Federal Taxes

    More in Federal Taxes

    529 Plan Tax Reporting

    To help save for college, states and some educational institutions offer 529 plans, which have both state and federal income tax benefits. These plans come in two varieties: prepaid tuition plans, which allow you to buy credits for future education, and 529 savings plans, which ...

    The Advantages of Paying Estimated Taxes

    We all prefer to pay later rather than earlier, especially if the money is going to the taxman. However, many filers are obligated to make estimated tax payments before the April 15 deadline. It's an unpleasant surprise to find out in the spring that not only do you owe a big ...

    How to Amend Your Tax Return to Add Alimony

    Alimony is taxed differently than child support. It's important to understand the difference when you are filing income tax returns. Alimony is taxable as ordinary income to the recipient, but money paid as alimony is not subject to income tax on the part of the payer. For ...

    How to Calculate Taxes on the Sale of Personal Residences

    When you sell your home, taxes probably aren't on the front of your mind. However, if the value of your home has gone up, you could find yourself with a hefty tax bill. If you qualify the primary residence exclusion, you might be able to exclude all of the gain from your primary ...

    How Often Can You Change Your Payroll Exemptions?

    Payroll exemptions are allowances that apply to federal income tax withholding. The Internal Revenue Service allows you a specific sum for each allowance you claim on your W-4 form. Your employer is supposed to give you a W-4 to complete when you are first hired. As an existing ...

    Can You Deduct a Child's College Dorm Room Costs?

    Paying for college can be a major financial burden for students and their parents, but tax credits and deductions may make higher education more affordable. In some cases, education deductions allow parents to write off the money they spend on a child's tuition and fees. ...

    Can I File Gains and Losses From My Stock on My Tax Returns?

    Investing in the stock market can boost your income, but it can also boost your tax bill. Whether you have gains or losses, you must report them on your income tax return. If your losses exceed your gains, you're limited to a $3,000 deduction -- $1,500 if married and filing ...

    What Can the IRS Do if I Don't File?

    If you simply forget to file your return and miss your due date, the IRS won’t do much if you go ahead and file. If you’re due a refund on the return, you won’t even get hit with late filing penalties or interest. However, if the IRS notices you didn’t ...

    Can a Short Form Filer Deduct Property Taxes?

    Owning a home or car comes with a lot of extra expenses that can make your wallet lighter during the year. However, the Internal Revenue Service offers a number of tax deductions that can make your wallet feel a little heavier come tax time, but filing your taxes will take a ...

    Can a Tax Credit Result in Negative Tax Liability?

    Keeping the amount of taxes you owe as low as possible is just good financial sense. When you take advantage of tax deductions and tax credits, you may be able to reduce your tax liability to zero, meaning you don’t owe any federal income tax for the year. In some ...

    Can I Have Two 401(k) Plans at the Same Time?

    If you hold two jobs with separate employers or worked for more than one employer during the tax year, you can be in a tax-deferred 401(k) retirement plan with each of your employers. There are no rules or laws preventing you from having two or more 401(k) plans at the same ...

    Can I Work Out a Payment Plan for a Tax Lien?

    The Internal Revenue Service collects tax debt from taxpayers on behalf of the federal government. The agency may place a tax lien against you if you fail to pay a tax debt. A paid tax lien can appear on your credit report for seven years. An unpaid tax lien can remain there ...

    Capital Gains Rules Regarding Residence Exclusions

    If you've owned your home for a long time, it may have appreciated significantly by the time you're ready to sell it. If you've owned your home for more than a year, any gain from the sale is taxed at capital gains rates, which are generally lower than ordinary income tax rates. ...

    How to Deal With Difficult IRS Agents

    The Internal Revenue Service is a large agency with thousands of employees. Many IRS agents are pleasant and helpful to work with, but some may be difficult. If you find it hard to deal with your agent, feel your case is being handled unfairly or find yourself in a financial ...

    How to Determine Capital Loss From Stocks in the Short-Term Vs. Long-Term Carry Forward

    If you've had a rough year selling stocks, tax relief is in sight. Not only can you use your losses to offset any gains, you can also take a limited tax deduction. In addition, you can carry forward the excess loss into future years when, hopefully, you will have more gains to ...

    How Does a Distribution From a 529 Plan Get Reported?

    States maintain 529 plans to help save for college. Contributions to such plans aren’t deductible, but the money grows tax-free while it remains in the plan, and if you use the money for qualified educational expenses, the earnings remain tax-free. When it comes time to ...

    How to Get an EIN for a Revocable Trust

    All trusts may have an EIN for tax purposes, although most revocable trusts aren’t required to have one until the grantor dies. When a grantor passes on, a revocable trust automatically becomes irrevocable, and irrevocable trusts must have an EIN issued by the Internal ...

    How to Estimate AGI

    AGI, short for adjusted gross income, represents your gross income minus adjustments to that income. Knowing your AGI not only helps you estimate your tax bill, but it also helps you determine your eligibility to claim other itemized tax deductions. When you estimate your AGI, ...

    What Is the Federal Income Tax Table?

    One of the biggest questions taxpayers have each year is how much they owe in federal income tax. The amount you owe depends on your income, your allowable deductions and credits, and the current federal income tax rate. If you prepare your own tax return without using tax ...

    Giving Money to Your Adult Children

    Your adult children have needs and dreams, and you can help. You can give your time baby-sitting grandchildren or helping them make repairs around the house. You can even give advice, but if you give much money to your adult children, you’ll have to file a gift tax return ...

    What Happens If I File Taxes Married Jointly & Forgot to Add My Income?

    Tax season brings a ton of paperwork, tax jargon and stress. It's not difficult to forget to add something to your tax return before you send it in. The IRS even provides a quick, efficient means to amend a tax return to get the correct information filed. Failing to add your ...

    How to Know if I'm Subject to a 10-Percent Early Withdrawal Penalty

    If you withdraw from your retirement plan before you reach normal retirement age, the IRS may impose an early withdrawal penalty unless you meet certain exceptions. Some employees and public safety officers who separate from employers before normal IRS retirement age may not ...

    What Is My Income Tax Bracket?

    Under the federal income tax system, different portions of your income are taxed at different rates. As your income goes up, so does the highest tax rate you must pay. Your "tax bracket" is simply the highest tax rate that applies to any portion of your income. But ...

    Is Injury Settlement Income Taxable?

    Receiving an injury settlement means that you suffered harm, so you might think that the government should not expect a share. Depending on the type of settlement you receive, you are right. While no one wants to experience the harm that leads up to an injury settlement, knowing ...

    Does Interest on a Certificate of Deposit Get Reported on a 1040?

    Certificates of deposit promise a higher interest rate than savings accounts in exchange for your commitment to leave the money in the account for a specified period of time. Like most other types of interest income, the interest from your CD counts as taxable income in the year ...

    IRS Income Tax Underpayment Penalty

    If you underpay your federal taxes, the Internal Revenue Service will assess penalties and interest. These penalties vary in severity, depending on the circumstances. In some cases, criminal penalties apply. If your debt remains unpaid, the IRS can place a tax lien on all of ...

    IRS Rules for 529 Plans

    A 529 plan is an investment plan designed to help families save for college expenses while enjoying certain tax advantages. The name comes from the Internal Revenue Code's Section 529, which allows the plan format and details its tax implications. The plans, which are also ...

    IRS Rules on Gift Tax

    If you make a gift of substantial value to someone, you may become liable for federal gift tax. Gift tax, when it applies, is imposed on the donor, never the recipient. If you owe gift taxes, you must fill out a special gift tax return to report and pay the tax.

    Are Life Insurance Proceeds Taxable in a Decedent's Estate?

    The Internal Revenue Service usually won't tax life insurance proceeds unless you name your estate as the policy's beneficiary. Even then, the IRS might not take a piece, depending on the value of your overall estate. However, some catches apply to this general rule. It's not ...

    How Much of a Gift Can You Give to Someone to Buy a House?

    If you want to help someone buy a home, you can give as much of a gift as your generosity allows. However, you can't necessarily do it without any tax implications. Unless you're helping a charity, the money you give isn't tax deductible to you, and if you give too much, you -- ...

    How Much Tax Do You Pay When You Give Large Sums of Money Away?

    If you're feeling generous, the Internal Revenue Service encourages you to give--to a point. Gift tax doesn’t affect your federal income tax, and you can give gifts to your spouse, to a charity or to a political organization without filing a gift tax return. However, if ...

    Do I Need to Claim Earned Interest on My IRA or Annuity?

    Individual retirement accounts and annuities allow you to save for your retirement and secure your financial future. Regardless of which type of IRA or annuity you have, you are not required to pay taxes on the interest you earn annually from investments in these instruments. ...

    Do You Need to Claim an Insurance Lawsuit Award on Your Income Taxes?

    Taxation of lawsuit awards is a complex subject. Taxation of an award depends on whether the plaintiff’s claim involved a physical injury or a non-physical injury. Taxation also depends on whether the purpose of the award was to compensate the plaintiff for his losses or ...

    Do You Pay Federal Taxes on Social Security Retirement?

    Although not everyone who collects Social Security retirement benefits is required to pay taxes on the monthly payments, some people do have to pay federal taxes on a portion of their benefits. Generally, the federal government taxes up to 50 percent of your benefits if you ...

    Help for Paying an IRS Debt

    The consequences of an overdue Internal Revenue Service tax debt can be serious. Penalties and interest accumulate, and the IRS can place a levy against your property. Once the IRS places a levy on your property, even bankruptcy can't remove it. Fortunately, a number of options ...

    How to Report Gifts of Cash to Minors

    When you've got enough funds to share with friends or family, you may be able to benefit youngsters with your generosity. The Internal Revenue Service has specific rules and guidelines for how to give gifts of cash. After you give your gifts, the next thing to figure out is how ...

    Do I Report the Interest From a CD Not Matured on Federal Taxes?

    The Internal Revenue Service considers all income that is not specifically exempted by law from taxation to be taxable income. A significant portion of income received by Americans is interest income. While some interest income, such as the interest on most municipal bonds, is ...

    How to Report an IRA Rollover on a Tax Return

    An eligible rollover of funds from one IRA to another is a non-taxable transaction. Rollover distributions are exempt from tax when you place the funds in another IRA account within 60 days from the date of distribution. Many plan administrators can even perform a direct ...

    How to Report a Stock Loss on an Income Tax Return

    You report stock losses on your income taxes in the year that you actually sell the stock. For example, if the price of a stock you own tanks, but you hold it in hopes that it will rebound, you can't claim the loss on your taxes. However, once you sell the stock, you can use the ...

    How Should Married Couples Fill Out a W4?

    If you are an employee of a company, your paycheck will have state, federal and, in some cases, local income tax withheld. The amount depends on two factors: how much money you make, and the information you provide on your Form W-4. Filling out a W-4 is pretty straightforward ...

    The Tax Credit on Contributions to a College Fund

    The federal tax code offers incentives to help you pay for college for yourself and your dependents. Certain deductions reduce your taxable income, tax credits result in a lower income tax bill and exclusions are not included in your income for purposes of determining your tax. ...

    Tax Deduction for Mileage Due to Voluntary Work

    People who perform volunteer work for a tax-qualified charitable organization can claim a tax deduction for direct out-of-pocket automobile operating expenses they incur while working on behalf of that organization. But the Internal Revenue Service doesn’t allow them to ...

    Tax Implications of Financial Planning Decisions

    Financial planning is an essential process if you want to safeguard and grow your wealth, regardless of how much money you have or earn. While the goal of financial planning is to optimize your management of money, it also involves keeping as much of your income as possible. ...

    Tax on an IRA Vs. Stock Account

    Individual retirement arrangements offer several tax benefits that make them more advantageous for saving for retirement than regular stock accounts. However, IRAs penalize you for taking money out early, while stock accounts offer the potential for lower long-term capital gains ...

    Tax Laws & Regulations on Travel Expenses

    The IRS allows tax deductions for many types of travel. Most travel-related tax breaks are available for business- or employment-related travel. You may be able to take advantage of these tax breaks whether you are employed or in business for yourself. However, the IRS imposes ...

    The Tax Liability on Taking Money Out of an Investment

    Before you invest money in anything, regardless of how safe or risky the product might be, it's a good idea to take a look at your overall financial plan. Things to consider include whether your current financial situation justifies the investment, and whether the investment is ...

