Embedded Files
"Today, it takes more brains and effort to make out the income-tax form than it does to make the income." ~Alfred E. Neuman
The income tax has made more liars out of the American people than golf has. - Will Rogers
"Taxes are one of the best inventions in the history of human civilization. I may be the only person who thinks that, but without taxes, civilization would collapse. How else do we pay for our military, roads, emergency services, schools, hospitals, and social programs? Liberals tend to hate military spending, conservatives tend to hate entitlement and social programs, and we all can argue those issues ad nauseum. But without taxes, government doesn’t function. Without a functioning government, life begins to look like a Mad Max movie. I’ll watch a postapocalypse movie—I don’t want to live in one. With the understanding that taxes are good, taxes are patriotic, and taxes are essential to civilization," From Monk to Money Manager: A Former Monk's Financial Guide to Becoming a Little Bit Wealthy---and Why That's Okay" by Doug Lynam
TAX TIPS:
Ask a CPA every 3 years to review your tax returns in order to find ways to save on taxes and be more tax efficient
Enroll in a FSA: Using an FSA can reduce your taxes. What is an FSA? A Flexible Spending Account (also known as a flexible spending arrangement) is a special account you put money into that you use to pay for certain out-of-pocket health care costs. You don't pay taxes on this money. You can only get it through your employer. You put pretax money away to spend on qualifying medical expenses not covered by your health insurance. It helps you reduce your taxable income and cover healthcare costs. There is an end of the year deadline to spend this money. If you haven't spend all the funds for the year yet.... go to FSAstore.com - Official Site - Items Guaranteed FSA Eligible to see what qualifies. Almost everything sold on the site is elegible for FSA dollars.
Find free tax help: Taxhelp-Expert.com Stumped by income tax or want to know how you can get the most from your tax return? To ask your question, just fill out the questionnaire and submit. A tax expert will get back to you with an answer in 48 hours.
IRS Free File. Almost everyone can file their tax return electronically for free. The software does all the work of finding deductions, credits and exemptions. It's free for those who earned $72,000 or less in 2020. Some of the Free File packages also offer free state tax return preparation. Taxpayers who are comfortable filling out tax forms electronically can use Free File Fillable Forms, regardless of income, to file their tax returns either by mail or online.
Choosing a preparer. The IRS has several options for finding a tax preparer. One resource is Choosing a Tax Professional, which offers a wealth of information for selecting a tax professional. The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help taxpayers find preparers in their area who currently hold professional credentials recognized by the IRS or who have an Annual Filing Season Program Record of Completion.
Interactive tax assistant. This tool has recently been updated with answers to even more tax questions. It can also help a taxpayer determine if a type of income is taxable. Many people experienced changes to income and other life events in 2020. This tool can help them find tax credits and deductions.
"Tax Notices: Penalty Removal Request. It’s the time of year where the IRS and state tax agencies send out tax notices for additional tax due, underpayment of estimated payments, etc. There are usually 3 components of the amount due on a tax notice: Tax liability, interest, penalty. A tip that I’ve passed along on the podcast that has been really effective for many members of the ChooseFI community is that you can request an "abatement" (removal) of the penalty. I’m always careful to say this is NOT tax advice to you personally – just what I’ve experienced anecdotally in my career. The key to an abatement request is to write a short letter (or fill out IRS Form 843) in response to the taxing agency explaining that you made an honest mistake, you did not intend to underpay your tax liability and you have taken steps to make sure it won’t happen in the future. If owed, you would also include a check for the tax liability and interest along with this abatement request letter. For specific language to include in your abatement letter, I found many examples by Googling the topic." Brad from ChooseFI
Did someone use your SSN to file taxes? Here’s what to do
Looking to Settle for Less with the IRS? (youtube)
Year-round tax planning pointers for taxpayers
Here are some simple things taxpayers can do throughout the year to make filing season less stressful.
Organize tax records. Create a system that keeps all important information together. Taxpayers can use a software program for electronic recordkeeping or store paper documents in clearly labeled folders. They should add tax records to their files as they receive them. Organized records will make tax return preparation easier and may help taxpayers discover overlooked deductions or credits.
Identify filing status. A taxpayer's filing status determines their filing requirements, standard deduction, eligibility for certain credits and the correct amount of tax they should pay. If more than one filing status applies to a taxpayer, they can get help choosing the best one for their tax situation with the IRS’s Interactive Tax Assistant, What Is My Filing Status. Changes in family life — marriage, divorce, birth and death — may affect a person's tax situation, including their filing status and eligibility for certain tax credits and deductions.
Understand adjusted gross income (AGI). AGI and tax rate are important factors in figuring taxes. AGI is the taxpayer's income from all sources minus any adjustments. Generally, the higher a taxpayer's AGI, the higher their tax rate and the more tax they pay. Tax planning can include making changes during the year that lower a taxpayer's AGI.
