Category: Tax and Life Changes

Life changes and your taxes go hand in hand; believe it or not. That being said, it’s easy to forget about your tax return as a newlywed or when you’re welcoming a newborn into the family. Be aware that many of these changes also make you eligible for deductions and credits on your tax return. In some cases, you may need to update your W-4 form as well. PriorTax will keep you up to date on what to do when these life changes occur. You won’t be left in the dark.

Check back here for answers to your questions about how these changes affect your taxes.

 

Archive for the ‘Tax and Life Changes’ Category

What to do When I Missed the Tax Deadline

Posted by admin on April 18, 2024
Last modified: April 19, 2024

Once the tax deadline of April 15th has passed, fret not if you missed it. You still have the chance to file your taxes. Consider these approaches to complete your tax return and receive your refund promptly if you have missed your tax deadline.

Missed your Tax Deadline? Take Action Now without delay.

Rest assured, if you still need to complete your tax filing, there’s no need to worry. There’s still time to submit your documents. Around 80% of individuals anticipate a tax refund, and in the event of delayed filing, no penalties will be incurred.

You Will Want to File your Taxes As Soon As Possible

Annually, the IRS has noted significant unclaimed tax refunds exceeding $1 billion. It is important to be aware that regardless of whether you fall below the IRS income threshold for filing taxes as an individual ($13,850) or as a married couple filing jointly ($27,700)

missed tax

Use E-file with Direct Deposit

Don’t worry if you’ve missed the tax deadline, there’s still a way to easily file your taxes online using the services offered by PriorTax. E-filing allows the IRS to swiftly and efficiently process your tax return, ensuring that you receive prompt acknowledgment of its receipt.

Should you choose to submit your tax return by mail, please be aware that the IRS will require additional time to receive and handle your submission. Opting for E-Filing with direct deposit is recommended for the speediest processing of your tax refund. According to the IRS, they aim to issue the majority of tax refunds within 21 days of acceptance.

Pay Up Taxes to the IRS

If you have outstanding debts, it is advisable to submit your tax return promptly to prevent accruing larger penalties. Failure to file for an extension in April will result in penalties for both failure to file and failure to pay.

When it comes to filing your taxes, it’s essential to submit them on time to avoid facing hefty penalties. While a late filing may still incur a penalty, it will be less severe compared to not filing altogether. By filing promptly, you can minimize the amount you owe in interest. Remember, the longer you delay filing, the greater the interest charges you’ll accrue.

Delaying tax filing can occur when individuals are facing a tax bill they are uncertain about covering. To address this concern, implementing proactive measures can lead to more favorable outcomes and reduced expenses in the long run.

It is advisable to submit your filing promptly, make an initial payment based on your means, and subsequently inquire about a payment arrangement with the IRS. The IRS provides various avenues of assistance to accommodate your situation. You have the choice to seek a short-term payment plan, a prolonged installment agreement, an offer in compromise, or a temporary suspension of collections in certain circumstances.

Opt for long-term installment agreements, which provide a timeline of up to six years to fulfill your payment obligations. Alternatively, consider the short-term payment plan if you anticipate settling your dues within 180 days.

Rest assured, if you missed the tax deadline — submitting your taxes with PriorTax is never too late. Regardless of your financial decisions in the past year, PriorTax will ensure they positively impact your tax situation. Whether you prefer to handle your taxes independently or have a dedicated tax professional assist you, we are committed to securing every eligible dollar for you and guaranteeing the maximum refund possible.

What to Consider For Tax Filing Extension in 2024?

Posted by admin on April 4, 2024
Last modified: April 4, 2024

Should you require additional time for tax preparation, consider utilizing PriorTax Free request for tax extension or complete and submit Tax Form 4868. This tax form will enable you to request an automatic tax extension for filing taxes until October 15, 2024. Alternatively, you can opt to make an electronic E-File tax payment with PriorTax and designate “extension” as the purpose of the payment. If you need support from a free dedicated tax professional, reach out to PriorTax Support via phone or email now.