    Tax Write Offs for Hobbies

    Hobbies are expensive, but the United States tax system won’t pay for your hobby. The Internal Revenue Service has different regulations for hobbies and businesses and restricts what you can write off on your income taxes as hobby expenses. You can claim legitimate ...

    Taxation of Annuity Withdrawals

    Before you begin taking distributions from an annuity, it's important that you understand the potential income tax consequences that accompany withdrawals. Your age, the type of annuity you own and the manner in which you receive the money will all affect how your money is taxed ...

    Taxes on Stock Profits

    Stock market profits are taxable by the IRS as capital gains. Some capital gains are taxed as ordinary income, and some capital gains are taxed at lower capital gains tax rates. Some dividends are also classified as capital gains. In addition, you can sometimes deduct your ...

    What Is the Time Limit on Amending a Tax Return?

    If you find you made a mistake on your tax return, you can submit a Form 1040X to correct it. You should not file an amended return for a simple math mistake, because the Internal Revenue Service verifies all calculations; your error will be corrected and your return will be ...

    How to Use K-1 Form for Taxes

    If you have joined a business partnership, limited liability company or S corporation, you will receive a report of your share of the firm's net income on Form K-1. The company shares this information with the Internal Revenue Service, and you must report the earnings on your ...

    Are the Wages Deducted for a Cafeteria Plan Tax-Exempt?

    Cafeteria plans, also known as Section 125 plans, allow employees to customize their benefit plans. Employees decide which of the employer-offered benefits they need and choose whether to take the benefit or receive cash instead. If the employee chooses cash, such payments are ...

    Ways to Avoid an Audit

    While the overall incidence of tax audits remains low, around 1 percent according to Smart Money, the truth is that the Internal Revenue Service can choose to audit any taxpayer at any time. While that thought can strike fear in the hearts of the most stalwart people, there are ...

    How to Check on the Status of an IRS Tax Return

    Keeping track of your tax return during processing makes sense. Whether you expect a refund or you filed an amended return, keeping current on your tax return processing helps you sleep at night. The IRS provides several tools for checking the status of an IRS tax return: an ...

    Are Treasury Bonds Tax Free?

    The United States Department of the Treasury provides one of the largest and safest ready markets for debt securities in the world. Both institutions and individual investors can purchase U.S. government debt securities, such as Treasury bonds, through the TreasuryDirect.gov ...

    Are Long-Term Capital Gains Reported to the IRS?

    The Internal Revenue Code requires U.S. citizens and permanent residents to report their worldwide income on their federal tax returns, including long-term capital gains. Special tax rules apply to capital gains, however, and the applicable tax rate on long-term capital gains is ...

    Are Earnings on a 529 Plan Federally Taxable?

    Many U.S. states offer 529 investment plans to help individuals save for a college education. In addition to federal regulations, 529 plans are subject to the rules created by the state in which they are available. When shopping for a 529 plan, do not assume that the terms of ...

    Can I Pay Installments on Federal Income Taxes I Owe if I Can't Afford to Pay It All at Once?

    You might discover you owe the Internal Revenue Service money when you prepare your annual tax return. If the outstanding balance is more than you can pay, you have several options. One approach is to arrange installment payments. Whatever you do, file your return by the ...

    Does Getting Married Affect Your Income Tax Return?

    While marriage itself is not a taxable event, getting married does involve positive and negative consequences for your tax status. An understanding of how the Internal Revenue Code works, however, can help you maximize the advantages and minimize the disadvantages. Many tax ...

    How Many Gifts Can You Give Anyone at Any Time Without a Gift Tax?

    If you give an item of value to another person without receiving something of equal value in return, you have given them a gift. While that concept might seem pretty straightforward, it can get complex in a hurry when the Internal Revenue Service gets involved. You might want to ...

    Tax Deduction for Not-for-Profit Donations

    The Internal Revenue Service grants donors to certain nonprofit organizations the right to deduct the reasonable value of their donations from their taxable income. Pitfalls await taxpayers who attempt to write off their donations without understanding applicable restrictions, ...

    Minimum Income Required to File Federal Taxes

    The requirement to file federal taxes hinges not only on your income, but also the source of it. This applies to your salary or wages, and also to income from other sources, such as investments and the sale of property. Before you decide whether or not to file, consult a tax ...

    IRS Rules for Married Filing Separately

    Under the Internal Revenue Code, five filing statuses are possible, including "married filing jointly" and "married filing separately." Married taxpayers may choose to file either jointly or separately. The choice of filing status affects many aspects of your ...

    Do H-2A Visa Holders Pay Social Security Tax?

    Farming is a seasonal business, and in some seasons -- particularly during the harvest -- a shortage of labor occurs. The H-2A visa allows temporary or seasonal agricultural workers entry into the United States. Agricultural employers who are unable to meet seasonal labor ...

    How to Complete Federal Gift Tax Form Number 709

    When you give money or other valuable items to anyone who is not a qualifying charity, you must report the gift to the Internal Revenue Service. Generally, as of the 2012 tax year, the donor is responsible for paying tax if the value of the gift exceeds $13,000. Because gift tax ...

    Who Pays Taxes on Monetary Gifts?

    With some exceptions, all monetary gifts larger than a certain amount are subject to federal gift taxes. Those taxes, however, aren't paid by the recipient, but by the giver. It's the giver's responsibility to keep track of all gifts -- how much, and to whom -- and to file a ...

    Tax Treatment of Trusts

    A trust allows the trust grantor to place assets under the care of a trustee, who then distributes trust assets to beneficiaries selected by the grantor. Although trust assets and income are subject to federal taxation, the taxation of a trust depends on whether it is revocable ...

    Can I Get a Tax Refund if No Fed Taxes Were Taken out of My Paycheck During the Year?

    Most people have a portion of their paycheck withheld to pay the federal income tax and, in some cases, a state tax as well. After deductions and tax credits are figured in, the amount paid often exceeds the actual amount owed, and a tax refund is issued. If you didn’t ...

    How Much Social Security Tax Do You Have to Pay?

    The Social Security tax is one part of the Federal Insurance Contributions Act, or FICA, taxes that your employer withholds from your paycheck. The Social Security tax includes not only the portion you pay, but an additional portion your employer pays on your behalf. As of 2012, ...

    Do I Have to File an Income Tax Return While Working Abroad?

    If you’re a United States citizen, you typically owe income tax on the money you earn, no matter where you work. You may be able to exclude some of your income from taxes, but even if you are eligible for this exemption, you still must file an income tax return each year.

    The Penalty for a False Deduction

    The Internal Revenue Service doesn’t have the resources to verify every deduction reported on the tax returns it receives, and as a result, there are opportunities for taxpayers to increase their tax savings with false deductions. Honest mistakes happen, but for situations ...

    Tax Consequences for Revocable and Irrevocable Trusts

    Revocable and irrevocable trusts are treated quite differently under U.S. tax law. The main reason for this disparity is that the assets of a revocable trust are considered the property of the grantor, while an irrevocable trust is treated as an independent legal entity that ...

    I Forgot to Claim My IRA Income

    If you forgot to claim your individual retirement account income on your tax return, you'll have to file an amended return and pay the extra taxes you owe on the distribution. If you remember before your tax filing deadline, you won't have to pay extra in penalties and interest ...

    FICA Tax Deductions

    The Social Security tax and the Medicare tax, both authorized by Federal Insurance Contributions Act, apply to your earned income. Technically, you can't ever deduct your FICA taxes. But you might be able to reduce your income taxes if you're self-employed or if too much was ...

    The Federal Income Tax on Nonqualified Annuities

    Annuities are retirement investment vehicles managed and maintained by life insurance companies. Qualified and nonqualified annuities are identical except for the tax treatment of the owner's contributions and withdrawals. Because nonqualified annuities contain a mix of pre- and ...

    How to Prepay Taxes

    Although prepaying income taxes is generally for the self-employed, taxpayers who do not have enough income tax withheld or credits to reduce their tax bill to under $1,000 can also prepay taxes to lessen the financial burden at the end of the year. In some circumstances, you ...

    What Are the IRS Tax Brackets?

    The saying goes that death and taxes are the only certainties in life. While paying taxes may be certain, the amount you pay is not. The IRS has six tax brackets ranging from a low of 10 percent to a high of 35 percent for 2012, rising to 39.6 percent in 2013 for singles who ...

    What Is the Dependent Deduction?

    Each dependent you claim on your tax return entitles you to a tax deduction. The Internal Revenue Service calls this deduction a dependent exemption. The dependent exemption is the same amount as the personal exemptions you claim for yourself and for your spouse if you are ...

    Can You Get Education Credits With Coverdell Funds?

    Coverdell Education Savings Accounts offer tax-sheltered growth and tax-free distributions as long as the money is used for qualified educational expenses. Education credits, such as the American opportunity tax credit and the lifetime learning credit, offer tax benefits for ...

    How Will a 1099-C Affect Our Income Taxes?

    When a creditor decides not to pursue – or can’t pursue -- you on a debt, it will send you a Form 1099-C. By doing so, the creditor triggers various tax consequences. The creditor writes off the uncollectible debt to avoid paying taxes on money it will never see. The ...

    How Much Are Federal Tax Withholding Allowances?

    The idea behind payroll tax withholding is to place paying your taxes on a “pay as you go” basis. Your employer deducts taxes each payday and sends the money to the Internal Revenue Service. As a result, when it comes time to file your tax return, all or most of your ...

    How Are 1099-R Forms Coded for Roth Conversions?

    You must pay taxes on a conversion to a Roth retirement plan if the funds you converted were originally set in a pre-tax retirement plan, and you must report the conversion on your tax return. You’ll receive an Internal Revenue Service Form 1099-R from your IRA custodian, ...

    How to Claim Gaming Wins and Losses on a Tax Return

    If you had a successful night at the slots or poker tables, you're going to have to share some of the lucky proceeds with Uncle Sam. The Internal Revenue Service generally requires that you report your gambling winnings and losses separately when you file your taxes rather than ...

    Does 1099-R Mean Reported Earnings?

    A 1099 is an Internal Revenue Service form used to report income not covered in a W-2 wage statement. It reports such things as dividends, interest, miscellaneous pay from freelance work or self-employment, or distributions from retirement accounts. An administrator of any ...

    How to Recover Excess Social Security Deductions

    The Social Security portion of the Federal Insurance Contributions Act tax is capped each year at a certain level of income. If you have just one employer, it's easy for that employer to know when your income exceeds the limit so it can stop deducting Social Security taxes from ...

    Tax Credit for Post Secondary School

    The Internal Revenue Service uses multiple tax credits to offset some of your postsecondary education costs for yourself, your spouse or your dependents. However, you can claim only one credit per student each year. Usually, the American opportunity credit offers the biggest tax ...

    How to Obtain a Tax ID Number for a Deceased Individual

    The Internal Revenue Service issues an Individual Taxpayer Identification Number when taxpayers need an identification number to file taxes. As of April 1, 2009, the IRS has enabled taxpayers to utilize Form W-7 to apply for an ITIN for deceased taxpayers. It is a simple process ...

    Tax Advice on Excess Contributions to a Roth IRA

    You might discover at some point that you have contributed more to your Roth IRA than the Internal Revenue Service allows. Fortunately, this does not have to be an expensive mistake. There are several ways to fix this problem. In fact, if you remove the extra funds soon enough, ...

    What Is OASDI Withholding on an Oregon Paycheck?

    Most employers in the United States must take OASDI tax out of their employees’ paychecks. OASDI stands for Old Age, Survivors and Disability Insurance, which is a program that the Social Security Administration oversees. On your paycheck, OASDI withholding is the acronym ...

    What Is the Deduction for Married Filing Jointly?

    The Internal Revenue Service typically permits taxpayers to choose between itemizing deductions and taking a standard deduction. Taxpayers with qualified expenses that do not exceed the standard deduction may choose not to itemize. Married couples face another choice -- whether ...

    What Percentage of Federal Taxes and Medicare Are Deducted out of Gross Pay?

    The Internal Revenue Service describes federal tax as a “pay-as-you-go system.” The idea is to withhold federal taxes from each paycheck so that you have already paid most, if not all, of the taxes you owe by the end of the year. Your employer follows IRS guidelines ...

    Is Drill Weekend Pay Taxable?