Check withholding. Since federal taxes operate on a pay-as-you-go basis, taxpayers need to pay most of their tax as they earn income. Taxpayers should check that they're withholding enough from their pay to cover their taxes owed, especially if their personal or financial situations change during the year. To check withholding, taxpayers can use the IRS Withholding Estimator. If they want to change their tax withholding, taxpayers should provide their employer with an updated Form W-4.
Make address and name changes. Taxpayers should notify the United States Postal Service, employers and the IRS of any address change. To officially change a mailing address with the IRS, taxpayers must compete Form 8822, Change of Address, and mail it to the correct address for their area. For detailed instructions, see page 2 of the form. Report any name change to the Social Security Administration. Making these changes as soon as possible will help make filing their tax return easier.
Save for retirement. Saving for retirement can also lower a taxpayer's AGI. Certain contributions to a retirement plan at work and to a traditional IRA may also reduce taxable income.
Here’s What To Do if You Owe Taxes, but Can’t Pay (YouTube)
The IRS Doesn’t Tax These Income Sources
Tax season can be a bummer even though we know it’s coming every year. It seems like we owe the IRS a piece of every bit of money we get.
And thanks to higher interest rates, some people are remembering for the first time in years that interest earned on savings accounts and CDs is taxable.
However, as Kiplinger pointed out, there’s a long list of income that the IRS may not tax:
Financial gifts to/from individuals ($18,000 limit per person)Charitable gifts (get receipts, depends on if you take the standard deduction or itemize)
Employer-provided health insurance
HSA contributions
Inheritances (cash, property, etc. … income subsequently generated is taxable)
Life insurance proceeds (this can get complex)
Long-term care insurance payouts
Disability benefits
Municipal bond interest (with some exceptions)
Mediation can help taxpayers settle tax issues
Mediation – also known as Alternative Dispute Resolution – can help taxpayers resolve tax issues early and efficiently.
The process provides taxpayers a faster, more collaborative and cost-effective approach to case resolution. The traditional appeal process is still available for taxpayers who choose it.
Mediation might be right for a taxpayer if:
• The taxpayer wants to resolve the dispute at the earliest possible stage of their audit.
• The taxpayer doesn’t have many disputed issues.
• The taxpayer gave the IRS information to support their position.
• The IRS is still considering the taxpayer’s case and issues remain unresolved.
Mediation is:
• Voluntary for both parties.
• Nonbinding, meaning each party retains 100% control over whether to settle the case. No one can force either party to do something they don’t agree to do.
• Effective when both parties have a desire to resolve the disputed issue.
• Appropriate when all issues are fully resolved except the issue for which mediation is requested.
• A chance to avoid a lengthy appeal process or costly litigation.
Mediation is not:
• Required by either party.
• A replacement for the audit or collection process.
• A process in which the parties in the dispute offer arguments directly to the mediator hoping to “win.”
• Effective if either party believes the only way the dispute will get resolved is if the other party concedes or gives up on its position.
• A time to present new information or raise new issues.
• An opportunity to try and get a more favorable outcome or delay the examination or collection process.
Mediation works best if taxpayers prepare for success. Find out what to expect from the Independent Office of Appeals.
More information
• Appeals Mediation - Alternative Dispute Resolution (ADR)
• Publication 4167, Appeals - Introduction to Alternative Dispute Resolution
• IRS Independent Office of Appeals forms Alternative Dispute Resolution Program Management Office
What taxpayers should do if they receive mail from the IRS
IRS sends notices and letters when it needs to ask a question about a taxpayer’s federal tax return, let them know about a change to their account or request a payment. Don’t panic if something comes in the mail from the IRS – they’re here to help.
When a taxpayer receives mail from the IRS, they should:
Read the letter carefully. Most IRS letters and notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and includes any steps the taxpayer needs to take. A notice may reference changes to a taxpayer's account, taxes owed, a payment request or a specific issue on a tax return. Taking prompt action could minimize additional interest and penalty charges.
Review the information. If a letter is about a changed or corrected tax return, the taxpayer should review the information and compare it with the original return. If the taxpayer agrees, they should make notes about the corrections on their personal copy of the tax return and keep it for their records. Typically, a taxpayer will need to act only if they don't agree with the information, if the IRS asked for more information or if they have a balance due.
Take any requested action, including making a payment. The IRS and authorized private debt collection agencies do send letters by mail. Taxpayers can also view digital copies of select IRS notices by logging into their IRS Online Account. The IRS offers several options to help taxpayers struggling to pay a tax bill.
Reply only if instructed to do so. Taxpayers don't need to reply to a notice unless specifically told to do so. There is usually no need to call the IRS. If a taxpayer does need to call the IRS, they should use the number in the upper right-hand corner of the notice and have a copy of their tax return and letter.
