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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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How to Maximize Your Tax Refund with Form W-4

Posted by admin on August 10, 2023
Last modified: August 10, 2023

Maximizing your tax refund relies upon a few easy processes, research, and some preparation. Examining your tax situation, involving your partner when finishing up your tax form W-4s, and taking advantage of certain tax credits can assist in boosting the size of your refund. Additionally, PriorTax free dedicated Tax Professional can help you determine which credits give you the greatest tax refund.

Review your Form W-4 with our Tax Professional for Tax Refunds Over Looked

Before beginning a new job, your employer requires you to fill out Form W-4. This form conveys how much federal income tax needs to be taken from your paycheck. The quantity of taxes deducted from wages depends on the combination of income and credits declared in the W-4 document.

Are you reviewing your W-4? It’s time to decide. Are you aiming for a bigger refund or a bigger paycheck? With less taken out of each pay period, you can count on receiving larger wages throughout the tax year.

tax refund

Elements to review when amending your Form W-4 may include.

When filing your W-4, there are crucial elements to take into account. By claiming credits such as the Child Tax Credit or the Other Dependent Credit, you are reducing the amount of money being withheld from your paycheck.

When you are in the process of filling out a Tax Form W-4, there are several things that you must keep in mind. For starters, you may need to adjust the amount of withholding on your taxes should you have multiple sources of income, like an extra job or investments.

When filling out your W-4 form, there are a few points that you should bear in mind. These include the possibility of withholding extra money from each paycheck for income tax purposes.

By indicating more income on your W-4 form, your paychecks will be smaller since greater tax amounts will be taken out. This increases the possibility of withholding too much, which may result in a bigger tax refund.

When you anticipate certain credits or deductions, the potential implications are clear; bigger paychecks and possibly owing some extra tax or receiving a smaller refund. To make sure you enter accurate information on your W-4 form, consider using a our Prior Tax Calculator. It is designed to provide a reliable estimate of what should be entered.

Reconsider your Tax Filing Status.

The selection of a filing status can have an effect on getting a refund. Your filing status decides several important elements, such as your standard deduction, whether you have to file taxes, the credits available to you, and how much tax you pay or refund you get.

When filing their taxes, individuals have multiple statuses to select from. Most commonly, people opt for married filing jointly or separately, single person, or head of household designations.

Having an experienced, dedicated Prior Tax Professional on your side is essential to ensure the best outcome for you, from the beginning of the process through to completion. They will help you decide which options work best for your particular circumstances to maximize your tax refund.

Look into Claiming the Earned Income Tax Credit

Reap the rewards of the Earned Income Tax Credit. Are you a working family, an independent contractor, or someone with moderate to low income? Then you may be eligible for the Earned Income Tax Credit. This tax break reduces taxable liability and could result in a sizable refund!

In order for you to be qualified, the following criteria must be met: you should have a valid Social Security number and be either a U.S. citizen, a year-long resident alien, or a non-resident alien married and filing jointly with an American citizen or resident alien. Additionally, there must be verifiable income from self-employment, an employer, or working on a farm, not including any person being claimed as a dependent or child of another individual. Lastly, those in the age range between 25 and 65 living in the United States for at least half of the year are eligible.

And in order to receive the EITC, you must file a tax return, even if you owe no taxes, which you can read more about here.

Have you Claimed the Child and Dependent Care Tax Credit?

Make sure you take advantage of the Child and Dependent Care Credit. Available to those with a qualifying child or dependent, this credit is based on a percentage of what you paid for care-related expenses.

As of the 2022 tax year, a maximum amount of $3,000 in expenses can be claimed by one individual and $6,000 by multiple. It is important to remember that any dependent care benefits provided by an employer must be factored into this deduction total.

Important Qualifications

Are you the parent of an individual who is 13 or younger? Or do you have someone dependent on you due to physical or mental impairments and living in your household for the majority of the year? How about your spouse, who is unable to look after themselves and reside with you throughout the year? These may all be qualifying individuals.

Some Other Criteria Must be Considered.

In order for you, as a parent or guardian, to be eligible for the credit, there are various conditions that must be fulfilled. 

It is necessary that your filing status is not married, filing separately, and none of the caregivers are your spouses or parents of the child. Moreover, each dependent being claimed must have a valid Social Security number. As well you must provide the full name, address, and Social Security number of all care providers.