    You pledged to serve your country for one weekend each month and two weeks each year. As a military reservist, you receive pay for each weekend you serve, prorated for the number of hours in your monthly drill, and based on the Department of Defense’s pay schedules for ...

    Is a Cancellation of Debt Good or Bad for Taxes?

    If you've had a foreclosure or bankruptcy, the last thing you need is to find out that you may owe tax on canceled debts. In many cases, cancellation of debt is considered taxable income, but there are important exceptions to this rule, including foreclosures and mortgage ...

    Myths About the Income Tax

    Tax policy is always a contentious issue for individuals and corporations, particularly because it directly impacts the funding, size and scope of government programs. While the case for big and small government often becomes entangled with tax policy debate, those debates are ...

    Overpayment of Social Security Taxes With 2 Employers

    Nobody likes paying more taxes than they need to. However, if you earn more than the Social Security wage base but you work for more than one employer, you might be paying too much in Social Security taxes and not even know it. Social Security taxes are required by the Federal ...

    IRS Penalties for Overstating Deductions

    The U.S. Internal Revenue Code imposes tax penalties of gradually increasing severity on taxpayers who overstate their deductions. The least severe penalties involve moderate fines and interest penalties based on the amount that you owe, while the most severe penalties involve ...

    Do I Have to Get a Federal ID Number for Withholding My Nanny's Federal Withholding Tax?

    While it’s not-so-affectionately known as the nanny tax among taxpayers, the Internal Revenue Service’s tax requirements on household employers are similar to those of a traditional employer. If you employ a nanny -- or any other household worker such as a cleaner or ...

    Do Charitable Donations Trigger Tax Audits?

    The Internal Revenue Service audits a small percentage of the millions of tax returns it receives each year. Although historically the IRS has been reluctant to share specifics with regard to what triggers an audit, claiming substantial deductions, including deductions for ...

    Are Social Security Taxes Figured on Gross or Net Profit?

    When you work for yourself instead of an employer, you are responsible for paying the full amount of Social Security and Medicare taxes on your net earnings, not the gross amount of your revenue. The Internal Revenue Service calls this tax the self-employment tax. Neither ...

    What to Do If a Mistake Is Made on a Tax Return

    It’s common for taxpayers to make errors on income tax forms -- and common to wonder what to do next. The remedy for a mistake on a tax return depends on the type of mistake you made. Some errors won’t require you to do anything. Other errors may require you to file ...

    Are You Penalized for Not Having Federal Taxes Withheld for Unemployment Benefits?

    Even if you’ve lost your job, the Internal Revenue Service expects you to pay taxes on any money you bring in while you’re unemployed, including unemployment insurance benefits. You opt to have federal income tax withheld from your unemployment checks, just as your ...

    Are Relocations Tax-Deductible?

    Many relocation expenses are tax-deductible. Much depends on the reason for the expense and the relocation. The IRS specifies those relocation costs that are deductible. Often the most expensive relocation issue is selling your home. Employer relocation programs often offer ...

    Information on Tax Form 1099-A

    If your house or other property was foreclosed or repossessed by the mortgage holder or lender, you'll get a Form 1099-A. The IRS requires this from lenders to report acquisition or abandonment of secured property. It is simply to notify the IRS the property was foreclosed or ...

    What Is the Penalty for Paying Federal Estimated Taxes Late?

    Most people never have to worry about making estimated tax payments because an employer withholds a percentage from wages or salaries. However, if you are self-employed or have significant outside income with no tax withholding, you have to make estimated payments unless your ...

    The Difference Between Allowance & Exemption

    Typically, a taxpayer must deal with at least two documents: the W-4 form that she fills out so her employer can calculate payroll taxes, and her annual tax return. You claim withholding allowances on a W-4, but you claim exemptions on your tax return. Both allowances and ...

    How Much of the Estate Is Exempt From Federal Tax?

    Federal estate taxes have bounced up and down over the years. Those taxes are assessed on the total value of the estate -- everything you own, such as real estate, securities, insurance, trusts and annuities, business interests and other assets. Their worth is fair market value, ...

    Tax Breaks for Interest on Homes

    A home is the biggest investment most people make. It's also the biggest break on federal income taxes, unless you're very wealthy and have a very expensive home. Most homeowners borrow up to 90 percent of the cost of a house and all the interest on that loan is deductible on ...

    What Does It Mean When My Paycheck Says That I'm Exempt From Federal Taxes?

    If your employer shows you as exempt from federal taxes, it means that he is not withholding taxes from your paycheck. Although some employees are exempt, most are not. If you think your employer should be collecting taxes on your earnings, you must talk to your company's ...

    Paying Social Security Tax When Switching Jobs

    You may be unwise to switch horses in midstream, but there's nothing you can do about Social Security when you switch jobs: the tax is still there, paid by you and shared by your employer. According to federal tax law, all salaried workers and wage earners must pay the ...

    How to Change the Birth Date on a Tax Return

    If you file your taxes using a paper return, you will not need to include your birth date on it. When you file electronically, however, the Internal Revenue Service uses your birth date to help verify your Social Security Number. If you somehow mistype your birth date and it ...

    What if I Forget a Tax Form 1099-INT?

    When your bank or investment company mails you a 1099-INT, it also provides the same information to the Internal Revenue Service. If you file your taxes and forget to include a Form 1099-INT, you must file an amended return to include it. You cannot amend a return ...

    How to Postpone Your Tax Return

    Knowing the deadline to file tax returns always falls around April 15 does not keep unpredictable events from disrupting your plans to meet the Internal Revenue Service's due date. To help you, the IRS accepts filing extension requests. The extension only applies to your ...

    Why Aren't They Taking Out Enough Federal Taxes From My Paycheck?

    The federal government requires you to pay your taxes as you earn money, rather than waiting until you file your taxes and then making a lump sum payment. For most people, employer withholding covers their tax liability so they don't owe extra interest or penalties. Depending on ...

    What Is the 6,000-Pound Vehicle Tax Deduction?

    The 6,000-pound vehicle tax deduction refers to Section 179 of the IRS tax code enacted by various Stimulus Acts. It is one of the few tax incentives that work in the favor of small businesses, as of 2012. Typically, equipment purchased by a business can be expensed as ...

    Does Social Security Count as Income for a Retired Person?

    The Social Security retirement benefits you get may be considerably more than the Internal Service minimum income for filing a tax return, yet for many retirees, none of their benefits count as income, so filing is not required. Because that’s not always the case, you need ...

    How to Replace a Lost Income Tax Return

    When tax season ends, many people are so eager to put the filing experience behind them that they lose track of the return. You can easily replace a lost tax return by ordering a return transcript, which includes most line items from the return, or by requesting a copy of the ...

    How to File for a Social Security Tax Overpayment Refund

    The Internal Revenue Code sets the maximum amount employers may withhold from paychecks for Social Security tax in one fiscal year. But a problem sometimes occurs when you change jobs within the same year: Not knowing how much has already been withheld, your new employer may ...

    Is Military Retirement Pay Taxable?

    When you joined the military as a young person and headed for basic training, retirement income might have been a small consideration. But if you’ve reached the age when retirement pensions and tax obligations play a role in your long-term planning, the Internal Revenue ...

    Can You Stop Paying Federal Income Taxes at Age 70?

    It is income, not age, that determines when you can stop paying federal income taxes. Basically, you have to file a tax return as of publication if you and your spouse, both over 65, had combined income of more than $21,300 or half your Social Security benefits and other income ...

    The Taxes on Settlement Monies

    Although the Internal Revenue Service considers most money you receive as taxable income, some settlement monies are exempt. However, even if the settlement itself is exempt from income tax, portions of it can be taxable. Knowing what is and is not taxable is imperative to ...

    Limits on Kids as Tax Deductions

    You must overcome several IRS limitations before you can claim a child as a dependent. It is worth the effort, however, because claiming dependent children provides a nice tax deduction, and you might be able to claim one or more tax credits that can add up to several thousand ...

    Tax Deductions for Multiple Houses

    You can own as many houses as you can afford and still get some federal income tax deductions. Only your primary residence and one second home qualify for both mortgage interest and property tax deductions. If you're fortunate enough to own additional homes, you can still deduct ...

    Number of Deductions for a Wife and Two Kids

    Paying your taxes and your bills is easier when you take advantage of tax deductions and credits for your wife and kids. Claiming these benefits when you file your tax return may reduce your tax liability by thousands of dollars. Another plus is that you can get the benefit of ...

    Who Can Seize My Federal Income Tax Refund?

    The Financial Management Service, a division of the U.S. Treasury Department, maintains a database of people who are delinquent on debts to the federal government. The service matches your Social Security number against the delinquent debt database; if you are in the database, ...

    Do Social Security Benefits Count as Gross Income?

    Since 1935, the U.S. Social Security Administration has provided benefits to retired or disabled individuals and their family members. Since the 1980s, some recipients of these benefits who meet certain income levels have been required to pay taxes on the money they receive. ...

    Pretax Contributions and Social Security Payroll Deductions

    Helpful tax laws allow wage earners to contribute "pretax" money to retirement accounts, as well as health-savings accounts and employer-sponsored savings plans. This means that either your employer does not withhold anything from your wages, or you do not pay any ...

    What Debts Can Be Taken From Your Federal Taxes?

    If you're expecting a big tax refund, don't count on it -- and if you owe money to the state or federal government, your refund may be smaller than you think. The federal Treasury Offset Program gives the U.S. Treasury Department the right to withhold your federal tax refund to ...

    Can Amending Your Tax Return Delay Your Money?

    When you are trying to navigate the maze of tax forms and other paperwork that goes with preparing your tax return, it is all too easy to overlook a deduction or taxable gain from an investment. If you discover an error after you file your return, you may need to submit an ...

    Tax Benefits of a Second Home

    A second home could be a house in a ski resort, a cabin on a lake or in the mountains or just a house in another area to let you escape from summer heat or winter cold. A boat, if it has sleeping, eating and sanitary accommodations, also qualifies. You might decide to buy a ...

    What Determines What Form You Will Fill out for Your Tax Returns?

    Using the right form is the important first step in filing your federal income tax return. The Internal Revenue Service offers three basic choices: 1040EZ, 1040A and 1040. EZ is the simplest, the "long form" 1040 the most complex, but which one you use depends on your ...

    What Deductions Can I Claim on My Income Tax for a House I Own?

    A home of your own is the American dream. It's also a great benefit when you figure your federal income tax. A home provides the largest deductions from income for taxes for most homeowners. You'll have to file a long Form 1040 and itemize your deductions, which is more ...

    Do Charitible Contributions Affect Income Taxes?

    Giving to charity can help a worthy organization and your income tax status, too. You can deduct contributions of either cash or goods to qualified organizations, reducing the amount of income on which you have to pay taxes. You'll have to keep records and get appraisals for ...

    Are Federal Taxes Due If the Person Dies?

    A death in the family is an event that can raise a variety of complex financial issues related to the distribution of assets to heirs and federal taxation. When a person passes away, federal taxes may be due on income the person earned during the year before death, as well as ...

    How to Find Out What Tax Bracket I Am In

    Your marginal tax bracket can have a significant effect on your after-tax investment results. The knowledge of your tax rate helps you decide whether you are in good shape with taxable investment choices, or whether you should be looking for some tax-free or tax-advantaged ...

    Eight Ways to Lower Tax Liability

    You do not have to be a tax professional to know how to save money on your taxes. While lowering your income is an option, it is not the method most people choose when seeking to lessen their tax liability. Maximizing your deductions and credits is essential if you want to ...

    Can a Short-Term Capital Loss Be a Tax Write-Off Against Ordinary Gains?

    Not every investment goes the way you hoped, but you can take solace in the fact that the Internal Revenue Service lets you use your capital losses to offset your capital gains. In some cases, you can even use your losses to offset some of your ordinary income for the year.

    How Much of One's Income Goes to Federal Tax?

    The federal government imposes several taxes that reduce net personal income from working, saving and investing. Tax rates vary depending on your total annual income, your tax filing status, your income sources and other factors. Tax deductions and credits can reduce the amount ...

    Tax Credits for Dependent Children

    Children who are your dependents entitle you to claim dependent exemptions, which are a tax deductions you subtract from your gross income. In addition, you may be able to claim one or more tax credits for dependent children. Unlike the dependent exemption, credits are ...