Let the IRS know of a disputed notice. If a taxpayer doesn't agree with the IRS, they should follow the instructions in the notice to dispute what the notice says. The taxpayer should include information and documents for the IRS to review when considering the dispute.
Keep the letter or notice for their records. Taxpayers should keep notices or letters they receive from the IRS. These include adjustment notices when the IRS takes action on a taxpayer's account. Taxpayers should keep records for three years from the date they filed the tax return.
Watch for scams
The IRS will never contact a taxpayer using social media or text message. The first contact from the IRS usually comes in the mail. Taxpayers who are unsure whether they owe money to the IRS can view their tax account information on IRS.gov.
More information:
• Understanding Your IRS Notice or Letter
Reminder: Taxpayers must file and pay taxes even if they live abroad
It’s important that U.S. citizens and resident aliens living abroad understand their tax obligations.
Their worldwide income -- including wages, unearned income and tips -- is subject to U.S. income tax, regardless of where they live or where they earn their income. They also have the same income tax filing requirements as U.S. citizens or resident aliens living in the United States.
An income tax filing requirement applies even if a taxpayer qualifies for tax benefits such as the Foreign Earned Income Exclusion or the Foreign Tax Credit, which reduce or eliminate U.S. tax liability. These tax benefits are available only if the eligible taxpayer files a U.S. income tax return.
Taxpayers living outside of the U.S. and Puerto Rico have an automatic extension to file – but not to pay
A taxpayer has an automatic two-month extension to June 17, 2024, if both their tax home and abode are outside the United States and Puerto Rico. Even with an extension, a taxpayer will have to pay interest on any tax that wasn’t paid by the regular April due date.
Those serving in the military outside the U.S. and Puerto Rico on the regular due date of their tax return also qualify for the extension to June 17, 2024. Taxpayers should attach a statement to their tax return if one of these two situations applies. More information is in the instructions for Form 1040 and Form 1040-SR, Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad, and Publication 519, U.S. Tax Guide for Aliens.
Reporting requirement for foreign accounts and assets
Federal law requires U.S. citizens and resident aliens to report their worldwide income, including income from foreign trusts and foreign bank and other financial accounts.
Schedule B (Form 1040), Interest and Ordinary Dividends – In most cases, affected taxpayers attach Schedule B to their federal return to report foreign assets. Part III of Schedule B asks about the existence of foreign accounts such as bank and securities accounts and usually requires U.S. citizens and resident aliens to report the country in which each account is located.
Form 8938, Statement of Foreign Financial Assets – Some taxpayers may also need to attach Form 8938 to their return to report specified foreign financial assets if the total value of those assets exceeds certain thresholds. The instructions for this form have the details.
People must also report foreign assets of $10,000 or more to the Treasury Department
U.S. persons with an interest in or signature or other authority over foreign financial accounts where the total value exceeded $10,000 at any time during 2023 must also file a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts with the Treasury Department. The form is available only through the BSA E-filing System website.
The deadline for filing the annual Report of Foreign Bank and Financial Accounts was April 15, 2024. U.S. persons who missed the April deadline have an automatic extension until Oct. 15, 2024, to file the FBAR.
Eligible seniors have many free tax filing options
Whether they prepare and file their own tax returns or get in-person help, there are easy, secure and free tax filing options for seniors.
In-person IRS help for seniors and low-income taxpayers
Eligible taxpayers can have their taxes prepared in person for free with these two programs:
Tax Counseling for the Elderly – The TCE program prioritizes taxpayers aged 60 and older. TCE specializes in questions about pensions and retirement-related issues unique to seniors.
Volunteer Income Tax Assistance – The VITA program is generally for people who make $60,000 or less, people with disabilities and limited English-speaking taxpayers. VITA assistance is often provided at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations.
To find a TCE or VITA site near them, taxpayers can use the site locator tools on the IRS Free Tax Preparation page of IRS.gov.
IRS Free File
Many seniors and retirees can file their taxes for free with IRS Free File at IRS.gov/freefile. The program offers online tax preparation software for taxpayers with adjusted gross income (AGI) of $79,000 or less in 2023.
With IRS Free File, leading tax software providers make their online products available for free. One is available in Spanish. IRS Free File partners set their own eligibility rules based on income, age and state residency.
With IRS Free File, taxpayers can:
Find the product that’s right for them with the Find Your Trusted Partner tool.
File Form 1040-SR for seniors over the age of 65 and find the most common forms that can be filed electronically.
IRS Free File products support mobile phone access. Taxpayers can do their taxes on their smartphone or tablet.
Free File Fillable Forms
Taxpayers with an AGI over $79,000 can use Free File Fillable Forms. Fillable Forms don't include guided preparation, so taxpayers need to be comfortable completing their own tax forms.
Veterans can file with MilTax
Certain veterans, military retirees and military survivors can file their taxes with MilTax online which is offered through the Department of Defense. With MilTax, eligible taxpayers can prepare and file their federal income tax returns and up to three state income tax returns for free.