The American Rescue Plan set to be effective in 2022 brings forth some noteworthy modifications to the Child and Dependent Care Tax Credit. The plan markedly enhances the expense amount that can qualify as creditable, lessens the impact of income levels on it, and makes it completely refundable. This implies that you can claim this tax credit regardless of whether or not you owe the government taxes – something that has yet to be possible.

In a nutshell

Picking the right tax filing status related to your circumstances can reduce your taxes and amplify the tax refund you will receive. Utilizing our Prior Tax Calculator is an ideal way to forecast what needs to be entered on your W-4 and adjust the return amount when tax preparation rolls around. Should you qualify, claiming the Earned Income Tax Credit can lessen your tax bill and potentially generate a refund even when no taxes are owed?

Ensure you get the most from your tax return by leveraging a dedicated PriorTax Tax Professional. With our support, get started-to-finish service and never worry about filing with confidence. Our Free Dedicated Tax Professional helps you through the process with expert guidance and assistance. Answer straightforward questions and benefit from our guarantee of maximum refunds. However, you choose to handle it, know that PriorTax will take care of everything so that you can relax this tax season.

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Category: Tax and Life Changes, Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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When to Expect Your Tax Refund in 2023

Posted by admin on January 18, 2023
Last modified: February 13, 2023

When will you get your 2023 tax refund? Here’s our annual chart with our best estimates. Keep in mind that the answer is never exact, but we can make some educated guesses based on a few factors.

Now is also an excellent time to begin applying your year-end tax filing strategies that can lower your tax bill with tax credits or increase your refund with tax deductions. So whether you’re planning for next year or want to lower your bill this year, these strategies can help you out.

Have you had any significant changes in your life this year, like a new job, getting married or divorced, having a baby, retiring, buying a house, or changing investments? These types of things can have a significant impact on your taxes. So it’s a good idea to reach out to PriorTax Tax Professional sooner rather than later. Our dedicated tax professionals can make sure you are taking full advantage of all the tax deductions and tax credits you’re entitled to for maximum tax refund.

Are you wondering whether the 2023 tax filing season is going to be normal? While it’s impossible to say for certain, it’s likely to be closer to normal than it has been since 2019. That was the last tax filing season before COVID-19 caused widespread office closures, even at the IRS. As a result, the 2020 tax filing deadline was delayed by several months.

Don’t worry, the vast majority of taxpayers won’t have any issues come tax season. Just to be clear, the weeks leading up to April 18 2023 is when Americans file their taxes for the income they received during the 2022 calendar year. Alternatively, you can file for an extension, giving you an extra six months to sort everything out.

2023 tax refund

April 18, 2023 is the Tax Deadline!

What is the reason for the 2023 tax deadline being on April 18 instead of the 15th? The standard deadline of April 15 falls on a Saturday, so when this happens, the tax filing deadline to the next business day. However, in 2023 this Monday happens to be Emancipation Day.

The tax filing deadline to file your federal income tax return (Form 1040) is Tuesday, a state holiday Patriot’s Day in Maine and Massachusetts. Most states usually follow the same calendar for state income tax returns. Depending on when you file your taxes, you may receive your tax refund payment within 2-3 weeks.

When to File Your Tax Returns and Expect your 2023 Tax Refund?

It’s that time of year again the tax filing season is around the corner. It is time to think about maximizing your tax refund!

For most people, tax season starts in late January or early February. However, this year may be different due to recent changes in tax law. So it’s important to stay up-to-date on any new developments.

Generally speaking, early filers who are due a refund can expect to see their money sometime in mid-to late February. However, those who claim certain credits like Earned Income Tax Credit or Child Tax Credit may have to wait a bit longer for their refunds – about one month.

Last year was impacted significantly by Covid-19, which caused both deadlines and procedures to change.

According to our projections, this is when you can expect to receive your income tax refund based on when you file your return. Keep in mind that this timeline is an estimate and may change depending on future events.

You can check on the tax filing status of your tax refund using the “Where’s My Refund” tracker from the IRS website or with your assigned PriorTax Tax Professionals. Just enter some basic information about yourself, and we’ll update you on where things stand.