    Tax Filing Tips for Itemizing Deductions

    Two-thirds of American taxpayers use the standard deduction set by the Internal Revenue Service when they file tax returns. It's quick, easy and avoids a lot of record and receipt bookkeeping. Itemizing deductions, however, may save you money, especially if you have a home ...

    Can I Cut Taxes by Using 401k?

    The 401k program is a retirement system offering tax advantages for employers and employees. An employee can choose between deducting contributions from taxable income when they are made or deferring the tax benefit until money is withdrawn after retirement. A small-business ...

    What Is the Difference Between Gross Income & Adjusted Gross Income?

    With so many different descriptions of income on your tax return, it's easy to get the terms mixed up. However, if you use the wrong amount, you could end up missing out on a deduction you're eligible to claim, costing you money, or claiming a child as a dependent when he's ...

    Tax Rules for Claiming Tuition

    Federal income tax rules governing college tuition have fluctuated over the years. For several years, the Hope scholarship credit governed tuition credits, but as of 2012 that program has been replaced by the American opportunity tax credit. It can reduce tax liability for ...

    How to Compute FICA Taxes

    Federal Insurance and Contributions Act, or FICA, taxes include Social Security and Medicare contributions. Both employer and employee contribute to pay FICA taxes. Employees pay FICA taxes via payroll deductions. While for decades, employer and employee made equal FICA ...

    How to Report the Rollover of a 401(k) to a Traditional IRA on a 1040

    Whether you're looking for new investment options or just want to consolidate your retirement assets, you can move your 401(k) money to a traditional individual retirement account tax-free with a rollover. Although you won't owe taxes on the rollover, if you don't report the ...

    How to Liquidate an IRA to Pay IRS

    Individual retirement accounts are intended to promote retirement saving among working Americans. The Internal Revenue Service discourages their use for most other purposes by imposing a 10 percent penalty on withdrawals before age 59 1/2. This penalty applies only to ...

    How to Decrease Tax Liability With a Last Minute IRA Contribution

    Just because the calendar year has ended doesn't mean you've missed out on your chance to lower your tax liability with a contribution to your traditional individual retirement account. Unlike most tax deductions, the deadline for contributing to a traditional IRA is your tax ...

    Are There Tax-free United States Treasuries?

    The Internal Revenue Service considers any income you receive during the year to be taxable income unless it is specifically exempted from taxation by federal law. This includes any interest you earned on your savings and investments. Some interest, such as interest on most ...

    Can a Retired Person Be Claimed as a Dependent?

    Claiming dependents is a crucial, money-saving step when figuring your federal taxes. For tax year 2011, claiming one dependent translated into a $3,700 subtraction from your taxable income. Although the process of claiming a dependent is easy, the IRS rules on this subject can ...

    How to Calculate Federal Tax

    While you can calculate your federal taxes due by completing a Form 1040 in its entirety with all of the supporting documents, it is a good practice to estimate your tax liability at some point throughout the year as well. This may allow you to make changes to your situation to ...

    How Are Certificates of Deposit Taxed?

    A certificate of deposit is an agreement with a financial institution to leave money deposited for a specified period. A CD will usually produce a higher interest rate than a regular savings account because it assures the institution of having that money on deposit. CDs can be ...

    Is Royalty Income Subject to Social Security Tax?

    The IRS collects Social Security taxes from wage earners and the self-employed. The tax amounted to 4.2 percent of gross wages as of the time of publication, while employers kicked in another 6.2 percent. If you are self-employed, you paid both employee and employer share ...

    What Is the Standard Deduction for Married Filing Separately?

    Most married couples will file joint federal income tax returns, even if they opt to take only standard deductions and not itemize deductions. In some situations, however, couples elect to file separate returns. This would be the case, for instance, if there was a wide disparity ...

    Where Do I Enter Losses From My IRA Account on Federal Taxes?

    Your individual retirement arrangement had a bad year and you want to claim a deduction on your tax return. Be warned, it's notoriously difficult to get a tax break for losses in your IRA because of the way the losses are calculated, and a deduction is disallowed completely for ...

    At What Age Can You Withdraw Money From an IRA Without a Tax Penalty?

    There are two types of individual retirement accounts. A traditional IRA lets you deduct contributions from your taxable income, but you will have to pay taxes when you withdraw the money. A Roth IRA is funded with after-tax money. With a Roth, you pay taxes before you ...

    Can the IRS File a Lien Against My Retirement Accounts?

    The Internal Revenue Service may or may not have the ability to place a lien on your retirement accounts. The IRS has wide-ranging power, but its ability to use that power to place liens or seize assets is controlled by regulation, specifically U.S. Code Section 6334, Property ...

    Gift Tax Explained

    The Internal Revenue Service approves of generosity – up to a point. The government allows you to give without incurring a gift tax, but not too much or too often. If you go over IRS limits, you can defer paying the tax, but the bill may still come due eventually. It ...

    Are Social Security Disability Benefits Taxable on Federal Taxes?

    In 2011, more than 8.5 million workers in the United States received tax-free disability benefits from the Social Security Administration. Those who receive Social Security disability benefits may have to pay federal taxes on them if they have other sources of income. There are ...

    Tax Exempt Benefits of Nonprofits

    Nonprofit organizations exist to provide products and services that benefit the public. Earning a profit is not their primary goal. These organizations may sell goods and services that bring in a profit, but all profits must go back into the organization to promote its mission ...

    Earnings Subject to Social Security Tax

    The Social Security system raises the money it needs to provide income to retirees by taxing wage earners. Social Security taxes do not apply to passive income sources or "unearned income," including interest, dividends and capital gains. Instead, Social Security taxes ...

    How to Report Savings Bond Interest

    U.S. savings bonds -- Series EE and I -- earn interest every month. The interest you earn is taxable, but you have some choices on when you can claim and pay taxes on it. Follow a few basic rules to ensure you report savings bond interest properly.

    Is a Gift Tax Considered Part of a Gift?

    While many taxpayers won’t deal with it in their lifetime, the gift tax was implemented to prevent people from giving away their wealth before they die to avoid estate taxes. The tax itself only applies to large gifts and is assessed separately from the gift itself, so the ...

    401(k) Rules for Income Tax Deductions

    A 401(k) account can provide tax benefits to business owners and employees. It allows employees to contribute to their retirement, with matching contributions from employers. Employees have contributions deducted from their taxable income, reducing their current tax liability. ...

    Tax Breaks for Graduate Degrees

    Going to graduate school isn’t cheap, but sometimes you don’t have a choice if you want to get hired at your dream job or even just keep your current one. The good news is that the Internal Revenue Code offers several tax breaks for graduate degrees that help put ...

    Gift Tax & Treatment

    The gift tax is designed to limit a taxpayer's ability to avoid estate taxes by giving away all his money before he dies. However, because exemptions are so generous, you probably won't have to a pay gift tax on most gifts that you make. If you do owe gift tax, you must file a ...

    How Much Can I Give Away Without Filing a Gift Tax Return?

    Most gifts are not large enough to qualify for the federal gift tax, which taxes gifts at the same rate as income. The IRS allows for an annual exclusion that enables you to give a maximum amount of money each year to an individual without triggering a gift tax. In addition, you ...

    How Much Difference Does an Additional Allowance Make on the Federal Withholding Amount?

    Your employer uses the withholding allowances you claim on your W-4 form to adjust your gross pay before calculating how much federal income tax to withhold from your paycheck. The idea is to withhold enough tax each pay period so that you will have already paid all or most of ...

    How Do I Take Money Out of an IRA Tax-Free?

    While individual retirement accounts offer a number of tax advantages, there's no such thing as a free lunch. You either have to pay taxes on the money as it goes into your IRA or you have to pay when it comes out. Only qualified withdrawals of the earnings portion of a Roth IRA ...

    How Do I Report This 1099-DIV From My Mutual Fund?

    Dividends you receive from your mutual fund are taxable, even if you receive additional shares in lieu of cash. When dividends are paid out to you, you’ll receive a 1099-DIV at the end of the year that lists your dividend income information. Your brokerage also provides ...

    Funeral Expenses & IRA Withdrawal

    When death strikes and the deceased was unprepared financially, survivors face the added burden of paying for the arrangements. That burden can average more than $6,500 beyond buying a cemetery plot, grave marker, obituary and flowers, according to a 2010 study by the National ...

    How to Report Irrevocable Trust Income Taxes to the IRS

    Unlike a revocable trust, an irrevocable trust is treated as an entity that is legally independent of its grantor for tax purposes. Accordingly, trust income is taxable, and the trustee must file a tax return on behalf of the trust. If income is distributed to trust ...

    Will My Second Job Affect My Tax Bracket?

    Generally a need for additional money to cover bills or increase savings drives your decision to get a second job. This decision, however, should not be considered lightly as it may affect how much you pay in taxes. Whether your second job will affect your tax bracket depends on ...

    How to Claim a Dependent's 1099-INT From Savings Bonds

    For simplicity's sake, parents are sometimes allowed to include their dependent children's interest and dividend income on their own tax return rather than having the child file a separate return. However, not all dependents are eligible to have their income reported on the ...

    Are Bonuses Included in Gross Income for Taxes?

    A bonus from your employer may reward you for superior performance, recognize some special achievement or just acknowledge longtime service. It can be cash at end-of-year holiday time, a paid vacation trip, a car or any other award. Whatever form a bonus has, it is taxable ...

    How to Report Tax Free Municipal Bonds

    Municipal bonds are those issued by a state or local government to fund operations or specific projects. Not all are tax-free, though some are. When you do invest in non-taxable bonds, you still must report the interest earned on your Internal Revenue Service Form 1040. You also ...

    Are Savings Bonds for Education Tax-Free?

    On of the advantages to investing in savings bonds is you'll never have to pay state and local income taxes on the interest. If you use the savings bond proceeds - both the interest and the return of your investment - for qualified educational expenses, you can exclude the ...

    Is Social Security Tax Refundable?

    Social Security taxes make up part of the Federal Insurance Contributions Act, or FICA, taxes. Unless you’ve had Social Security tax erroneously withheld, you won’t receive a refund. If an error has occurred, how you get a refund of the excess Social Security tax ...

    What Are the Benefits of the IRA Deduction?

    There are two kinds of individual retirement accounts, or arrangements, as the Internal Revenue Service now calls them, a traditional IRA and a Roth IRA. Each offers some tax benefits, either when money is put into the account or when it is withdrawn. The type of IRA that is ...

    Tax Limits on College Tuition for Federal Taxes

    The Internal Revenue Service lets you pick from several tax breaks for college tuition, but not without limits. Besides the caps on how much of your tuition you can use toward figuring the tax break, each credit or deduction has a set of eligibility criteria. However, even if ...

    How Much Can Be Claimed When Claiming a Stock Market Loss on Taxes?

    Most investors suffer stock market losses from time to time. Knowing how the Internal Revenue Service treats the deductions can help you decide when to bite the bullet and sell your losing stocks to maximize the tax breaks. The losses that you can claim depend on the amount of ...

    IRS Requirements for Saving Tax Returns

    Your tax return document piles don’t subside after your taxes are prepared. You must still keep copies of all your paperwork for a certain period of time after you file. Most taxpayers fall into a general category for record-keeping requirements, but you might fall into ...

    IRA Contributions Effects on Income Tax Owed

    The impact of IRA contributions on your tax liability depends on how much you contribute, whether the contributions are deductible and how much you earn. When money you contribute is deductible, it is not taxed until the year it is withdrawn from the account. When withdrawn, ...

    How to Modify a Tax Return for an ITIN to SSN of a Spouse

    An individual taxpayer identification number, or ITIN, is a unique number issued by the Internal Revenue Service to taxpayers who are ineligible for a Social Security number. Taxpayers who have an ITIN use the number for tax purposes, such as income reporting, filing income tax ...

    What Percentage of Your Gross Income Is Taxable?

    The annual tax-filing ritual catches many people unprepared and still a bit uncertain of how the tax system actually works. The most important numbers you'll be working with are gross and net income, the latter being the amount that decides how much tax you have to pay. Before ...

    Do I Have to Itemize for a Childcare Deduction?

    Paying a person or entity to care for your child or children while you work or look for work can be an expensive proposition for the even the wealthiest of people. The Internal Revenue Service acknowledges the need for proper childcare while parents work by offering taxpayers ...

    Taxes on Traditional IRA Conversion

    You can move some individual retirement arrangements into other plans without any tax penalties, but if you convert a traditional IRA into a Roth IRA you will owe taxes. With a traditional IRA, you get to deduct your contributions from taxable income when you make them, but pay ...