IRS Direct File
Taxpayers in 12 states may be eligible to file for free with the IRS Direct File pilot, a new tax filing service from the IRS.
How to pay and get help with state and local taxes: State and local taxes can be just as complicated as federal income taxes. A wide variety of tax systems are in use and tax matters can get complex. It’s important to know: 1) They may calculate your taxes differently from the federal level. 2) What income your state taxes. 3) How your state collects money from residents and non-residents. 4) When your return is due. Your state tax deadline could differ from the federal due date.
Low to moderate income workers may be eligible for the Earned Income Tax Credit: The Earned Income Tax Credit is the federal government’s largest refundable tax credit for low to moderate income workers. Almost a third of those who qualify for the EITC became eligible for the first time this year due to changes in their marital, parental or financial status and may not realize they’re eligible. People who earned $63,398 or less in 2023 may be eligible for this valuable tax credit. Other workers at risk for overlooking the EITC include those: 1) Living in non-traditional homes, such as a grandparent raising a grandchild. 2) Whose earnings declined or whose marital or parental status changed. 3) Without children. 4) With limited English skills. 5) Who are veterans. 6) Living in rural areas 7) Who are Native Americans. 8) With earnings below the filing requirement. Taxpayers can check their eligibility and how much they qualify for at IRS.gov/eitc. The EITC is a tax credit for certain people who work and have low to moderate income. A tax credit usually reduces tax owed and may also result in a refund. To get the EITC, qualified workers must file a tax return and claim the credit. Eligible taxpayers should file a tax return to claim the credit even if their earnings were below the income requirement to file.
Filing a federal tax return even if it’s not required could put money in taxpayers’ pockets
Some people choose not to file a tax return because they aren't legally required to file, but they could be missing out on refundable tax credits or an income tax refund. This could apply to someone if they:
Have had federal income tax withheld from their pay.
Made estimated tax payments.
Qualify to claim refundable tax credits.
Don’t miss out on valuable tax credits
A few tax credits people can claim on a federal tax return if they’re eligible include:
Earned Income Tax Credit – The EITC helps workers who earned $63,398 or less in 2023 when they file a federal tax return. Taxpayers can use the EITC Assistant on IRS.gov to check their eligibility.
Child Tax Credit – Taxpayers can claim the Child Tax Credit if they had a qualifying child under the age of 17 at the end of 2023.
Credit for Other Dependents – Taxpayers who don’t qualify for the Child Tax Credit may qualify for the Credit for Other Dependents. This includes people who have:
Dependent children who are age 18 or older at the end of 2023.
Parents or other qualifying individuals they support.
Education credits – The American Opportunity Tax Credit is for qualified education expenses for the first four years of higher education. The Lifetime Learning Credit is for qualified tuition and related expenses paid for eligible students enrolled in an eligible educational institution.
Get help deciding whether to file
The Interactive Tax Assistant provides answers to many common tax law questions based on an individual's specific circumstances. It can help someone decide whether they should file a tax return and if they're eligible for many common tax credits.
The tool is safe. It keeps the user anonymous and discards the information they provide when they exit a tool.
E-file to get a refund faster
The fastest way to get a tax refund is to e-file and select direct deposit. The IRS issues most refunds for e-filed returns in less than 21 days.
By law, taxpayers have the right to challenge the IRS’ position and be heard
Every taxpayer has fundamental rights when working with the IRS. Collectively their rights are known as the Taxpayer Bill of Rights. One of these is the right to challenge the IRS's position and be heard.
Here’s what this right means for taxpayers.
Taxpayers have the right to:
Raise objections.
Provide additional documentation in response to formal or proposed IRS actions.
Expect the IRS to consider their timely objections.
Have the IRS consider any supporting documentation promptly and fairly.
Receive a response if the IRS does not agree with their position.
Here are some specific things this right provides taxpayers:
Here are some specific things this right provides taxpayers:
In some cases, the IRS will notify a taxpayer that their tax return has a math or clerical error. If this happens, the taxpayer:
Has 60 days to tell the IRS that they disagree.
Should provide copies of any records that may help correct the error.
May call the number listed on the letter or bill for assistance.
Can expect the agency to make the necessary adjustment to their account and send a correction if the IRS upholds the taxpayer's position.
Here's what will happen if the IRS does not agree with the taxpayer's position:
The agency will issue a notice proposing a tax adjustment. This is a letter that comes in the mail.
This notice provides the taxpayer with a right to challenge the proposed adjustment.
The taxpayer makes this challenge by filing a petition in U.S. Tax Court. The taxpayer must generally file the petition within 90 days of the date of the notice, or 150 days if it is addressed outside the United States.
Taxpayers can submit documentation and raise objections during an audit. If the IRS does not agree with the taxpayer's position, the agency issues a notice explaining why it is increasing the tax. Prior to paying the tax, the taxpayer has the right to petition the U.S. Tax Court and challenge the agency's decision.
