’re still on top of your payment plan!

It’s important to note that even though you may have until October 15 to file your taxes, the payment is still due by April. To better understand how the tax extension deadline works and other related deadlines, here is more info to consider.

It’s no surprise that with tax day quickly approaching, many people struggle to get their paperwork together in time. Last year, the IRS reported that 19 million taxpayers had requested an extension for filing their income tax returns, and the number is expected to be similar this year.

With the October 16, 2023, deadline looming for filing your paperwork, you may have some reprieve from the pressure. Nevertheless, it is important to remember that this extension only gives additional time for filing – less time to pay. Therefore, estimate how much tax you owe and submit it as soon as possible in order to prevent extra fees and interest due to late payments.

October tax extension

What is a tax extension?

Do you need more time to file your federal income taxes? A tax extension may be the answer. When approved, a tax extension can help prevent penalties for late filing with the IRS.

Submitting Form 4868 to the IRS before April 18, 2023, provides an extension for filing taxes that year until October 16. Submitting a payment for any estimated taxes owed is important to avoid additional penalties and interest when requesting an extension. This can be done both online and by mail.

Which states have federal tax deadline extensions?

Due to FEMA-declared natural disasters, certain states have received deadline extensions for federal tax filing and payments. Specifically, this includes individuals’ income taxes, business taxes, and quarterly tax filings. So, what are the affected states?

The IRS has identified certain counties that have been affected by the disaster, and only those individuals living in and businesses established in these areas may be eligible for relief. Generally speaking, this requirement must be fulfilled in order to receive this assistance.

In the event that you were incapable of complying with the tax-filing deadline due to your preparer living in an area affected by disaster or documents for completion of your return being located in said region, You may be eligible for IRS-recognized relief. For more information, visit the IRS dedicated page on disaster aid.

  • Alabama (October 16, 2023)
  • California (October 16, 2023)
  • Georgia (October 16, 2023)
  • Hawaii (October 21, 2024)

Does the tax extension deadline apply to me?

Do the tax extension period apply to you? By submitting IRS Form 4868 before the original filing deadline, you are eligible for a six-month extension until October 16, 2023, to file your taxes. Even though extra time has been provided, paying at least 90% of any tax owed on or before the regular date is important. Otherwise, the IRS could punish you with late payment penalties and interest.

Did you miss the April 18 tax return deadline? You may face both failure-to-file and failure-to-pay penalties, plus interest from the IRS. Not filing for a tax extension before this date could mean your taxes are definitely delayed, according to the agency.

Have I already missed the deadline for the tax extension application?

After April 18, 2023, deadline for tax extension requests has passed and you still haven’t filed your taxes, the IRS advises that you do so as soon as possible in order to avoid penalties and interest that begin to accumulate right away. Furthermore, those struggling to pay their bill can consider various payment plans provided by the agency. There is even a chance of penalty abatement for first-time offenders who meet several criteria.

If I miss paying the taxes by the October tax extension deadline?

Failure to meet the October tax extension deadline comes with consequences. Should you miss it after requesting an extension, then the following will occur:

It’s expensive to delay paying your taxes. Even with a tax extension, the payment due date is April 18th – and interest accrues right away. That means allowing your taxes to go unpaid until October could cost an exorbitant extra fee.

Didn’t manage to meet the April deadline for paying your taxes this year? The IRS late-payment penalty may be higher than usual as a result. Generally, it can be anywhere from 0.5% to 25% of the monthly unpaid amount until the full sum is paid off.

The IRS may impose a late-filing penalty of 5% for every month or partial month your taxes are not submitted on time. This amount can accumulate as much as 25% of the overall amount due to them.

How to file a tax extension

Before the tax filing deadline, you can extend the time to file by submitting Form 4868 electronically or by mail. Alternatively, paying an estimate of what you owe to the IRS with your debit/credit card, IRS Direct Pay, or EFTPS and marking it as a payment for an extension will eliminate any paperwork.

Are you considering a tax extension? PriorTax can assist you from start to finish with filing Form 4868. Contact your dedicated tax professional and explore submitting the form online for free. Upon completing with our free dedicated tax professional, you will receive an email confirmation from PriorTax and the IRS.