    What Is the Difference Between Single & Married Tax Deductions?

    The Internal Revenue Service offers married couples options to file tax returns jointly or separately. Standard deductions are higher for joint filers, and either or both spouses can claim itemized deductions on separate returns. If one spouse can claim some larger deduction or ...

    Are Social Security Benefits Classified As Income for Tax Purposes?

    Whether your Social Security benefits count as income when you file your federal tax return depends on how much other money you get. If you file a joint return, and your other income is more than $32,000, you'll have to pay on at least part of your Social Security benefits. You ...

    Does Everyone With an IRA Get a 1099-R?

    You'll get a 1099-R any time you move money in your individual retirement account. The Internal Revenue Service requires financial institutions to issue a 1099-R for any distribution from an IRA over $10, which covers most changes. That rule covers all forms of IRAs, including ...

    Does the IRS Have the Right to Garnish or Levy Your IRA?

    Internal Revenue Service garnishments and levies are legal seizures of a taxpayer’s property to satisfy past-due taxes. Levies are often confused with liens, but they are two different collection methods. Liens secure tax debt by staking claim to property, while levies and ...

    Federal Guidelines for Simple IRA Deductions

    A Savings Incentive Match Plan for Employees, or SIMPLE, is an easy way for small businesses to create retirement programs with tax benefits for both employers and employees. A SIMPLE can be set up by any company with 100 or fewer employees. An employer sets up a SIMPLE at a ...

    Are Government Savings Bonds Tax Deductible?

    Savings bonds issued by the government offer safety for your cash and a decent return in interest. They are a time-tested investment that now competes with a wide range of other savings vehicles, such as certificates of deposit and money-market accounts. Savings bonds offer no ...

    How Are Gains From Stocks Reported to the IRS?

    Gains from stock sales are income, which means they may be subject to federal tax. Your broker is required to file a form with the Internal Revenue Service providing details about your stock sales, and you must declare any gains and losses from those sales on your income tax ...

    If You Receive a Pell Grant Do You Qualify for the American Opportunity Tax Credit?

    The American opportunity credit is a tax credit available for students in their first four years of post-secondary education, such as trade school or college. Up to 40 percent or $1,000 of the credit, whichever is less, is refundable, which means you can get a tax refund for a ...

    Where to Find Proof of IRS Tax Lien Payment

    If you fail to pay an outstanding tax debt, the Internal Revenue Service will file a tax lien against your property. A tax lien allows the IRS to secure or requisition your property in order to secure payment. Once you pay the debt, the IRS will release the lien within 30 days ...

    How to Report Mortgage Interest Income

    If you are the lender on a mortgage, you must include the interest paid to you on your income taxes. For example, if you are the seller and you lent the buyer the money to purchase the home, any interest you charge on your loan payments count as taxable income. In addition to ...

    Can I Claim My Ex-Wife on My Income Taxes?

    You've filed the divorce papers and are moving on with your life. Then, tax time rolls around and you aren't exactly sure what to list as your tax filing status. Both your filing status and tax liability depend on the state of your divorce. Complicating matters are situations ...

    Are Inherited Savings Bonds Taxable?

    Savings bonds allow owners to defer paying taxes on the accumulating interest until the bond is cashed in. After someone dies, the bond passes to the her estate or the person named as the beneficiary on the bond. How the bond is eventually taxed depends on how the decedent and ...

    Overlooked Tax Deductions for the Self-Employed

    A self-employed person usually doesn't have teams of clerks and bookkeepers to look after all the records and nuances of a business, so it can be easy to overlook a tax deduction. The process is complicated because a self-employed person files at least three forms, a schedule ...

    Taxation of Annuity Benefits

    If you're considering a distribution from an annuity, take the time to familiarize yourself with the potential tax liability that may be created by your withdrawal. The type of annuity you own, qualified or non-qualified, and the amount of earnings in that account could impact ...

    How to Report Interest Earned on a Certificate of Deposit

    Certificates of deposit tend to offer lower rates of return than other, more risky investments, like stocks or mutual funds, because your interest rate is guaranteed and the money is covered by the Federal Deposit Insurance Corporation. However, the rates are typically higher ...

    Can You Claim an Education Tax Deduction If You Used a Pell Grant to Pay?

    If you received a Pell Grant to help cover the cost of education, you may wonder what other education benefits you may qualify for. While you cannot double-dip and receive benefits for the same expenses twice, such as a tax deduction for the tuition the Pell Grant covered, you ...

    How to Claim IRA Money Used to Pay Medical Bills

    The Internal Revenue Service usually penalizes taxpayers who make early withdraws from an individual retirement account, or IRA. Depending on the type of IRA, the penalty can range from 10 to 25 percent in addition to the withdrawal being subject to regular income taxes. An ...

    My Promotion Puts Me in a Higher Tax Bracket: Do I Pay That Tax for the Entire Year?

    Since Congress ratified the 16th Amendment to the Constitution in 1913, the progressive income tax has been the law of the land. While rates and tax brackets have changed over the years, the progressive nature of income taxation has not. Getting a raise at work might push you ...

    Maximum Earnings for Social Security Deduction

    The Social Security tax, part of the payroll taxes, is deducted from your paycheck by your employer. The tax only applies to your earned income, so wages and self-employment income are hit, but not your investment income or interest. As of 2012, the tax is 4.2 percent for ...

    Are Lawsuit Proceeds Tax Exempt?

    If you are a plaintiff, you can obtain proceeds from a lawsuit in two ways -- through a judgment or through a settlement. Either way, the Internal Revenue Service, and perhaps your state government, may take a share of the money. Whether or not your lawsuit proceeds are taxable ...

    Taxes on Social Security Benefits If You Retire at 62

    Almost all Americans pay into Social Security at some time in their working lives. Social Security taxes deducted from wages and salaries build credits that can be redeemed at retirement, an age that can vary from 62 to 70. Normal or full retirement age once was 65, but is being ...

    IRS Rules for Not Taking Distribution of IRA Funds

    The Internal Revenue Service wants you to keep money in your individual retirement account until retirement age, which it defines as 59 1/2. However, since that money was not taxed when you put it into the IRA, the IRS wants to make sure it is taxed eventually. Therefore, it ...

    How Much Can I Claim on My Taxes for a Charitable Donation Without Evidence?

    Giving to a charitable organization has two benefits. First, it helps that group provide services to needy individuals. Second, it can provide a nice deduction from your taxable income. Like everything else associated with income taxes, the Internal Revenue Service has strict ...

    Tax Lien Notices

    Tax liens are legal claims to secure debts placed on personal property. They are filed by state and federal tax agencies for outstanding tax liability due. The lien is attached to the property and the rights of that property until it is removed. By law, the agency needs to ...

    The Income Restrictions on EE Savings Bonds Used in Education

    You can exclude the interest from EE savings bond issued after 1989 if you meet certain criteria and you use the money on qualified higher education expenses like tuition at a college or trade school. Besides having your income fall below the annual limits, you must have bought ...

    Can a Gift Tax Be Avoided by Taking a Reduction on the Estate Tax Exemption ?

    Gift taxes and estate taxes exist for the same reason: the Internal Revenue Service doesn't want you to give away too much of your money or assets without also giving the government its share. The gift tax prevents taxpayers from transferring their assets tax-free during their ...

    The Percentage of Federal Taxes Paid Vs. Income

    It's an unfortunate fact of life, but the more you earn, the more the Internal Revenue Service will take from your earnings. The amount of your income that's actually taxable depends on your adjusted gross income -- or AGI -- minus whatever deductions you qualify for. However, ...

    How to Claim the Overpayment of Capital Gain Taxes

    When you sell a capital asset, the difference between the purchase price and sale price is your capital gain or loss, which you must report on your income tax return. The Internal Revenue Service considers any investment a capital asset. When you sell an asset for profit, you ...

    Do I Need to File a 1099 Form for a Savings Account?

    As a taxpayer, you never file a 1099 for anything. The 1099 forms are sent by businesses to report money they've paid to someone else -- $600 to a contractor or $10 in dividends, for example. If you get a 1099-INT in the mail for your savings account, the company's already sent ...

    Do Retired People Get Audited by the IRS?

    Nothing in the Internal Revenue Service rules says the agency should go easy on retirees. If you're living quietly on a modest retirement income, it's unlikely you'll get audited: The audit rate for typical taxpayers hovers around 1 percent. If your return includes one of the ...

    Do You Subtract All Deductions to Get AGI?

    If you're like many people, you dread doing your taxes each year – and with good cause. The process is complicated and riddled with phrases and rules. One of those phrases is "adjusted gross income" or AGI, and a lot of other tax rules depend on exactly what ...

    Are Employee Stock Options a Taxable Benefit?

    The question with employee stock options isn't whether they're taxable -- they are -- but when. Depending on the kind of option, you may have to pay tax when it's awarded, when it's vested or when you exercise. You definitely pay taxes when you sell the shares. Vesting is the ...

    IRS Domestic Partner Regulations

    Neither domestic partners nor same-sex spouses get to file a joint return for federal taxes. If you live in a community property state, however, your returns are definitely intertwined. Community-property laws treat couples' income as shared equally. According to IRS ...

    What Can Make the IRS Audit Your Tax Claim?

    The Internal Revenue Service tends to keep mum regarding exactly what causes it to pluck one tax return from among millions with the intention of giving it a closer look. This doesn't entirely leave taxpayers in the dark, however. Tax professionals and statisticians routinely ...

    Nanny Income Tax Rules

    It's often easier and more cost-effective to send your children to daycare than to pay an in-home child care provider. If you employ an in-home provider, you may become liable for paying the nanny tax, although this tax doesn't only apply to nannies. It relates to all household ...

    Federal Income Tax Rules on Babysitting Income

    The Internal Revenue Service doesn't make a distinction between child care providers and babysitters. If you – or your teenage son or daughter – care for children on a regular basis or even occasionally, the money you earn is income. This typically means filing a tax ...

    Michigan Cities That Have Local Income Taxes

    Michigan is among 17 states that permit cities, counties and other local government units to levy a local income tax. All 22 of Michigan’s taxing cities tax both residents and nonresidents but charge nonresidents a lower income tax rate than residents. The state mitigates ...

    Categories That Reduce Your Taxable Income and Reduce Your Tax Liability

    Earning a substantial income is wonderful – until you realize how much of a percentage the Internal Revenue Service wants as its cut of your earnings. Fortunately, the IRS offers a lot of ways to reduce your taxable income and lower your tax bill. Some are mutually ...

    Are Gifts to Education Funds Exempt From Gift Tax?

    Setting up a separate college fund to help pay for your child's education can potentially offer some tax advantages. You could, however, end up increasing your tax bill if your contributions are subject to federal gift tax. The IRS has specific rules about what types of gifts ...

    How to Prove Funds Are Inheritance to the IRS

    Money or property received from an inheritance is typically not reported to the Internal Revenue Service, but a large inheritance might raise a red flag in some cases. When the IRS suspects that your financial documents do not match the claims made on your taxes, it might impose ...

    How to File a Separate Return When Married

    Togetherness is key to a satisfying marriage, but not necessarily when you're filing a federal income tax return. In some situations, filing a separate return will allow you to save on taxes. In addition, filing separately places the responsibility of paying taxes solely on the ...

    The Taxation of Annuity Distribution Gains

    Determining the income tax liability on annuities can appear a daunting task. Internal Revenue Service regulations treat annuities in company retirement plans and those purchased individually differently for tax purposes. Additionally, the manner in which you withdraw the ...

    Do I Have to Pay Federal Taxes If They Were Not Deducted From My Paycheck in North Carolina?

    When the time comes to pay the IRS, it doesn't matter which state you live in. If you have taxable income, you owe every penny, regardless of whether your employer took the pennies out of your paycheck. That's the law whether you live in North Carolina, North Dakota or north ...

    How Much Money Can You Make Before You're Put Into a Higher Tax Bracket?

    Income taxes are the primary source of revenue for the federal government. Since the passage of the 16th Amendment to the Constitution, the federal income tax system has been a progressive one based on taxable income. The amount of income that pushes you into a higher tax ...

    Can the IRS Garnish My Retirement Pay?