In some circumstances, the IRS must provide a taxpayer with an opportunity for a hearing before an independent Office of Appeals. The agency must do this before taking enforcement actions to collect a tax debt.
These actions include levying the taxpayer's bank account. Immediately after filing a notice of federal tax lien in the appropriate state filing location.
If the taxpayer disagrees with the decision of the Appeals Office, they can petition the U.S. Tax Court.
More Information:
Publication 556, Examination of Returns, Appeal Rights, and Claims for Refund
How to request help with a tax matter from the IRS Independent Office of Appeals
If a taxpayer disagrees with an IRS decision, they can ask the IRS Independent Office of Appeals to review their case. This office is separate from the rest of the IRS. Appeals officers review cases that taxpayers submitted, meet with the taxpayer informally and consider the taxpayer’s position and the IRS's position in a fair and unbiased manner.
Overview of the appeals process
Here's what taxpayers need to know if they want to appeal their case:
To submit an appeal request, taxpayers mail their request in writing to the office that sent them the letter with their appeal rights. For information on filing a formal written protest or a small case request, taxpayers should review Publication 5, Your Appeal Rights and How To Prepare a Protest If You Disagree. The IRS office that receives the request will consider the taxpayer's request and attempt to resolve the disputed tax issues. If that office can't resolve the taxpayer's issues, they will forward the case to Appeals for consideration.
Once the request is with Appeals, the Appeals officer contacts the taxpayer within 45 days by mail to schedule an informal conference to review the taxpayer's situation. Appeals conducts conferences by phone, in person and by video. Taxpayers may choose which type of conference they prefer.
At the conference, the Appeals officer discusses with the taxpayer the law as it applies to the facts of the case, including court rulings on similar cases.
If a taxpayer hasn't heard about their appeal andit's been more than 120 days since they filed their request, taxpayers can ask for a status update by contacting the IRS office they worked with last.
If the taxpayer sends new information or documents to Appeals, the Appeals officer may need to send the case back to the original IRS office to review the new information. Appeals will not raise new issues or reopen issues agreed to by the taxpayer or the IRS except in cases of potential fraud or malfeasance.
Appeals officers review the facts, the law, the taxpayer's comments and information the taxpayer and the IRS office presented before they make a final decision. They will also explain to the taxpayer the reasons for the decision and their options. Generally, there are three outcomes of an appeal:
In the IRS's favor: If the facts and laws support the government's position, the Appeals officer recommends that the taxpayer concede and give up the issue.
In the taxpayer's favor: If the law and facts support the taxpayer's position or courts have ruled in favor of taxpayers in similar cases, the Appeals officer recommends that the IRS concede and give up the issue.
Compromise: The Appeals officer may recommend a compromise when the facts or laws are unclear or the courts have made different rulings on similar cases. In this situation, Appeals may recommend a settlement where the taxpayer pays a percentage of the tax due.
Interest continues to add up on any unpaid balance a taxpayer owes as Appeals reviews a case.
More information:
How Long Do You Need To Keep Tax Documents?
Homepage - National Association of Enrolled Agents: The NAEA is the nation’s leading community for tax practitioners – from aspiring enrolled agents to experts with decades of experience. We are advancing the professional tax practice through leadership, management, community, and ethics.
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Tax Prep Checklist: What Documents Do I Need to File Taxes?
Taxpayer Advocate Service: Helping taxpayers navigate their IRS issues or concerns. The Taxpayer Advocate Service is an independent organization within the IRS that helps taxpayers and protects taxpayers’ rights.
They can offer help when tax problems cause a financial difficulty. When the taxpayer has tried and been unable to resolve their issue with the IRS, or a taxpayer believes an IRS system, process, or procedure just isn’t working as it should. If taxpayers qualify for assistance, which is always free, TAS will do everything possible to help them.
TAS may be able to help taxpayers if they
Are experiencing financial hardship
Have experienced a delay of more than 30 days to resolve a tax account problem
Have not received a response or resolution to the problem or inquiry by the date promised by the IRS
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Offer in Compromise | Internal Revenue Service: An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability or doing so creates a financial hardship. We consider your unique set of facts and circumstances:
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What Is My Filing Status?: If taxpayers are confused about their filing status, they can use the What Is My Filing Status? tool Interactive Tax Assistant tool on IRS.gov. This tool can also help taxpayers who are eligible for more than one status find the one that will result in the lowest amount of tax.