It’s always a good idea to get your tax return in as soon as possible – and Efiling is the quickest, easiest way to do it. In general, you can expect to receive your refund via direct deposit within 2 weeks – although, during the busiest times of tax season (late March), it may take a bit longer. So gather up all your documents such as W2s, 1099s, mortgage, and student loan interest statements, etc.

There are a few important factors that can affect when you might get your 2023 tax refund, these include:

  • How early you file
  • Whether you’re claiming certain credits (especially EITC and CTC)
  • Whether your return is e-filed or sent by mail
  • Whether you have existing debts to the federal government

The IRS will delay processing by 2-3 weeks for income tax returns that claim the Earned Income Tax Credit (EITC) or Child Tax Credit (CTC), so they can verify that taxpayers qualify for the credits.

Keep in mind that this is just an estimate of when you can expect your refund – it’s not exact, since every taxpayer has different returns and situations. Also note that the first column is when the IRS accepts your return, which can be 2-3 days after you submit it electronically. Mailing in a tax return can result in extra delay at the beginning of the process since the IRS will need to manually enter it into their system. But don’t worry – we’ll keep this page updated in case the IRS changes tax season this year.

tax refund in 2023

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Category: Tax Deadlines, Tax Deductions and Credits, Tax for Business, Tax News, Tax Tips and Tricks, Tax Year 2022
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FAQ for Child Tax Credit and Other Tips on Tax Filing

Posted by admin on June 16, 2022
Last modified: June 16, 2022

Each year, you are required to file a Federal Income Tax Return for the prior calendar year on or before Tax Day. Whether you are required to file certain tax will depend on a number of factors, including your total income, filing status, age, child tax credit and whether or not you are dependent on another person’s federal income tax return. We’ve prepared a list of answers for commonly asked questions. PriorTax is the best place for easy and simple filing with our e-filing available with the help of our tax experts always standing by to assist you on the other line.

Who can you claim as a dependent and how to claim child tax credit on your taxes? 

If they meet certain criteria, you may be able to claim a dependent on your taxes for child tax credit. This might include a family member, a foster child, or an adopted child. Generally, the dependent must be a United States citizen, resident, or national. They must also be single or married, filing separately. Additionally, you must be the only one claiming for them for the child tax credit on your return.

In general, you will not have to file a tax return unless you earn income from sources inside the U.S. For the U.S., you typically do not have to file a return if you make less than $12,000 a year unless you paid a portion of the state’s income taxes upfront and wish to claim the refund.

Yes, the Federal Government requires every NRA that earns U.S.-source income to file U.S. tax returns, no matter how much revenue is earned or how much liability there is. Any income is taxable unless the law specifically exempts it, and any taxable income must be reported on the tax return. When you itemize, you reduce taxable income by the cost of certain expenses deductible under U.S. tax law. Tax credits reduce tax liabilities by one factor, and tax deductions lower your taxable income.

To get more taxes taken out over the course of a year so that you owe less when you file, you may want to lower your exemption. In addition, you can deduct interest on your student loans, as long as you fit specific income criteria, along with interest on a home mortgage, state and local taxes, and others.

Again when claiming Child Tax Credit on on your taxes, dependents are typically family members, but could also include foster children or adopted children. To claim someone as a dependent for child tax credit, they must be a United States citizen, resident, or national. You must also be the only one claiming them on your return.

child tax credit
child tax credit

Besides about Child Tax Credit.. If you’re wondering which tax form to use, read on for a brief guide.

Depending on your situation, you may need to file IRS Form 1040, Schedule C, Schedule B, or Schedule SE.

Form 1040 is individuals’ standard income tax form to report their income and expenses. You’ll need to use Schedule C to report your business income and expenses if you’re a freelancer, contractor, or self-employed person. Meanwhile, Schedule B is used to report interest and dividends of $1,500 or more; any amount less than $1,500 can be reported on Form 1040. Finally, if you pay self-employment taxes, you’ll need to fill out Schedule SE in order to calculate how much tax you owe.

What is a 1099? 

1099 forms are used to report income from sources other than employment. This includes income from self-employment, interest, dividends, rents, royalties, and other miscellaneous sources. You will receive a 1099 statement in the mail, just as a W-2 form for employment income.

How does Short-term disability benefits work?