    If you owe the Internal Revenue Service for overdue federal income taxes, the IRS can garnish your assets to get payment. This procedure is called a levy. When the IRS levies against your assets, it may go after any funds in your retirement account, or any retirement payments ...

    What Happens to Federal Income Tax Debt if the Person Who Owes It Dies?

    Death and taxes may be inevitable, but what about taxes after death? If you pass away with a tax liability, the IRS can keep on coming with notices, liens, levies and the entire arsenal of heavy collection weaponry. The target shifts slightly, however, with your heirs and ...

    What Pre-tax Deductions are Not Subject to Federal Tax?

    A key benefit of pretax deductions is that they give employees a tax break. Your employer deducts the benefit from your wages before it computes taxes. While federal law exempts pretax deductions from certain taxes, not all deductions are subject to the same taxes.

    Are U.S. Savings Bonds Treated as Long-Term Gains?

    When it comes to safety and security, it's hard to beat U.S. savings bonds. These bonds are issued by the U.S. Department of the Treasury, and the principal and interest are backed by the full faith and credit of the U.S. government. Savings bonds are nonmarketable securities, ...

    Are Workers' Compensation Settlements Taxable?

    If you're injured on the job, workers' comp benefits everyone. You get compensation for workplace injuries or illness without having to sue. Your employer and coworkers don't have to worry about liability for the accident. And your benefits help make up for the income you lose ...

    Are Revocable Trust Assets Included in Estate Tax Returns?

    Unlike irrevocable trusts, revocable trusts ordinarily offer no relief from estate taxation because the grantor maintains control over the assets he places into it. Whether you're acting as trustee for someone else's trust, or if you're doing your own estate planning, the value ...

    Is Spousal Support Taxable Without a Dissolution of Marriage?

    Courts order spousal support – more commonly known as alimony – for a variety of complex reasons, but they mostly boil down to one issue: after a long marriage, one spouse has insufficient income of her own to continue the marital lifestyle, or something comparable, ...

    Tax Credits for Trade Schools

    Whether you're going back to school for yourself or you have a child headed to a trade school, tuition can be expensive. On the bright side, trade schools generally count as qualified educational institutions, so some or all of the expenses qualify for a federal tax credit. ...

    What Is My Tax Bracket With Dependents?

    When someone refers to her tax bracket, she usually means the highest federal income tax rate that applies to any of her income. Income tax is levied on your taxable income, which is the amount left after you subtract deductions from your gross income. When you have dependents, ...

    Is Medical Insurance Taxable?

    Health insurance isn't cheap, especially when it comes out of your own pocket. Depending on how you pay for your medical insurance, the Internal Revenue Code might allow you to deduct the costs. Depending on the circumstances, you might not have to include the premiums in your ...

    How to Fill Out Schedule B - Interest & Ordinary Dividends

    When you have substantial interest or dividend income, the Internal Revenue Service makes you fill out some extra paperwork with your tax return. You must fill out Schedule B with your Form 1040 tax return if you have more than $1,500 of taxable interest or $1,500 of ordinary ...

    Can You Claim Health Insurance Premiums Paid Through a Cafeteria Plan?

    Usually, if you have the option as an employee to receive cash or a benefit, and you opt for the benefit, the value of the benefit is included as part of your taxable income. However, cafeteria plans offer a popular exception to that rule that gives you flexibility as to which ...

    IRS Inherited IRA Distribution Rules

    The good news about being named the beneficiary to an inherited IRA is obvious: You came into money. The down side isn’t always so clear, though. But if you don’t mind your p's and q’s and follow the Internal Revenue Service’s rules about distribution ...

    Taxation of Social Security Disability Payments and an IRA Distribution

    If your income is high enough, it can turn Social Security payments taxable. This can hit you whether you receive Social Security retirement or disability benefits. If you start withdrawing money from a traditional IRA, that counts toward the income level at which taxes kick in, ...

    Can I File Separately if I Am Married & Filed Jointly in Previous Years?

    Joint married tax returns usually save spouses tax dollars, but sometimes there are good reasons to file a separate return instead. If you file separately, you have no tax liability for your spouse's income or for errors on his return. You can file either a separate or joint ...

    Estate & Gift Tax Credits

    The IRS taxes the transfer of assets from one person to another. When you give money or property to someone while you are alive, you could be charged the gift tax. When you transfer your belongings to your heirs at death, they may need to pay estate taxes before receiving the ...

    How to Calculate Actual Wages When You Pay Medical Insurance & Contribute to a 401(k)

    For federal tax purposes, the amount of money shown in box 1 of your W-2 is the amount of taxable wages your employer paid you during the year. However, especially if you take advantage of company-sponsored health insurance or a 401(k) plan, your actual wages could be a lot ...

    What Government Bonds Are Taxable?

    Investing in government bonds allows you to earn regular interest payments from securities backed by the "full faith and credit" of the government that issues the bonds. Although any type of bond can fluctuate in value, ordinary investors don't trade bonds for capital ...

    Is the Face Amount of Life Insurance Included in My Gross Estate?

    "Face value" is synonymous with "death benefits" -- it's what your life insurance policy pays its beneficiaries at the time of your death. Whether this money becomes part of your gross estate for estate tax purposes depends on a number of factors. You must ...

    Do You Inherit Past IRS Debt of Your Husband Incurred From a Previous Marriage?

    As a general rule, debts incurred before your wedding don't carry forward into your marriage. Saying "I do" doesn't mean you also agree to pay the Internal Revenue Service for your spouse's premarital tax omissions and liabilities. Exceptions exist, however. They ...

    A Nanny's Wages and Paying Income Tax

    Although it would greatly simplify your life if you could hand your nanny her paycheck each week and, come tax season, treat her as an independent contractor, the Internal Revenue Service specifically requires you to treat nannies as household employees. As such, you’re ...

    Can a Dad Write Off Tuition for a Married Daughter?

    The tuition and fees deduction lets you write off up to $4,000 of qualifying tuition expenses you pay for yourself, your spouse or your dependents. Usually, you're going to run in to some roadblocks if you want to claim a tax write-off for paying your married daughter's tuition, ...

    What Is Taxable Income for Active Military?

    If you’re an active-duty service member, your tax situation is slightly different than that of civilians. The Internal Revenue Service’s treatment of military income means that computing your federal taxes has a few extra wrinkles. But that hassle is worth it in the ...

    Taxes on Selling Master Limited Partnership Shares

    The master limited partnership is a business form that operates as a hybrid of a limited partnership and corporation. It offers the tax advantages of a limited partnership along with the liquidity enjoyed by corporate shareholders. Selling shares in a master limited partnership ...

    Is Renting a Room an Investment for Income Taxes & the IRS?

    Renting that unused room in your basement can be a good way to help meeting your mortgage payment each month. If you’re not careful, it can also be a good way to run afoul of the taxman. The Internal Revenue Service treats renting out a portion of your primary residence ...

    How to Pay Federal Taxes If You're an Independent Contractor

    As an independent contractor, the Internal Revenue Service will treat you as your own employer. As such, the process for calculating and filing your federal income tax is different from that of an employee. In fact, as an independent contractor, your income tax rate may be ...

    Can a Former US Citizen Receive Social Security Retirement Benefits?

    According to The Wall Street Journal, nearly 1,800 Americans renounced their citizenship in 2011, many of them for tax reasons. The decision to give up citizenship involves a host of considerations, not least of which is whether you'll be able to receive your Social Security ...

    How to Compute Taxable Income

    Computing your taxable income for the Internal Revenue Service isn't as simple as just adding all your income. But that's a good thing, because Uncle Sam lets you take a number of deductions on your income, so you're paying taxes on a smaller amount. Knowing your taxable income ...

    Gross Income vs. Federal Taxable Gross

    Individual income taxes are the primary source of revenue that funds the operation of the federal government. Fortunately, not all of your income is subject to taxation. The Internal Revenue Service, the federal organization charged with collecting income taxes, has a simple ...

    What Hobbies Are Taxable?

    Technically, a hobby is something you do in your non-working hours just because you enjoy it. When it comes to tax law, however, nothing is ever that clear-cut. The Internal Revenue Service says a hobby is something that produces income when you don’t engage in the ...

    Why Did My Federal Withholding Go Up?

    If you base your budget on your take-home pay, a sudden change in your federal withholding can throw a wrench in your financial plans. Though knowing the reason for the change in withholding might not make you happy, you can at least rest assured your employer's not siphoning ...

    How Much of Federal Withholding Do I Get Back?

    Under the federal tax system, your employer withholds money from each paycheck and sends it to the IRS, to pay the taxes that you owe for the current year. When you file a return in the next year, you calculate how much tax you owe for the entire year, using deductions, ...

    Can I Get a Tax Refund With a 1099 Even if I Didn't Pay in Any Taxes?

    Tax refunds are a matter of relatively basic math. You calculate your tax bill, then subtract tax payments you made during the year, either through income withholding or by paying estimated quarterly taxes. If you paid more than you owe, the Internal Revenue Service returns the ...

    What Does It Mean That My W-2 Indicates I Didn't Pay Any Federal Taxes While in the Military?

    When you enlist in the military, you are asked to fill out a W-4 form for the finance office. Your marital status, number of children and the state you reside in will determine the amount of federal income taxes withheld from your Leave and Earning Statement. When you receive ...

    IRS Audit Interview Questions

    After you file a tax return, the IRS has three years to audit you. If the government suspects you under-reported a quarter of your real income or more, it gets six years to snoop; if you're accused of fraud, there's no limit. Part of the audit consists of an interview with an ...

    Are Attorney Fees for Social Security Benefits Deductible?

    If you are appealing a Social Security disability claim, or are involved in Social Security litigation, you can hire an attorney to represent you. An experienced attorney can get appeals filed on time, speak on your behalf to the agency and appear at a Social Security hearing, ...

    Am I Responsible for Half of the Income Taxes in a Marriage?

    Spouses have the option of filing either joint returns or separate returns at tax time, and most choose joint returns. If you do, you're not responsible for just half the resulting tax liability – you're responsible for 100 percent of it. The Internal Revenue Service can ...

    Can I Ignore Alternative Minimum Tax?

    If you are subject to the Alternative Minimum Tax, ignoring it could be an expensive mistake. IRS rules require you to pay the AMT if your income is above the threshold and you would owe more tax under the AMT than you would under regular income tax rules. That being said, there ...

    How to Reduce Alternative Minimum Tax

    Enacted in 1969, the alternative minimum tax started out as a tool to prevent a small number of high-income earners from paying absolutely no taxes. The AMT eliminates personal exemptions and just about every itemized deduction and replaces them with a single AMT deduction ...

    Do You Have to File a 1099 for a Contractor Hired to Work in Your Own Home?

    The Internal Revenue Service relies on 1099 forms to catch payments that the Form W-2 misses. When you receive dividends or withdraw money from an individual retirement account, for instance, you get a 1099. The 1099-MISC goes out when a business pays a nonemployee. One copy ...

    When Do You Pay Taxes on Stocks?

    The Internal Revenue Service collects taxes on money you make from stocks. However, that money might be considered either capital gains or income. The category the money falls into determines when you have to pay taxes on stocks and how much of a tax bite the IRS takes. Your ...

    Is Money Left to a Church Qualified As an Estate Tax Deduction?

    The Internal Revenue Service is all in favor of taxpayers giving to qualified charities – and churches are included. Section 2055 of the Internal Revenue Code sets out specific rules and criteria for churches, but almost all meet these standards. You can leave your church ...

    Are Credit Card Points Taxable?

    Many credit cards allow you to earn "points" with each purchase -- points that you can redeem for travel or merchandise. Since you can exchange these points for something that costs money, the points themselves clearly have economic value, and that leads many to wonder ...

    Do Penalties Still Accrue From the IRS When There Is a Payment Plan?

    You might find it difficult to pay your taxes in one lump sum when they are due. If this occurs, you could propose a payment plan to the Internal Revenue Service. If you file your taxes by the deadline, you can avoid the failure-to-file penalty. But failure-to-pay penalties ...

    If I Owe More Taxes After an IRS Audit, Do I Have to Pay Interest on It?

    When the Internal Revenue Service audits you, the agency compares your tax return against your records to see if you have underpaid your taxes. If the IRS finds an underpayment, you will have to make arrangements with the agency to bring your account current. The agency will ...

    How to Sell Stock to Pay Estate Tax

    Taxes can be owed if the value of an estate exceeds the maximum exemption amount allowed by Congress. For 2013, the exemption amount is $5 million. If you are named as the personal representative, also known as the settlor, in the decedent’s will, you are responsible for ...