#IRSTaxTip: IRS Free File can help first time filers with their tax returns. http://ow.ly/vNR350MChiL
#IRSTaxTip: Not too much, not too little - taxpayers should check if their tax withholding is just right. http://ow.ly/8awX50Ls2Ka
#IRSTaxTip: Reviewing tax credits and deductions now helps set taxpayers up for success at tax time. http://ow.ly/xQSK50LQhBl
#IRSTaxTip: Good recordkeeping year-round helps taxpayers avoid tax time frustration. http://ow.ly/uFCr50LQhxk
#IRSTaxTip: Understanding the Credit for Other Dependents. http://ow.ly/T1aq50MVNp0
#IRSTaxTip: Common mistakes international filers make using Free File Fillable Forms. http://ow.ly/Bwfi50MVNpT
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How to Get a Faster Tax Refund
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Get An IP PIN tool enables anyone who has an SSN or ITIN to get an IP PIN after they verify their identity through a rigorous authentication process. Taxpayers should review the Secure Access requirements before they try to use the Get An IP PIN tool.
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Saver’s Credit: How To Get Free Money To Save for Retirement
The Saver's Credit is a tax credit for eligible contributions to your IRA, employer-sponsored retirement plan or Achieving a Better Life Experience (ABLE) account. You may be able to take a tax credit for making eligible contributions to your IRA or employer-sponsored retirement plan.
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1040-SR: What you need to know about the new tax form for seniors ... a new simplified tax form ... a do it yourself with no need for a tax professional for senior citizens over 65 ... it takes only 4-6 minutes to complete.
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Free Tax Preparation Help If you need help with your taxes, visit the IRS website. There's a program called VITA (volunteer income tax assistance) that offers free basic tax return preparation to qualified individuals. The program offers help to people who generally make $57,000 or less, have disabilities and or are limited English-speaking taxpayers. Robin from Dollar Stretcher tips
https://www.supermoney.com/fresh-start-program-help-pay-taxes/
The Fresh Start Program helps make streamlined installment agreements more easily available to taxpayers. Setting up an installment agreement with the IRS may help you avoid some tax penalties.. If you owe $50,000 or less, the Fresh Start Program can help you pay your debt through monthly direct debit payments spread out over six years
Listen to 217| How to Save Thousands in US Federal Taxes Using Geo-arbitrage | David McKeegan on Apple Podcasts: David from Greenback Expat Tax Services explores the basics of taxes for expats. Learn about the rules surrounding expats taxes and strategies to consider. Listen to 217| How to Save Thousands in US Federal Taxes Using Geo-arbitrage | David McKeegan from ChooseFI on Apple Podcasts. https://podcasts.apple.com/us/podcast/choosefi/id1187770032?i=100047713853
How to Legally Hide Money from the Government FOREVER in 2021 (Roth Secrets Revealed) Money Guy Show Tax evasion is illegal, however, tax avoidance is highly encouraged. Roth accounts provide an outstanding opportunity for tax advantaged retirement savings and wealth building. This powerful investment vehicle was created to encourage everyone to save...Listen on Apple Podcasts: https://podcasts.apple.com/us/podcast/money-guy-show/id121362031?i=1000509826560
How to Live Income-Tax Free in the USA (pt 2) ... and Make Money!
Radical Personal Finance Listen on Apple Podcasts: https://podcasts.apple.com/us/podcast/radical-personal-finance/id896153632?i=1000516337024
Protect Yourself From Tax Fraud: Each year, thousands of people lose millions of dollars to tax scams. Scams take many shapes and forms, like phone calls, letters, or emails from Internal Revenue Service (IRS) impersonators. They claim a need to verify your personal information or use threats to bully you into paying a fabricated tax bill. They may even threaten to have you arrested if you do not pay up. Don’t fall victim to these tactics. Keep the following tips in mind:
The IRS does not initiate contact with taxpayers by email, text messages or social media channels to request personal or financial information.
Contact the Treasury Inspector General for Tax Administration to report a phone scam at 1-800-366-4484 or online at the IRS Impersonation Scam Reporting web page.
The IRS will not threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.
Understand Tax Season: Does teaching about taxes seem as intimidating as completing your own taxes? With IRS resources for teachers, it doesn’t have to be! Explore the Understanding Taxes lesson plans to choose the lesson content and activities that will resonate the most with your students
Learn From Tax Simulations: After you teach your students about taxes, take them through a virtual simulation to practice what they've learned. The tax simulation app allows kids to understand the tax process through the lens of 20 different taxpayers. They learn how to file taxes electronically through different income scenarios like claiming credits or submitting a return.
MoneyMath: Lessons for Life: As tax season approaches, you can teach your middle schoolers about financial literacy. Through real-life examples of personal finance, MoneyMath from the Treasury Department provides a free curriculum for teachers. It first explores careers, then students learn about income, taxes, gross income, saving, and net income in different fields.
How people can give back by becoming an IRS-certified volunteer : The IRS and its community partners are looking for people around the country to become IRS-certified volunteers for the upcoming tax season.
Tax tips for new parents
Kids are expensive. Whether someone just brought a bundle of joy home from the hospital, adopted a teen from foster care, or is raising their grandchild. There are several tax breaks that can help.