It’s important to keep in mind that while obtaining a Form 4868 extension allows for an extended tax filing deadline to submit your tax return, it does not grant additional time to settle any outstanding tax liabilities.

In the event of overdue taxes, the IRS enforces interest charges that accrue on a daily basis. Individual taxpayers are subject to a 3% interest rate imposed by the IRS, in addition to the federal short-term interest rate determined by the government quarterly.

tax extension

There Are Other Tax Penalties To Consider As Well

In the event that an individual fails to submit their tax return by the specified deadline, which includes any tax extensions granted, they may face the consequences of the failure-to-file penalty.

If taxes are not paid by the tax payment deadline, a failure-to-pay penalty will be imposed. The IRS will apply a 0.5% charge monthly on the outstanding taxes, up to a maximum of 25% of the unpaid amount.

If both penalties are incurred within a month, the 5% failure to file penalty will be offset by the 0.5% failure-to-pay penalty.

Already Have Extended Time to File My Taxes?

You might have extra time to file your tax return—here’s who qualifies

In the United States, the majority of citizens are expected to submit their 2023 federal tax return by April 15. However, specific circumstances, such as residing in designated regions or serving in the military, could extend this deadline for some individuals.

In circumstances where military personnel are in combat zones, the deadline for federal tax filing and payment is extended by 180 days following the conclusion of their active service in that area, surpassing the usual April 15 deadline. Eligible individuals can also request further extensions if they are currently on active duty.

Exceptions from Requesting Tax Extension

In light of the recent natural calamities affecting various states in 2023, the Internal Revenue Service has introduced an extension for federal tax return deadlines. This initiative aims to provide residents with additional time for the preparation and submission of their tax returns. Below is a compiled list of the states eligible for this assistance, presented in alphabetical order.

Different states have various deadlines for filing income taxes, with the majority falling on April 15, 2024. To request an extension beyond this date, it is essential to reach out to each state individually.

California

In the wake of intense storms and flooding that hit San Diego County starting on January 21, residents in California now have an extended deadline until June 17, 2024, to submit their federal tax returns.

Connecticut

In light of the recent intense storms and floods that struck Connecticut starting on January 10, residents in the affected areas, including New London County, the Mohegan Tribal Nation, and Mashantucket Pequot Tribal Nation, will now have an extended deadline of June 17, 2024, to submit their federal tax returns.

Maine

Residents in various Maine counties hit by the recent severe storms and flooding from December 17, 2023, onwards are now granted an extended deadline of June 17, 2024, to submit their federal tax returns. This relief measure applies to individuals residing in Androscoggin, Franklin, Hancock, Kennebec, Oxford, Penobscot, Piscataquis, Somerset, Waldo, and Washington counties.

Michigan

Residents residing in various counties in Michigan who experienced the aftermath of severe weather conditions, including storms, tornadoes, and flooding commencing from August 24, 2023, are granted an extension until June 17, 2024, to submit their federal tax returns.

Rhode Island

Residents residing in Providence County, Rhode Island, who have faced the impact of intense storms, floods, and tornadoes that commenced on September 10, 2023, are eligible for an extended federal tax return deadline until June 17, 2024.

Tennessee

Residents in Tennessee impacted by the severe storms and tornadoes that started on December 9, 2023, are now being granted an extension until June 17, 2024, to submit their federal tax returns.

Washington

Spokane County, Washington, residents impacted by the wildfires that started on August 18, 2023, are now granted an extension until June 17, 2024, to submit their federal tax returns.

West Virginia

Individuals in West Virginia who have been impacted by the recent severe weather events, including storms, flooding, landslides, and mudslides that started on August 28, 2023, now have an extended deadline of June 17, 2024, to submit their federal tax returns.

Those Who Live Abroad Can File Tax Return or Tax Extension a Little Bit Later

Individuals residing in foreign countries have the option to delay their tax filing, although the deadline for tax payments remains April 15. American citizens and resident aliens who are living and employed outside the U.S. and Puerto Rico are granted a natural extension of two months for filing taxes, up until June 17, 2024.

In contrast to the aforementioned states, tax payments must be submitted by April 15 to avoid incurring interest and penalties on late payments.