Short-term disability benefits are taxable and subject to earned income, Social Security, and Medicare taxes. Amounts of commuter benefits A commuter benefit is not subject to income, Social Security, Medicare, state, and city taxes. Pension contributions are not subject to federal income taxes but state, city, Social Security, and Medicare taxes.

How to File Taxes on Earned Income such as W-2

Earned income, such as your wages, is taxed differently since you pay Social Security taxes, Medicare taxes, and state and federal income taxes on earned income. You file federal, state, and city income taxes on the lowest wage amount reported on your W-2, which is shown in boxes 1, 16, and 18. As an example, the New York state income tax instructions instruct an income tax payer to report wages as they appear on their W-2 in Box 1 and then add the amounts together to come up with their taxable wage amount for the New York State/City.

If you are an employee and receive wages subject to U.S. income tax withholding, you must usually file on or before the 15th day of the 4th month following the tax year. A real estate owner or the owner’s authorized agent must file necessary applications before May 1 of the tax year. State law automatically places a tax lien on all taxed properties on January 1 each year to assure payment of taxes.

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Category: Tax Deductions and Credits, Tax Tips and Tricks, Taxes for Prior Years
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How Do I Report Taxes on Tip Income for my Tax Return?

Posted by admin on June 9, 2022
Last modified: June 16, 2022

If you are a server, barista, or another staff member making tips, you need to know how these tips will factor into your taxes. In short, you report and pay taxes on tip just like you report and pay taxes on the rest of your income from your W-2 job. Your employer will use your monthly reports to determine how much money your employer needs to take from your paycheck to cover the payroll taxes and fees for tips. Estimate your return with our powerful tax calculator for current year or prior year taxes on tip.

So, do I have to report my tips?

As a worker in the food and beverage industry, you may be wondering if you need to report your tips to the IRS. The answer is yes – the IRS assumes that you will earn tips at an average of 8%. If you regularly report tips under this amount or don’t report any tips, the IRS may investigate.

So what exactly should you include taxes on tip income for your taxes

Tips are usually paid through credit/debit card or with cash, but there are other ways to receive a gratuity. Sometimes people who know you well might leave other perks as a tip.

These can include:

-Gift cards

-Free meals or drinks

-Tickets to events

If you receive any of these non-cash items as a tip, make sure to keep track of their fair market value so you can properly report them come tax time.

How do I report my taxes on tip to the employer and to the IRS?

Are you a server who needs to know how to report your tips? You’ve come to the right place. Keep reading to find out everything you need to know about reporting your tips to your employer and the IRS.

First, let’s start with reporting tips to your employer. You can use Form 4070A to keep a record of your tips as you earn them. Then, use Form 4070 to report them to your employer by the 10th day of the following month. So, if you earned tips in January, you would need to turn in your Form 4070 by February 10th.

Your employer will report your numbers to the IRS, and it will withhold money from your salary to cover tips. Reporting tips to your employer helps your employer keep enough money in your wages to cover taxes on tip. You must withhold income and FICA taxes on tip and taxes on every paycheck, and you must report every employee’s tip to the IRS. If you are not earning enough from wages and tips, your employer pays you directly to cover the taxes that were withheld; your W-2 shows you how much you owe.

Now let’s talk about reporting taxes on tip to the IRS.

If you make less than $20 in tips in a month, you can report them directly to the IRS using Form 4137. But if you earn tips from more than one job, you’ll need to treat each one separately. That is, you won’t add up your tips from different jobs – you will report your gratuity for each job individually.

At the end of every shift, your employer will give you a W-2 form reflecting the wages you earned and tips that you reported; one copy goes to the IRS. The IRS requires that you report the total monthly tips you make to your employer before the 10th of the following month. While the IRS requires that tipping employees file tip reports once per month, you need a report every paycheck period, or else you cannot properly report your employees’ total wages or keep proper taxes on file (and pay your share of the FICA taxes). In addition, employers are required to pay their employers’ share of Social Security and Medicare taxes, which are based on total wages paid to tipped employees and reported tips revenue.