Here are some tax tips for new parents
Get the child a Social Security or Individual Tax Identification number
To claim parental tax breaks, the taxpayer must have their child or dependent’s Social Security number, Adoption Tax Identification Number or Individual Tax Identification number. Confirming a child’s birth is the only way the IRS can verify that the parent is eligible for the credits and deductions they claim on their tax return.
Check withholding
A new family member might make taxpayers eligible for new credits and deductions, which can greatly change their tax liability. They can use the IRS Withholding Estimator to check their withholding. Taxpayers should provide their employer with an updated Form W-4, Employee's Withholding Certificate, if they want to change how much tax is withheld from their paycheck.
Check eligibility for these tax credits and deductions
Child Tax Credit
Taxpayers who claim at least one child as their dependent on their tax return may be eligible for the Child Tax Credit. For help figuring out if a child qualifies for this credit, taxpayers can check Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents?
Child and Dependent Care Credit
If taxpayers paid someone to take care of their children or another member of their household while they work, they may qualify for the Child and Dependent Care Credit regardless of their income. Taxpayers who pay for daycare expenses may be eligible to claim up to 35% of their daycare expenses with certain limits.
Adoption Tax Credit
This credit lets families who are in the adoption process during the tax-year claim eligible adoption expenses for each eligible child. Taxpayers can apply the credit to international, domestic, private and public foster care adoptions.
Earned Income Tax Credit
The Earned Income Tax Credit helps low- to moderate-income families get a tax break. If they qualify, taxpayers can use the credit to reduce the taxes they owe – and maybe increase their tax refund.
Credit for Other Dependents
Taxpayers with dependents who don't qualify for the Child Tax Credit may be able to claim the Credit for Other Dependents. Taxpayers can use the Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents tool on IRS.gov to help determine if they are eligible to claim the credit. They can claim this credit in addition to the Child and Dependent Care Credit and the Earned Income Credit.
Homeowners: review these house-related deductions and programs
The summer months are a popular time to buy or sell a house. New homeowners should put reviewing the tax deductions, programs and housing allowances they may be eligible for on their move in to-do list.
Deductible house-related expenses
Most home buyers take out a mortgage loan to buy their home and then make monthly payments to the mortgage holder. This payment may include several costs of owning a home. The costs the homeowner can deduct are:
state and local real estate taxes, subject to the $10,000 limit.
home mortgage interest, within the allowed limits.
Taxpayers must itemize their deductions to deduct home ownership expenses.
Non-deductible payments and expenses
Homeowners can't deduct any of the following items:
Insurance including fire and comprehensive coverage and title insurance
The amount applied to reduce the principal of the mortgage
Wages paid to domestic help
Depreciation
The cost of utilities, such as gas, electricity or water
Forfeited deposits, down payments or earnest money
Internet or Wi-Fi system or service
Homeowners' association fees, condominium association fees or common charges
Home repairs
Mortgage interest credit
The mortgage interest credit helps people with lower income afford home ownership. Those who qualify can claim the credit each year for part of the home mortgage interest paid. A homeowner may be eligible for the credit if they were issued a qualified Mortgage Credit Certificate from their state or local government. An MCC is issued only for a new mortgage for the purchase of a main home.
Homeowners Assistance Fund
The Homeowners Assistance Fund program provides financial assistance to eligible homeowners for paying certain expenses related to their principal residence to prevent mortgage delinquencies, defaults, foreclosures, loss of utilities or home energy services and also displacements of homeowners experiencing financial hardship after January 21, 2020.
Minister's or military housing allowance
Ministers and members of the uniformed services who receive a nontaxable housing allowance can still deduct their real estate taxes and home mortgage interest. They don't have to reduce their deductions based on the allowance.
Avoiding identity theft scammers posing as the IRS
Imitation may be the sincerest form of flattery, but when scammers pose as the IRS it means trouble for taxpayers. Identity thieves may contact taxpayers through fraudulent calls, emails, texts or social media messages pretending to be the IRS. Here are tips to help taxpayers know when the IRS is contacting them.
Letters and notices
A letter or notice is usually the first way the IRS will contact a taxpayer. When a taxpayer receives a suspicious letter or notice, they can check to see if it’s really the IRS:
Log in to their secure IRS Online Account to see if a copy of the notice or letter is in their file.
Review common IRS letters and notices at the Understanding Your IRS Notice or Letter page on IRS.gov.
Contact IRS customer service directly to authenticate it, if they weren’t able to authenticate in their online account.
Verify that any collection notice from a private collection agency has the same Taxpayer Authentication Number as the Notice CP40 the taxpayer received from the IRS. Taxpayers can visit Private Debt Collection Frequently Asked Questions to learn more about verifying a private collection agency.