    Can Taking the Standard Deduction Help to Avoid the Alternative Minimum Tax?

    The alternative minimum tax is a real possibility if you earn a good income. The tax's purpose is to eliminate certain deductions and tax benefits that help wealthy taxpayers avoid paying taxes. It acts as a separate tax system from the calculations on your 1040, and it begins ...

    Do Insurance Settlement Payouts Due to Injuries Get Taxed by the Federal Government as Income?

    People settling personal injury claims must understand the tax implications involved, since tax liability can erode the true value of such settlements. Attorneys representing injured people may be able to provide some tax advice to their clients. However, unrepresented accident ...

    Reducing Your Tax Debt for Real

    Tax debt is one of the hardest debts to resolve. While you can usually eliminate credit card debt or medical bills through bankruptcy, taxes are specifically excluded from a bankruptcy discharge, except in certain rare circumstances. Since penalties and interest continue to ...

    Can I Be Taxed on Money Gifts From Abroad?

    The Internal Revenue Service taxes gifts differently than income. If you receive a gift of money from someone living abroad, how the money is reported to the IRS depends on the amount and the residency of the giver. Gifts under $14,000 a year are excluded from federal income ...

    Can an Unemployed Person File a Federal Tax Return?

    Whether or not you're employed at the end of the year doesn't affect whether you can file a federal income tax return. In fact, even though you don't have a job, you might still be required to file a return because your taxable income exceeds the filing thresholds. ...

    Can I Change My Taxes From Married Filing Jointly to Head of Household?

    Filing status can change whenever your life changes. No matter how you filed your taxes last year, you can change it now if you qualify for a different status. If you have the option to file more than one way -- married but separate or head of household, for instance -- you can ...

    Can a Bank Mortgage Company Take Your Tax Refund?

    Falling behind on your mortgage impacts your finances in several ways. Your first hit goes on your credit report where you start showing past-due balances lowering your credit score. If you never bring the payments back to green, the bank may begin foreclosure proceedings. ...

    How to Allocate Interest Earnings When Someone Dies

    Not even in death will the Internal Revenue Service allow interest income to go unreported. Who pays taxes on it depends on whether the asset producing the interest is part of the decedent's probate estate, and when the interest was actually earned. The tax rate can vary as ...

    Lifetime Learning Credit Vs. American Opportunity Credit

    If you're putting your kids through college, you're probably looking for any tax break you can find. The fiscal cliff deal of 2013 preserved two education-related tax credits, at least through 2017. Depending on your student's curriculum and your adjusted gross income, either ...

    Is it Better to File an Extension or Amend a Tax Return?

    No matter how diligent of a tax filer you are, there still remains the off chance that you will encounter some difficulty when filing your return. A missing receipt, W-2 or 1099 could prevent you from filing a complete and accurate return. If you’re faced with such a ...

    My Husband Has Never Filed Income Taxes but We Are Filing Together

    If you and your husband violate Internal Revenue Service tax laws, it will add stress to your relationship and it could rob you of a refund you're entitled to. If you are filing with your husband and he has never filed taxes, you should take some precautions to ensure you ...

    The Tax Credit for After-School Activities

    The Internal Revenue Service is willing to help you out a little with your child care expenses. It offers the child and dependent care tax credit, which us better than an equivalent deduction, because it comes off your tax bill dollar-for-dollar. Unfortunately, depending on the ...

    A Closer Look at the Benefits of Using eFile for a Tax Return

    E-filing your return instead of mailing it in can mean the difference between a smooth tax filing process and one that lags on for months. In an effort to be more responsive to taxpayers and streamline its own bureaucracy, the Internal Revenue Service has made e-filing available ...

    Tax Credits for People With Disabilities

    Disabled taxpayers often incur more medical expenses than other taxpayers do, and they are often unable to earn as much income to cover them. Fortunately, the Internal Revenue Service offers certain tax credits that taxpayers can use to reduce the income tax they owe at the end ...

    Can I Do Instant Tax Returns Before My W2 Arrives?

    If you mail the Internal Revenue Service a return with erroneous information, you could spend months trying to correct your mistakes. You're allowed to complete your tax return based on whatever income information you have available, but in terms of tax law, what you can do and ...

    What to Do When the IRS Changes Your Tax Return Check Amount?

    If you get a notice from the IRS indicating that your refund check amount has changed, there’s no need to panic. The IRS changes thousands of refund checks every year, so having your refund check amount changed is not an indication of wrongdoing. Understanding why the ...

    Do You Have to Claim Tax-Exempt Interest Earned?

    In 1913, the first year the federal income tax was implemented, the tax rate was 1 percent of net income, and it applied to less than 1 percent of the population. The reach of the income tax has extended considerably in the past century and is now applied to all kinds of income, ...

    Can I Get the EITC Credit if I Have Received Income From My 401(k)?

    When you retire or face financial hardship, withdrawing from your employer-sponsored 401(k) can help fund your day-to-day expenses. The Internal Revenue Service requires you to include distributions from a 401(k) in your adjusted gross income (AGI) on your tax return, which can ...

    Are Disability Benefits Taxable on Children Under 18?

    The federal tax system takes into account income received at any age. That means a minor child may owe taxes, depending on the source and amount of his income. Although some adults pay taxes on Social Security disability benefits, a child under 18 is not eligible for disability, ...

    When Do Federal Taxes Get Taken Out of VA Paychecks?

    The U.S. Department of Veterans Affairs provides compensation to veterans who became disabled while actively serving in the military, as well as wartime veterans who live on limited income. If you earn income from either of these sources, the Internal Revenue Service won't ...

    What Is a FITW Deduction?

    FITW is an abbreviation for "federal income tax withholding." You may sometimes see it on payroll stubs to identify your withholding deduction. Withholding is one way of paying income taxes to the federal government before your end-of-the-year tax filing. Your FITW is ...

    Can a Tax Refund Be Wire-Transferred?

    Federal income tax refunds can be wire-transferred directly to your bank account on a limited basis. Traditional wire transfers go from bank-to-bank, using domestic or foreign clearing houses as traffic managers only. Classic wire transfers are available for two primary ...

    Canada's Gift Tax Law

    Canada does not impose a gift tax or an estate tax. Depending on the type of gift, the gift giver may have to pay the capital gains tax. Canadian taxpayers may be able to claim federal, provincial or territorial nonrefundable tax credits when they file their income tax returns. ...

    Groups That Do Not Pay Into the Social Security System

    Since 1983, almost all groups in the United States contribute to the Social Security system. Before 1983, members of Congress, the President and Vice President and all federal employees were exempt from Social Security taxes and benefits. Currently, the only prominent groups ...

    Do I Need to Report the Dividend Income on My Roth IRA?

    You do not report your Roth individual retirement account's dividend income to the Internal Revenue Service. The purpose of a Roth IRA is to provide tax-sheltered growth and tax-free retirement income. If you observe all the rules, you can withdraw retirement earnings from your ...

    US Gift Tax Regulations

    U.S. gift tax regulations determine everything from who must file a tax return, when to file the tax return and how much tax is owed. The regulations also list the different penalties the IRS can impose if you fail to file a tax return or do not pay the tax. Unless you give ...

    How to Avoid Trust Fund Penalties With the IRS

    Employers must withhold income tax, Social Security and Medicare taxes from their employees' paychecks. The money is held in trust until the employers pay it to the U.S. Treasury Department. Employees rely on their employers to remit those funds on time, which is why they are ...

    Taking Education Credits on a Tax Return by Mistake

    Just because you or one of your dependents is a student doesn't necessarily mean that you're eligible to take one of the education credits on your tax return. If you took the credit and subsequently suspected you weren't eligible, you need to amend your tax return to fix it. ...

    Rules Regarding Tax Deductions on Children

    Tax deductions and tax credits help offset the expenses that come with the enriching experience of raising children. Tax breaks for kids start with an exemption for any dependent child, but there is much more. Don’t overlook the other tax benefits for children that you ...

    Is Deferred Tax Deducted for Calculating Assets & Net Worth?

    In the financial world, a deferred tax is one that will be paid in the future. Accountants use generally accepted accounting principles, or GAAP, in financial accounting. Deferred taxes arise because of the temporary differences between financial accounting and income tax ...

    Deductions on an Estate Income Tax Return

    If you leave behind a sizable estate, Uncle Sam could be one of your heirs, whether you want him to be or not. Besides the unified credit, which essentially exempts the first $5.25 million of your estate from estate taxes, your estate can also make use of several deductions to ...

    Will SS Income Raise Your Tax Bracket?

    Social Security benefits supplement your income later in life. Even though the benefits are paid by the federal government, they might still count as taxable income on your return. So, depending on your total income, you could find yourself in a higher income tax bracket because ...

    How to Time a Tax Loss on the Sale of a Stock

    Picking stocks isn't easy and even the best of the best investors don't always pick winners. Though you should focus on picking good investments rather than trying to use your investments for tax breaks, good tax planning on the timing of your stock sales can save you on your ...

    What Is the Cap for Paying Social Security Taxes for a Joint Return?

    Unlike income taxes, the amount you owe in Social Security taxes is unaffected by the size of your family or by your tax filing status. Your Social Security tax obligation depends on only one thing: how much income you make. For couples filing joint tax returns, the amount they ...

    Do I Have to Pay My Dead Husband's Back Taxes?

    Even death can't change the terms of the Internal Revenue Code. The Internal Revenue Service has its rules, and they're pretty much ironclad, regardless of whether a taxpayer is deceased or alive. In most cases, you're only responsible for your husband's tax problems when you ...

    IRS Audit for Limits on Itemized Deductions

    When the Internal Revenue Service finds a discrepancy or other potential error on your tax return, it can audit you. Since many itemized deductions are either tied to hard limits or to complicated rules as to how they should be calculated, they can be major audit triggers. While ...

    Can I Set Up an Installment Agreement With the IRS to Pay Back Taxes While I Am in a Combat Zone?

    The IRS allows an extension of time to file returns and pay taxes for members of the military -- as well as support personnel and journalists -- serving in a combat zone. The standard extension continues 180 days after leaving the combat zone. If you're in the military but ...

    Taxes on Gifting, Insurance & Proceeds

    Whenever you receive income, you typically have to pay tax on it. However, tax law is complex. Gifts, insurance payments and transaction proceeds all have their own distinct tax rules. Many payments you receive that you might think are income may actually be tax-free. Other ...

    The Basic Tax Liability When Selling ISO's

    An incentive stock option is a grant from your employer that gives you the right to buy shares of company stock at a guaranteed price called the exercise price. ISOs offer some significant tax benefits that you don’t get with other employee stock options provided you ...

    Can I Avoid Federal Taxes If I Have a Mutual Fund Outside of an IRA?

    An individual retirement account can shield your investment income from taxes while you hold the money in the account. If you own a mutual fund in an IRA, you can usually avoid federal taxes until you take the money out. However, if you hold a mutual fund in a regular investment ...

    Can House Repairs Be Taken Off Income Tax if Insurance Paid for It?

    The IRS allows homeowners several valuable deductions: mortgage interest, property taxes and the costs of reserving part of the residence for a home office. Ordinary maintenance and repairs on your home are not tax-deductible, whether or not they are covered by homeowners ...

    What Could Cause an Offset in Tax Returns?

    No matter how careful you are at filing your income tax return, you could still lose your entire refund if it is offset to pay a debt. Only certain kinds of debt are eligible for offset. For example, private debts do not affect your tax return, as only state and federal debts ...

    How Respond to an IRS Audit Report

    The Internal Revenue Service typically mails an audit report to a taxpayer within a few weeks after conducting an audit. The report will explain any proposed changes to your tax return. Along with the report, you will receive an agreement form, a copy of IRS Publication 5, and a ...

    Can I File an Amended Return After an Audit?

    The IRS conducts different types of tax audits depending on the information and records that it wants to examine. Most commonly, the agency will conduct either a correspondence audit or a more detailed field audit. During an audit, a taxpayer might discover new information that ...

    Is Interest on a Minor's Bank Accounts Taxable?

    Interest paid on a minor's account is taxable. However, people younger than 18 seldom earn sufficient income to create tax problems, so it rarely matters what types of accounts they have. Two primary account options for minors exist. One is custodial savings accounts in banks or ...