All cash tips received by employees during a given calendar month are subject to the social security and Medicare taxes and must be reported to the employer. All tips, including cash, collected tips, your share of the tip pool, and non-cash items such as tickets and passes, are considered income and are subject to income, Social Security, and Medicare taxes. Therefore, when you accept non-cash tips, like tickets, collectibles, passes, or other items with value, the non-cash tips must be reported as income. These are not required to be reported as cash tips, but you are still responsible for reporting the non-cash tips to IRS as their fair market value.

taxes on tip
taxes on tip

When you accept a good for a tip, you must report that item’s fair market value as income. You do not have to report any non-cash tips, like passes or tickets, but you must report the cash value of the non-cash tips on your taxes on tip return. Tips that add up to less than $20 per month do not have to be reported to the employer, but they do have to be included with your wages on your tax return. If the total tips received by an employee in a single calendar month from a single employer are less than $20, those tips are not required to be reported, and no taxes are required to be withheld.

If you receive more than $20 of tips, both in cash and not cash, in any one month, you must report all tips you make for that month to your employer. If you earn cash tips during your work, you are required by the Internal Revenue Service to report them, whether you received them from a customer, another employee, your employer, or a pooled cash tip. Servers who receive tips as part of their jobs are required to report the totals to their employers and the IRS on their annual income tax returns. In addition, once a month, all employees who receive tips are required to provide the employer with a summary of their tip revenue on Form 4070, Employees Tips Report to Employer.

The employer has several obligations regarding the employees’ tips income, including responsibility for record keeping and reporting, collecting taxes on tip, filing specific forms, and paying or depositing taxes. The employer is required to only keep as much as the employer is allowed to collect on income taxes, any time up until the end of the year, and only when employee Social Security taxes, Medicare taxes, and any additional Medicare taxes collected from tips are deducted first and fully by those sources. The employee must use Form 4137, “Social Security and Medicare Taxes on Unreported Tips Income,” to report the amount of any unreported tips income to be included as an additional wage payment on his or her Form 1040 or Form 1040-SRR, the United States. The amount taken out of your paycheck is based on your total wages, plus any tips income you report, even if you received tips directly from customers as cash.

Because the customer does not opt into the extra charge or select a dollar amount, it is not considered tipped income and thus is not reported by you, as an employee, to your employer. However, if your income is mostly made up of tips, like in a food services job, you might have a right to extra tips income, which your employer would report to the W-2.

You should include:

– All cash tips that you get directly from customers.

– Tips added on credit cards.

– Your share of any tips you get through a tips-splitting arrangement with your co-workers as part of your total income.

Tips are typically reported on your Form W-2 if you primarily receive paychecks as a waiter, customer-service worker, or another occupation that regularly receives tips.

Your employer typically tracks all of the tips you collect, but you should add these to a daily tips journal to ensure that all of your tips are reported. The point is that restaurant employees must report and pay taxes on tip and all of their wages, including tips. An employer that operates a primary food or beverage establishment is required to file Form 8027, Annual Report on Employers Reports of Tip Income and Allocated Tips, to make annual reports to the Internal Revenue Service regarding the income they receive for food and beverages, as well as tips that employees report back to their employers. The employer reports to the Internal Revenue Service the difference between tips and an 8% fee allocated to its employees.

Finally, it’s important to remember that all tips should be included in your taxable income, regardless of who you report them.

We hope this article helped understand how to report your tips. Happy serving!

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Category: Tax and Life Changes, Tax Tips and Tricks, Taxes for Prior Years
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File My 2019 Taxes Electronically

Posted by admin on November 9, 2021
Last modified: November 16, 2021

Did you know that the income threshold is different if you are self-employed? You needed to file your 2019 taxes if you had at least $400 of net earnings from self-employment. You can still file your 2019 taxes if this applies to you and you did not fulfill your filing requirements in 2020.

If You are Expecting a Tax Refund

If you are expecting a tax refund, you have three years to file your prior year’s taxes. That means that April 15, 2023 is the deadline to submit your 2019 tax return and claim your 2019 tax refund.

After that date, the amount the IRS owes you is retained by the government and goes to the U.S. Treasury. After that date, you will also be unable to apply any excess tax paid toward another tax year where you owe income tax.

You may also be owed money by the IRS even if you earned less than the minimum gross income and weren’t required to file your 2019 taxes. Your employer may have withheld income tax for you throughout 2019 that you can claim back. 