Phone calls
After first mailing a notice or letter to a taxpayer, IRS agents may call to confirm an appointment or discuss items for a scheduled audit. Taxpayers should know that:
The IRS doesn’t leave pre-recorded, urgent or threatening messages. Scammers will tell victims that if they do not call back, a warrant will be issued for their arrest. Anyone making threats is a scammer.
Private collection agencies contracted by the IRS may call taxpayers to collect certain outstanding inactive tax liabilities, but only after the taxpayer and their representative have received written notice.
The IRS and its authorized private collection agencies will never ask a taxpayer to pay using any form of pre-paid card, store or online gift card. Taxpayers can review the IRS payments page at IRS.gov/payments for all legitimate ways to make a payment.
Email, text and social media
The IRS doesn't first contact taxpayers by email, text message or social media channels to request personal or financial information. Some common electronic scams that thieves use are:
Sending phishing emails to taxpayers.
Posing as an IRS social media account to contact taxpayers about a fake bill or refund.
Texting taxpayers about fake “tax credits” or "stimulus payments."
These messages will often direct taxpayers to click fraudulent links they claim are IRS websites or other online tools. Again, the IRS will mail a letter or notice before calling or emailing, and it will never contact a taxpayer by social media or text message.
In person visits
The IRS recently ended most unannounced visits to taxpayers by agency revenue officers. Ending these unannounced visits to taxpayers will improve overall safety for taxpayers and IRS employees.
More information:
Secure tax payment options
Consumer alerts
Report phishing and online scams
Parents: Check eligibility for the Credit for Other Dependents
The Credit for Other Dependents is a $500 non-refundable credit available to taxpayers with dependents who are not eligible for the Child Tax Credit. Taxpayers can claim this credit in addition to the Child and Dependent Care Credit and the Earned Income Credit.
This information can help taxpayers determine their eligibility to claim this credit on their 2023 tax return.
This credit can be claimed for dependents who:
Are of any age, including those who are age 18 or older.
Have Social Security numbers or Individual Taxpayer Identification Numbers.
Are parents or other qualifying relatives supported by the taxpayer.
Live with the taxpayer but aren't related to the taxpayer.
Are U.S. citizens, nationals or resident aliens.
The credit begins to phase out when the taxpayer's income is above $200,000. This phaseout begins at $400,000 for married couples filing a joint tax return.
A taxpayer can claim this credit if:
They claim the person as a dependent on the taxpayer's return.
They cannot use the dependent to claim the Child Tax Credit or Additional Child Tax Credit.
Taxpayers can use the Does My Child/Dependent Qualify for the Child Tax Credit or the Credit for Other Dependents tool on IRS.gov to help determine their eligibility.
More information
Income Tax guide from Consumer Reports
A tax preparer can cost between $150-$400 depending on the complexity of your return. Do it yourself software such as TurboTax, TaxCut or TaxACT cost between $10 to $75. For even greater savings you can file your taxes online. Taxpayers with adjusted gross incomes of $66,000 or less can use Free File at https://www.irs.gov/filing/e-file-options where they will pay nothing if they chose among several software providers.
The Salvation Army has a guide that lists price ranges for commonly donated items in order to get the tax deduction. The values apply no matter which charity is getting your donated items: http://salvationarmysouth.org/valueguide-htm/
Taxes - 360 Degrees of Financial Literacy is a national volunteer effort of the nation’s Certified Public Accountants to help consumers understand their taxes. 360 Degrees of Taxes has everything for tax season and beyond, all for FREE! This site, designed by CPAs, is here to help you find tax resources, tips, FAQs, checklists and much more. Check out the Ask-A-CPA section, where a real CPA will answer your individual questions. 360 Degrees of Taxes has everything you need to make small work out of filing. And with content being updated regularly, check back often.
Donate used cars, computers, household items in good condition such as clothing, furniture and toys and get a tax deduction. For more information see IRS Publication 526 and 1771, Charitable Contributions at www.irs.gov. To find charities in your area that accept donations, visit www.charitynavigator.org . If you don’t know what your used items are worth go to www.kbb.com (Kelley Blue Book) that provides free online prices for used cars based on vehicle’s mileage, condition and other factors. For used clothing and other household items go to the free online program TurboTax It’s Deductible at TurboTax® ItsDeductible - Track Charitable Donations for Tax ....
TAX HOLIDAYS
Some states have a variety of tax holidays, days when you can buy certain products without paying tax on them. Most of us are familiar with the school clothing/supplies holidays, but a few states are now doing hurricane and energy saving item tax holidays as well.
What to do if you haven't paid taxes in years
makes it easier for taxpayers to pay back taxes and avoid tax liens
TIP: If you owe IRS taxes, find an enrolled agent (license to appear before the IRS as a tax expert) to pay and settle with the IRS. Beware of ripoffs that say they will settle for pennies on the dollar. The enrolled agent will know what range to offer depending of the "IRS offer and compromise program". How many cents on the dollar the IRS is willing to accept is based on personal financial situation.
For more information contact the IRS
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