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

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

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

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

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

2024 Tax Updates from IRS to mitigate the significant inflation?

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

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

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

2024 tax

Is IRS tracking digital payments with Venmo for 2024 tax?

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

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

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

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

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

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

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

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

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

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

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

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

Types of Crypto Taxes in 2024

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

Taxable Crypto Transactions

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

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

Crypto Tax From Crypto Losses

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

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

Crypto Taxes on Lost or Stolen Crypto

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

crypto taxes 2024

Crypto Taxes on your income

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

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

The IRS considers the following crypto transaction as taxable events:

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

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

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

Crypto Taxes for Moving Crypto Between Digital Wallets

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

Crypto Taxes When Buying Cryptocurrency with Stablecoins

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

Crypto Tax from Crypto Staking

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

Crypto Taxes for Adding/Removing Liquidity from DeFi Protocols

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

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

Crypto Tax on Airdrops and Hard Forks

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

Crypto Taxes on Bankruptcies

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

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

Crypto Taxes on Crypto Gifts and Crypto Donations

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

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

Crypto tax from Crypto Mining

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

Crypto Taxes on DeFi

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

Crypto Tax on DAOs

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

Crypto Taxes on NFTs

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

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

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

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

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

No. At present, there have been no changes.

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

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

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

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

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

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

venmo tax

Venmo tax and Crypto tax rules for 2023 and 2024

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

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

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

What is the $600 tax rule for digital payments

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

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

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

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

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

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

Itemized vs. Standard Tax Deduction calculator

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

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

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

Standard Tax Deduction

Pros and Cons of Choosing Itemized Tax Deductions?

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

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

Pros of Choosing the Itemized Tax Deduction

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

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

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

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

Cons of Choosing the Itemized Tax Deduction

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

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

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

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

Pros of Choosing the Standard Tax Deduction

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

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

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

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

Cons in Choosing the Standard Deduction

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

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

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

Standard vs Itemized Tax Deduction

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

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

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

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

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

Should I take the standard vs. itemized tax deduction

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

Itemized Tax Deduction

When you should take the standard deduction

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

The current standard tax deduction is:

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

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

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

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

When you should take the itemized deduction

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

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

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

Updates on Student Debt Forgiveness: February 2024

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

The Biden Administration is Forgiving $1.2 billion in Student Debt Forgiveness for 153,000 Borrowers. 

On the 19th of January 2024, a significant announcement was made regarding an extra $4.9 billion allocated for student debt forgiveness and relief. This relief is specifically for 73,600 individuals, including teachers, social workers, firefighters, and nurses, who are eligible for the Public Service Loan Forgiveness program.

In a recent announcement, the administration led by President Biden revealed plans to forgive $1.2 billion in student debt for 153,000 borrowers. Individuals whose loans are set to be forgiven can expect to receive a personal email notification from the President himself within the day, as per the Department of Education.

In response to the Supreme Court’s ruling against the Biden administration’s proposal for widespread student loan forgiveness, the White House has introduced a new initiative to tackle the nation’s massive $1.77 trillion student debt burden. This debt relief program aims to support millions of borrowers by allowing them to eliminate up to $20,000 each in student debt.

In its most recent announcement, the Biden administration confirmed that they have given the green light for loan forgiveness to almost 3.9 million borrowers. Among them are individuals who have been diligently paying off their debts over the span of many years. Specifically, the latest batch of debt relief, which benefits 153,000 borrowers, is allocated to those participating in the Saving on a Valuable Education (SAVE) repayment program and have completed a minimum of a decade’s worth of payments.

student debt forgiveness

Who Qualifies for February 2024 Student Debt Forgiveness?

According to a recent Biden administration announcement, 153,000 borrowers under the SAVE program have been deemed eligible for certain benefits. As confirmed by the Education Department, these individuals have fulfilled the criteria of being part of repayment schemes for a minimum of a decade and having initially borrowed $12,000 or fewer for their college education.

Upon surpassing the borrowing threshold of $12,000, the department clarified that each subsequent $1,000 loaned entitles the borrower to forgiveness after another year of timely payments.