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Category: Tax Deadlines, Tax for Business, Tax Tips and Tricks, Taxes for Prior Years
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Four Top Tips on Getting More Tax Refund

Posted by admin on August 24, 2023
Last modified: August 25, 2023

How can you maximize your tax refund this year? Are you ready to maximize the tax refund you’ll get this tax season? Taking advantage of all available tax breaks is a great way to reduce your liability and, as a result, make the most of your return. Here are four tips to consider when seeking a larger refund – remember that for more long-term financial planning, consulting with an experienced advisor should be your top priority.

Let’s Maximize Your Tax Refund.

Are you hoping to get the most out of your tax return? Although it may be tempting to overpay in taxes, professionals do not advise this. This results in a refund from the government and can mean that your money is going to them instead of you. A better option is to adjust the amount taken out each month so that when tax season arrives, you’re not receiving a large return – allowing you to put the extra cash toward investments or other necessities during the year.

Are you hoping to get a bigger refund at tax time? Here are four actions that can help you maximize the money coming back from your tax return.

maximize tax return

Firstly, Filing Status

Choose Your Tax Filing Status Wisely.

Your filing status can majorly affect the size of your tax refund, both for single and married individuals. For couples that are wed, filing joint taxes is usually the way to go. However, it might be more beneficial to file separately in some instances.

An option to consider when filing taxes is filing separately. This could be beneficial when one or both spouses have a lot of medical or business costs. By doing this, your adjusted gross income can get reduced, and the deductions you can make may increase due to them exceeding a percentage of your income.

When considering your filing status, it is important to look at the potential tax credits you may need to include by filing separately. To fully understand which option could be more beneficial for you, do some calculations or use a free tax return calculator to gain an estimate.

For those who are unmarried, it is worthwhile to investigate whether you are eligible for head of a household standing. Typically, this requires that more than half of the upkeep expenses for your home and applicable dependents have been shouldered by you in twelve months.

When it comes to tax season, the existence of a dependent can hugely impact your return. This could be a child or an elderly parent – anyone you support financially. Filing as head of household is worth considering since doing so grants you access to more generous deductions than single filers receive.

Second, Tax Credits

Maximize your tax refund with tax credits. Tax credits are a great way to decrease the overall amount of taxes owed to the IRS. On a dollar-for-dollar basis, your tax bill can be significantly lowered when these credits are utilized. For instance, say you owe $6,000 in taxes but then take advantage of a credit worth $1,000 – that reduces your total liability to just $5,000.

Common tax credits include:

  • Tax credits can be a great way to reduce taxes owed. A popular type of credit is the Earned Income Tax Credit, which allows eligible tax filers to receive up to $6,728 for three or more qualifying children in 2021 and $6,935 in 2022.
  • One of the most well-known tax credits is The Child and Dependent Care Tax Credit, which can reimburse up to $3,000 for one dependent or $6,000 for multiple dependents. This credit assists with childcare costs incurred during the year.
  • Taking advantage of tax credits can be a great way to reduce your taxes. One popular option is the Child Tax Credit, which provides up to $2,000 per dependent in 2022 and was worth $3,600 in 2021. Your income will determine how much you may receive from the tax credit.

The amount of tax credits you can claim may be affected by various factors, such as income, filing status, and the presence of dependents. Other considerations for those seeking to use educational-based tax credits include timing and the eligible expenses.

Subsidies and other benefits may be available to those who opt to make certain energy-efficient upgrades in their homes. For instance, the Premium Tax Credit can help cover some expenses associated with purchasing a health care plan through the federal exchange.

Third, Tax Deduction

Tax Write-Offs Should not be Ignored. Although credits often yield a larger tax return than deductions, taking advantage of appropriate deductions is important. Deductions have the impact of reducing the amount of income that is subject to taxation, as opposed to just cutting down on what you owe in taxes.

Filing taxes can be confusing, particularly with the Trump tax plan’s doubling of the standard deduction. Generally, this makes taking the standard deduction the simpler option; however, itemizing may be more beneficial in cases where many deductible expenses are incurred.

The IRS allows you to deduct various costs related to work or other activities. Mileage, lodging, and home office expenses are deductible for self-employed individuals, just as donations to charitable organizations and mortgage interest can be taken off your taxes. Even student loan interest and gambling losses can be deducted – but the amount of each deduction does vary, so it’s important to keep appropriate records like receipts or bank statements to support your claims.