You aren’t able to get any of your money owed back until you file. So, if you haven’t yet filed your 2019 taxes you should file as soon as possible to get your money as soon as possible.

file my 2019 taxes electronically
file my 2019 taxes electronically

If You Owe Taxes

If you owe taxes, it will often be a good idea to file your prior year’s taxes, even if you are not currently able to pay your unpaid tax bill in full. Although you can face tax penalties filing your 2019 taxes after the deadline, you can reduce these the earlier you file.

The IRS has both late filing and late payment penalties. However, the late filing penalty will usually work to be more expensive than the late payment penalty. This is why you can generally benefit from filing even if you are unable to pay your full unpaid tax bill.

This advice remains true even if you owe a significant amount to the IRS but cannot pay your full tax bill for 2019. After filing your 2019 taxes, you can then benefit from working out a tax payment plan with the IRS. This has a few benefits:

  • By filing your 2019 tax return, you can put a stop to the more considerable late filing penalties. Remember that letting IRS late filing penalties will usually end up being much more costly than the equivalent late payment penalties.
  • Contacting the IRS to be put on a payment plan means that you can pay off your tax bill according to what you are able to afford.
  • A payment plan in place to pay your outstanding tax bill means that you can avoid more severe forms of collection enforcement for that bill.

And, can I still file my 2019 taxes electronically?

No. Unfortunately, you cannot still file your 2019 taxes electronically. The deadline to file your 2019 taxes electronically was October 15, 2020. However, there are options available so that you can put together the paperwork for your 2019 taxes electronically. Once the documents for your 2019 tax return are completed, you can print and mail them to the IRS and/or the relevant state tax agencies.

Free tax transcripts from the IRS are available for the current tax year at RapidTax.com and the past three years at PriorTax.com, so, you have until 2023 to request a free tax transcript for the 2019 tax year. 

PriorTax.com can help you file your prior tax returns and answer any questions you may have during the process. We can review and prep your documents for you to download, print, sign, and mail off.

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Category: Tax Deductions and Credits, Tax Tips and Tricks, Tax Year 2019, Taxes for Prior Years
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Is your 2020 tax refund still processing with the IRS?

Posted by Manisha Hansraj on June 10, 2021
Last modified: June 10, 2021
tax refund delay 2021

Like many taxpayers, your tax refund may be delayed.

The COVID-19 pandemic hit the world by storm. From stimulus payments, tax changes and extending the tax deadline, your refund may be taking longer than expected.

If you noticed that your tax refund is stuck on the “processing” status when checking the IRS Where’s My Refund Tool, you may need to allow some more time for the IRS to disburse your refund. Instead of taxpayers receiving their tax refund within two to three weeks, taxpayers are waiting from six to eight weeks to get their refund.

Here’s why your refund may still be delayed with the IRS.

Recovery Rebate Credit

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Category: Tax Tips and Tricks
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When does the additional $300 unemployment benefit begin?

Posted by Manisha Hansraj on August 25, 2020
Last modified: August 25, 2020
$300 unemployment benefit

Jobless Americans are worrying about their unemployment benefits.

Since the extra $600 weekly benefit disappeared, their income is significantly less. Those who are out of work depend on their unemployment income to pay their bills.

Recently, President Donald Trump issued a measure for $400 per week to aid Americans.

However, instead, it’s an additional $300 unemployment benefit. States should provide the extra $100, but it’s up to them to distribute this.

Eligibility

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Category: Tax Tips and Tricks
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10 Reasons to File Your Prior Year Tax Return Now

Posted by Manisha Hansraj on December 3, 2019
Last modified: December 5, 2019
prior year tax return

It’s not too late to file your taxes.

Life is never put on hold, even for tax season. Before you know it, the April and even October deadline fly right by. Then, you forget to file it next tax season and then the season after that.

However, although the deadlines go by, you should still file your prior year tax return. Here are some reasons why.

1. You’re getting a refund

One of the most important things to remember is that the IRS does not wait for anyone. According to the IRS, you have a three-year statute of limitations for refunds; meaning you can only claim tax refunds going back three tax years within the original April due date.

For example, if you want to claim a 2016 tax refund, your last chance to claim it is April 15, 2020. This means you must file by that date to get your refund. Therefore, any tax years going back from 2016 cannot be claimed.

Check out our helpful tax calculators to determine your refund for relevant tax years.

2. The IRS can hold your current year refund

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