Many Americans want to know how our future president’s tax plan will affect them.
Biden’s tax plan will affect wealthier Americans, corporations, and everyday individual taxpayers. He also plans on making significant tax revisions on Trump’s previous tax plan which took place in 2017.
Skip the tax jargon by taking a look at this quick breakdown.
Trying to understand anything tax related makes you feel like you’re back in grade school.
However, it doesn’t have to be difficult. Here’s some sure-fire information that may help you out if you’re a first time filer, or if you have some general questions about claiming tax deductions.
What’s the difference between claiming the standard deduction and itemizing deductions?
In general terms, a tax deduction is a certain amount you are allowed to exclude from your income. This means that you are taxed on a lower amount of income, and thus pay less in taxes.
While not as valuable as tax credits – which directly decrease your tax liability – deductions can still reduce your tax burden significantly.
There are two ways to claim deductions.
Itemize deductions. Add up all of your allowable expenses and subtract them from your income.
Claim the standard deduction. Deduct the basic amount available to everyone.
While preparing your taxes you need to figure out whether you get a bigger tax break from itemizing your deductions or claiming the standard deduction. Most people end up claiming the standard deduction, but some people have enough allowable expenses to make it worth their while to itemize deductions.
Generosity has its perks, or rather its tax benefits.
Keep in mind, taxpayers are able to easily itemize once they exceed their standard deduction. This typically happens by taxpayers claiming charitable donations along with any expenses they have. It then becomes greater than their standard deduction. However, the standard deduction is twice the amount for 2017.
Due to the Tax Cuts and Jobs Act (TCJA), taxpayers who itemize may face some difficulties next year.
Read on to find out what you can do to be prepared for next year!
“Bunching,” a word that people can’t stop talking about.
If you’re surfing the web for information on charitable donations, you might run into the term, “bunching.” It may be confusing, so we’re here to clear it up for you. (more…)
It seems like the year went by so quickly. Now, are you ready for the new tax season? The 2019 tax season brings in a variety of changes that will ultimately affect how you file and Form 1040.
Read below to find out what you need to know before filing your 2018 tax return.
Check your withholding
Due to the Tax Cuts and Jobs Act (TCJA), taxpayers may receive a lesser refund or a tax bill because of their decreased withholding. We advise that you should definitely check your withholding if you have a two-income family, work multiple jobs or part of the year, have children to claim the Child Tax Credit or older dependents, you itemize your deductions on prior year returns, receive high tax refunds or tax bills for the prior year or high-income taxpayers in general. Be advised that if you don’t have enough income tax withheld from your employer, you can be subject to a high tax due at the end of the year.
If you did not fill out an updated W-4 for 2018, click here to find out if you should adjust your withholding with the IRS Withholding Calculator.
The standard deduction increases
The TCJA doubles all filing status’ standard deduction. Below you will find out how next year will be different. (more…)
Strapped for cash as a recent grad? See if you qualify for a student loan interest deduction.
College is over and you’ve been blasted with a taste of reality…or should I say adulthood? It’s tough but you’ll get through it. Even the IRS is on your side with certain deductions available to those of us who used our after-high school lives to pick up a college education. College is expensive. The student loan interest deduction can help you out a bit. Let’s see if you’re eligible.
Are there income limits?
Here are the income limits that apply to the student loan interest deduction. Note that prior tax years have slightly different income limits:
Taxpayers whose MAGIs are above these limits can only take a reduced deduction or no deduction at all. The deduction phases out between MAGIs of $65,000 and $80,000 for single filers. For married couples filing jointly, the deduction phases out between MAGIs of $130,000 and $160,000. (more…)
Once the new year comes around, we tend to reevaluate ourselves and reflect on our accomplishments (and setbacks) from the past year. This is also a time when we think about how we can better ourselves for the year to come. For many of us, that means following through with a career move, proposing to that special someone, having a baby, or buying a new house.
All of these life events come with a price tag that are likely to affect your tax situation. You’ll want to take a look at the following tables as a reference to adjust your W-4 withholdings accordingly. Look at it as one more save-the-date or housewarming invite you need to send out to share the good news!
With the new year comes promises to lose weight, shiny new engagement rings, and of course…annual tax updates. While most tax laws remain consistent from one year to the next, there are some that change.
We are here to share a sneak peek of 7 tax updates coming your way for 2016. Let’s get started.
1. Tax Day is April 18th this year.
Since April 15th falls on Washington D.C. Emancipation Day, the tax deadline date will extend to the following Monday, April 18th. Are you among the lucky ones living in a New England state? Extend that deadline one more day to April 19th.
2. Tax penalties related to Obamacare are increasing yet AGAIN.
If you’ve reached the ripe ol’ age of 26, then you’re familiar with health insurance and the recent changes to it via Obama. For those without coverage last year, a penalty of $285 (or 2% of income above the filing limit) was billed to them. Still don’t have coverage for 2016? If you don’t apply for an eligible health care plan, then the tax penalty could hit an all-time high of $695 per adult (or 2.5% of income).
3. The Earned Income Credit is increasing.
2016 brings a small but modest increase to the EIC. If you are a taxpayer with three or more qualifying dependent children, then the maximum credit will be increasing by $27 to $6,269. For those with two dependent children, your maximum will be increasing by $24 to $5,572. For those taxpayers with an only child, you can receive a maximum of $3,373 which is up $14 from 2015. No kids to worry about? You’ll still get an increase of $3 from last year which will leave you with $506 for 2016.(more…)