Fourth, the IRA

Putting away funds in a conventional IRA is an excellent way to grow your savings and take advantage of the extra tax benefit. You can contribute to your IRA for the past tax year until the April filing date and be eligible for a full or partial deduction. This kind of deduction goes above the line, permitting you to still claim it even without itemizing.

Regarding your retirement savings, a few tax credits are available that could help reduce your taxable income. One such credit is the Retirement Saver’s Credit, which applies to contributions to both traditional and Roth IRAs. However, your income must meet certain criteria to be eligible for this credit.

Many of us look for good ways to increase tax refunds during the tax season and make every penny count. Knowing which tax benefits you are eligible for can help you achieve that goal. Understanding the available deductions and credits could put more money back into your pocket.

Summary

Maximizing your tax return can be tricky business, but it is made much easier when working with the experts at PriorTax. Team of Free dedicated Tax Professional is knowledgeable and experienced in helping clients get every tax deduction and tax credit they qualify for – often resulting in a larger tax refund! Whether you’re filing as an individual, family, or even a small business owner, PriorTax will provide trustworthy guidance throughout the entire process so that you don’t have to feel overwhelmed while tackling your taxes.

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Category: Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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Are You Receiving a Smaller Tax Refund

Posted by admin on August 17, 2023
Last modified: August 18, 2023

Could There be Unforeseen Instances in Getting a Smaller Tax Refund?

Reach out to one of our dedicated Tax Professionals at PriorTax should you believe the debt is not owed or there is a discrepancy in the amount taken from your refund. A Free dedicated Tax Professional could sort out the difference between your return and the original tax refund when you received a smaller tax refund.

The tax refund I received is less than expected. Why am I getting a smaller tax refund?

Are you concerned about the amount of your smaller tax return refund? We’ll assist you in understanding why the refund from your taxes is less than anticipated.

It is pretty normal for this to occur, often resulting from the IRS utilizing a portion of your refund money to cover any outstanding government debts that are owed.

In many cases, the IRS will use a portion of an individual’s tax refund to cover any unpaid government debts. These could range from overdue federal tax payments to student loan repayments and more. Other examples include past-due child support, outstanding state income taxes, fraudulent unemployment compensation wages or contributions due to a state fund, and SBA loan repayments.

HUD (Department of Housing and Urban Development ) loan repayments
Managing unpaid taxes comes under IRS jurisdiction, while any other debts are handled by the Department of Treasury’s Bureau of Fiscal Services (BFS). You may receive a notice from BFS detailing why your tax refund is less than what you expected should part or all of it be used to settle a debt.

When part or all of your anticipated tax refund is allocated to pay off a debt, BFS will provide notification to clarify the details. This notice will explain the initial refund amount, offset amount (the portion they are taking), and details of the agency that is receiving payment such as its address and phone number.

smaller tax refund

But, Did You Get More in Tax Refund instead of less?

You May Have Overpaid Withholding Taxes

Believe it or not, getting money back from the IRS is only sometimes good. That may seem odd, but it’s true. Receiving a refund can have implications that may ultimately cost you more in the end.

Nobody likes giving Uncle Sam a loan without collecting interest, yet this may be the situation you are in with your payroll taxes. Too much is likely being withheld, meaning you could be getting more of your money back. To ensure you’re not missing out, it’s wise to double-check your withholding amounts. That way, you can use the funds how and when you want to – rather than doing a last-minute scramble when tax season comes around.

One way to review your withholding taxes is with an IRS Tax Estimator. You’ll need to have pay stubs and any other paperwork related to income on hand. Once you put in all that information, it can tell you what your tax liability looks like.

Once you obtain results from this estimator, it’s possible to decide whether or not filing a new W-4 form should be submitted to your employer.

One way to guarantee success at tax time is to look into withholding. Doing this makes it possible to ensure the proper amount of taxes are taken out and avoid any unpleasant surprises when filing. Additionally, this can help you decide whether you should change the amount of taxes deducted from each paycheck.

Instead of allowing Uncle Sam to loan you money, make sure your withholding is accurate by periodically checking it. Waiting until the end of the year can lead to over-withholding and an unnecessary loan from the government.

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Category: Tax and Life Changes, Tax Tips and Tricks, Taxes for Prior Years
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