What Do You Need To Do?

As per the Education Department, individuals who qualify for loan forgiveness will soon receive an email notification from the President. No additional steps are required from recipients, as loan servicers will handle the forgiveness process promptly. Following the official statement, borrowers can expect to witness their loans being forgiven directly in their accounts within the next few days.

What Is The SAVE Student Debt Forgiveness Plan?

Introducing a new initiative called the EASE program, a modern income-driven repayment solution launched under the guidance of the current administration. EASE aims to alleviate financial strain by adjusting a borrower’s monthly payments based on their income, offering relief from excessive debt accumulation. This innovative program addresses issues that existed in previous IDR programs, preventing interest from escalating on borrowers’ debts.

Participants in the SAVE program can qualify for loan forgiveness after either 20 years or 25 years of making repayments. However, the White House has introduced a more expedited 10-year forgiveness plan specifically for individuals with lower loan balances.

How Many People Are Enrolled in SAVE Student Debt Forgiveness Plan?

As of Wednesday, the Education Department reported that 7.5 million individuals are registered in SAVE, with approximately 4.3 million not making monthly payments.

Tax Deadline for Businesses You Need To Know

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

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

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

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

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

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

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

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

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

Did you Miss The Estimated Tax Payment Deadline?

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

The Best Way to File My Tax Return for Businesses

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

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

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

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

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

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

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

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

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

Can You File a Tax Refund on a Weekend?

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

Is Weekend Tax Filing Possible? YES.

On weekends, taxpayers can anticipate the processing of their tax refunds by PriorTax and our dedicated tax professional, although they should still expect the weekend tax refunds to be processed within the typical operational timeline.

The policies of the company or institution issuing the refund will determine the extent to which refunds differ. A noteworthy observation is that numerous refunds, particularly those processed through automated electronic means, can be accommodated even during weekends.

In regards to the processing times of tax refunds, certain refunds might be affected by the operational schedule of banks and financial institutions, as they may not handle transactions during weekends. To ensure accurate details regarding refund processing times, it is advisable to reach out directly to the company or institution from which you are anticipating a tax refund from weekend tax filing.

Since the question needs more specific details, let’s assume the scenario involves receiving a refund on a bank card or credit card after returning an item on a Saturday morning. Upon returning the item and having it scanned by the store, the refund process is initiated promptly.

weekend tax

At the onset, a contractual agreement is established to ensure the provision of a refund. 

Suppose an item necessitates shipment back, analogous to the tax return process implemented. In that case, the timing of the tax refund processing varies depending on the status of one’s account and the nature of the item itself. It may be imperative to wait until the designated party physically receives the item before the tax refund can be effectively initiated. Remarkably, the registration of refunds transpires promptly once the item is scanned; nevertheless, in certain instances, the dispersion of refunds might be deferred until the conclusion of the business day, coinciding with the closure of operations.

It is doubtful that you will receive it on the weekend. The processing time for both banks and credit card companies may take several days. This is due to the multi-step verification process required to ensure the transaction is not fraudulent. The electronic payment first needs to be verified and approved by the store. It needs to be reviewed and approved by the corporate office if applicable, and finally, it has to be authorized by the financial institution before the funds are disbursed.

After transmitting the funds, they forward them to the appropriate institution responsible for verifying the presence of the funds in the originating account. To ensure the validity of the funds, all the transactions made throughout the day undergo processing before your institution finally deposits the funds into your account. Due to this meticulous process, it occasionally takes a span of two or three days.

In regards to the weekend tax filing, it is ultimately up to your particular establishment. Although certain banks, credit unions, and credit card customer service may have limited weekend hours, their operations are not at full capacity with all departments functioning. As a result, services related to transaction confirmations and funds availability are typically unavailable.

If the information gets processed partially before the weekend, there is a chance you will come across a pending status. However, if the information is not processed even in part, no notification will be displayed. Although some institutions can operate at full capacity throughout the entire week, the majority of them do not. Consequently, the funds will remain on hold until Monday for further processing unless they fall on a holiday.