There are many different Form-1099s that you may encounter when tax season rolls around. Some of the most common include: 1099-A: If your mortgage lender cancels some or all your mortgage, or your home was sold in a short sale, you’ll likely receive a 1099-A. Because the IRS considers canceled debt to be equivalent to […]
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Certain payments, depending on the circumstances, may be tax-free, despite other similar payments resulting in being taxed. The following three situations require special care to determine if the payment is tax-free. Legal Settlements: To determine if your court settlement should be taxed, you need to consider the reason the settlement was granted, and if it […]
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Gross income minus any deductions is defined as taxable income according to the IRS. Gross income is determined to be “all income from whatever source derived” according to federal law. That covers a large portion of income, including not just earned income such as your salary, but investment income and other unearned income. If you […]
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Taxpayers who are members of a health plan with a high deductible may be eligible to contribute to a health savings account. This type of account saves some of your money for future use on a range of medical expenses. Contributions made into your health savings account are tax-deductible, and investment earnings are tax-free, along […]
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If you are paid cash for services performed, you’ll need to complete a Schedule C, Profit and Loss from Business. This form reports earnings and expenses in relation to the work performed. Some common examples include a handyman who works multiple locations, and has expenses for tolls and mileage, or a copywriter who freelances. Schedule […]
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Businesses are responsible for recording all their income, even if it’s a cash transaction, and reporting earnings to the IRS, as taxes are required to be paid on all income. If you accept cash, you’re required to have a method of recording these transactions, such as a voucher or cash receipt pad. Many office supply […]
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The Child Tax Credit is a popular credit among parent taxpayers. If you have children, you may be eligible to claim $1,000 per child on your tax return. In order to be claimed, your children must meet the following criteria: They must be less than 17 years old Have a Social Security number assigned prior […]
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There aren’t many refundable tax credits, however they can significantly make your pockets fuller at tax season. The Earned Income Tax Credit is one of the most popular refundable tax credits. Introduced in 1975 as part of the Internal Revenue Code, the purpose of this credit is to put more money back into the hands […]
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There are two different types of tax credits: refundable and non-refundable. In general, most tax credits aren’t refundable, but there are a few that can add a little extra cash back into your pocket at tax time. There’s a significant difference between the two types, so it’s important to know which category your credit falls […]
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Tax credits and deductions are two different beasts. Tax credits are seen as the better of the two, however both can save you money when you file your taxes. Deductions reduce the amount of income that is subject to taxes. For example, if your earned income was $65,000 and you claimed $15,000 in deductions, then […]
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