    How Often Does the IRS Double Check Tax Returns?

    One of the major stressors at tax time is wondering whether you've made a mistake on your return that might come back to haunt you years later. You can take some comfort in the fact that the Internal Revenue Service only audits about 1 percent of all tax returns each year. A ...

    British Inheritance Tax Rate & Procedures

    The British inheritance tax applies to gifts a donor gives while living and to a decedent’s estate. You can apply several exemptions to lower or offset the inheritance tax liability. The tax must be paid within six months from the end of the month in which the decedent ...

    Can a Medical Savings Account Be Withdrawn Without Penalty From the IRS?

    Medical savings accounts offer special tax benefits for contributing money when you're covered by a high-deductible health insurance plan. Contributions are tax-deductible and qualified withdrawals come out tax-free. However, the punishment for non-qualified withdrawals is ...

    Tax Write-Offs for First-Year Home Owners

    Buying a home opens whole new world of expenses that you never had before -- home insurance, mortgage insurance premiums, lawn care and replacing broken appliances. On the bright side, as a homeowner, you're eligible for a number of new tax deductions. However, all the ...

    Must a Child File a Federal Tax Form for an Inheritance?

    The Internal Revenue Service doesn't allow much to go untaxed, but some inheritances are an exception. When a child inherits, an additional rule applies that may exempt him from taxation – he only has to report and pay taxes on unearned income that exceeds $950. As far as ...

    What Happens If I Forget to Report a 1099-B?

    A 1099-B is the form your broker sends you to document the gains and losses from your investments for the year. You are supposed to report the income stated on the 1099-B and attach it to your tax return. If you forget to report the income from a 1099-B, don’t panic. The ...

    If My Parents Gift Their Home to Me, Do I Have a Tax Liability?

    Your parents can give their home to you as a tax-free gift if the transaction meets the Internal Revenue Service definition of a gift. Your parents must legally own the property and intend to give it to you as a gift. They must relinquish all rights and ownership of the house ...

    How Do Assessments for Streets Affect Income Taxes?

    Some types of taxes are deductible when you file your federal income tax return. For example, you can deduct your real estate taxes, provided those taxes are imposed on you and are charged against all the property in the tax jurisdiction at the same rate. Assessments for streets ...

    The Removal of Incorrect Tax Liens

    A tax lien is a legal document filed by the Internal Revenue Service. Liens are recorded in the county where you own property, and appear on your credit report. The lien alerts creditors to the fact that the property you own is encumbered by tax debt. Unlike other liens, such as ...

    The Tax Consequences if Parents Pay a Child's Mortgage

    It's not always easy for kids to make ends meet after leaving the nest, so it's not uncommon for parents to continue to try to help out, for example by paying their child's mortgage. However, even if you're the ones making the payments, you're usually not going to get a ...

    How Much Tax to Withhold as an Independent Contractor?

    Independent contractors don't withhold tax; they estimate it. Because you don't have an employer to take out money from your paycheck, you have to estimate what you owe and send some of it to the IRS through the year. Estimated tax payments for the year usually fall due on April ...

    Taxation on Realized Losses

    Not every investment you buy is going to do well, but that doesn't mean it's a total loss. When you sell certain investments and realize a loss, you might be able to claim a write-off on your taxes. However, losses on personal property, such as your house or your car, can't be ...

    Tax Implications of Social Security Death Benefits for Children

    Social Security will pay survivors benefits to the eligible children of a covered worker. If you have worked and paid in to the Social Security system, these benefits can assist your family, in a similar way to a benefit paid out from a life insurance company. Social Security's ...

    Can I Deduct Vehicle Registration Fees on Federal Tax Return?

    With insurance, maintenance and registration fees, owning a car can feel almost as expensive as buying one. However, you might be able to claim your registration fees as a tax deduction on your federal return, depending on how you use your car and how the vehicle registration ...

    Are Monetary Settlements From Accidents Taxable?

    Even the Internal Revenue Service admits that circumstances exist where money should not be taxed, but few issues are that cut-and-dried with the IRS. Sometimes it taxes accident settlements, and sometimes it doesn't. Sorting through the rules can be complicated, and exceptions ...

    What Are the Tax Pros & Cons of Declaring Your Second Home as a Rental?

    If you own a second home and it sits empty most of the year, it's probably occurred to you to rent it out and make some money from it. Income means tax issues, however, and the Internal Revenue Service's rules for rental properties are particularly complex. Many of them depend ...

    The Tax Treatment of IRAs Payable to a Trust

    One of the primary reasons for creating a trust – either revocable or irrevocable – is to avoid having the assets you fund it with go through probate when you die. Assets with designated beneficiaries, such as an IRA, don't pass through probate either. If probate is ...

    IRS Laws on Tax-Deductible Mortgage Broker Fees

    If you pay a mortgage broker's fee, such as a loan origination fee, on your personal residence, the Internal Revenue Service's rules are clear. You can't deduct the fee from your taxes, and you can't add the cost of the fee to your home's basis to reduce the amount of your ...

    What Determines the Tax Bracket for Seniors Deducting From a 401(k)?

    A 401(k) plan lets you contribute money on a before-tax basis, giving you more money to invest and, hopefully, have grow. However, when you start taking money out of your 401(k), you'll have to pay regular income tax on every penny of it. Furthermore, because distributions ...

    Can Filing Taxes Quarterly Save Money?

    The Internal Revenue Service says taxes are on a pay-as-you-go system. For many people, this is not an issue, because their employers withhold taxes every payday. However, you are supposed to file and pay estimated taxes each quarter if you have a significant amount of income ...

    Does Requesting a Transcript of a Tax Return Flag an Audit?

    Many folks prefer not to deal with the Internal Revenue Service and worry that any type of inquiry on their account may cause the IRS to take a second look at returns or transactions posted to their account. However, requesting a transcript of a tax return you filed is not an ...

    Time Frame of Receiving a Tax Audit

    No one wants to find out that the Internal Revenue Service is auditing him. Unfortunately, if you're afraid there's a problem with your tax return, you might have to hold your breath for a considerable length of time. After the process is under way, it can be over in the blink ...

    I Pay My Mom to Babysit; How Do I Show That on a Tax Return?

    The IRS offers a child care tax credit to those who pay child care costs, which enable taxable income to be earned. You don’t need to pay a child care facility or private, licensed care provider to get credit for your expenses – the IRS allows you to count amounts ...

    Do High-Yield Savings Accounts Have to Be Claimed on Income Taxes?

    Maximizing your interest rates in a savings account helps to add money to your portfolio in a relatively low-risk manner. Though a high-yield savings account means more money in your pocket at the end of the year, it also means you must share a little more with Uncle Sam in the ...

    When is Tax Payable on a Matured Certificate of Deposit?

    Certificates of deposit offer you a fixed interest rate for a predetermined time period, so you know how much you're going to make. When the taxes are payable depend on the term of the CD because the Internal Revenue Service treats CDs with a maturity of longer than one year ...

    Are Retirement Distributions Exempt From IRS Penalties?

    When you put money into a tax-advantaged retirement account, the Internal Revenue Service requires you to follow IRS rules when you withdraw money. If you make an early withdrawal that isn't permitted by the IRS, you will be subject to penalties. However, once you reach legal ...

    Do I Pay Taxes on Stock Income If I Invest in a House?

    The stock market can help you grow your savings to reach your investment goals, including saving up to buy a home. However, the IRS doesn’t allow you to exclude any stock income just because you used the proceeds to buy a home, even if it’s your first one. But, with ...

    How to Use Income Averaging on Your Taxes

    Income averaging is a federal tax provision that since 1987 focuses solely on two select groups of taxpayers, farmers and fishermen, both of which exhibit income volatility as a common characteristic. The intent of the tax provision is to reduce qualifying individuals' tax ...

    Tax Benefits of IRA Vs. HSA Accounts

    The rules for signing up with a health savings account are a lot tougher than an IRA. All you need to put money in an IRA is to have earned income. With an HSA, you must be covered under a high-deductible health plan, and have no other health coverage. The tax rules for the two ...

    Do I Need to Pay Taxes on Insurance From a Deceased Person?

    You don't usually pay taxes on insurance payouts. Insurance isn't income: it's reimbursement for something you've already lost. Life insurance is sometimes an exception. Most of the money should be tax-free, but part of it may be taxable. The deceased's estate may also have to ...

    Are Parents of Five Kids Eligible to Be Tax-Exempt?

    According to the Internal Revenue Service, to claim exempt, you must have no tax liability for the previous tax year and expect the same for the current year. Your dependents play a large part in the amount your employer withholds from your paycheck and can affect your taxes, ...

    Tax Credit Thresholds

    The Internal Revenue Service offers several tax credits to reduce your federal income tax liability. The IRS typically uses credits to offset certain expenses or encourage behavior that benefits the economy. There are credits available for all income levels, but each has its own ...

    When Are Taxes Due if an Extension Was Filed?

    Uncle Sam is pretty generous when if comes to filing your taxes. All taxpayers can request a six-month extension to file their return, giving them until mid-October to get their return submitted. However, the generosity doesn't extend to paying: When you file for an extension, ...

    Is Paying Someone Else's Credit Card a Gift?

    The Internal Revenue Service casts a wide net when it comes to what counts as a gift for tax purposes. If you give anything away – even to a third party such as a credit card company on someone else's behalf – it's a gift, assuming you don't expect the cardholder to ...

    Tax Rules for Earned Interest

    Holding your money in interest-bearing accounts allows you to build wealth, even while you're asleep. However, even though you're not technically working for the money, you're still required to share some of it with the Internal Revenue Service. Depending on how much you make ...

    Getting Last Year's Tax Records

    It’s a smart idea to hang onto copies of your tax returns. For example, you may last year’s tax records to apply for a mortgage or student loan. In the event of a natural disaster, you’ll need tax returns to apply for help from government agencies. If something ...

    Is Foreign Income Taxable in the USA?

    Working aboard allows you to be paid to see the world without having to use up your vacation days. However, in many cases you're still going to have to share some of the money you make with Uncle Sam even though you might qualify for some additional income tax breaks.

    How to Get Certified Copies of Tax Returns

    When you have to prove your income, there's often no substitute for a copy of your tax return, certified by the Internal Revenue Service. You can order a copy of your tax return for the most recent year or any of the six years before that, but you'll have to cough up some money ...

    Does a Taxpayer Have a Taxable Income From Debt That Was Canceled in a Decedent's Will?

    If your best friend loans you $10,000 then tells you not to worry about paying him back, the Internal Revenue Service says this is income. You received money, you were relieved of having to return it, so it becomes cash in your pocket. If your friend dies, however, and if he ...

    How Much Do You Need in Deductions to File Itemized?

    Itemizing your deductions versus taking the standard deduction is a personal choice – you want the option that saves you the most tax dollars. Although exceptions exist in a couple of categories, the Internal Revenue Service generally doesn't set a minimum for the amount ...

    What Income Is Subject to Self-Employment Tax?

    When you work as an employee, your employer withholds the employee portion of your Federal Insurance Contributions Act taxes -- the Medicare and Social Security taxes -- from your pay, and pays the rest herself. When you're self-employed, you're subject to self-employment taxes ...

    Is Jury Duty Pay Reported to the IRS?

    Like most other types of compensation you earn for providing services, the pay you receive from the federal, state or local government for jury duty is generally taxable. There are situations, however, when it isn't necessary to report jury duty pay on your taxes. But your ...

    What Is a Taxable Entity?

    The IRS considers most individuals, married couples and corporations as taxable entities. Taxable entities must file tax returns each year if they have any taxable income. Except for qualified non-profit businesses, officially classified as 501(c)(3) entities by the IRS, or ...

    Tax Calculations on Money Earned

    U.S. citizens are taxed on the money they earn from worldwide sources. It’s in your best interest to ensure enough money is withheld from your earnings to pay your federal income tax obligation at the end of the year. You can calculate the amount that should be withheld ...

    Who Must File an IRS Form 706?

    Dying isn't cheap, especially if you own a lot of stuff at your death. The federal government imposes an estate tax on large estates and the Internal Revenue Service uses Form 706 for calculating estate taxes due. However, smaller estates usually aren't required to file Form 706 ...

    Calculating Taxes Due on Mutual Funds

    Mutual funds are professionally managed pooled investments. When you buy shares of a mutual fund, you own a piece of the underlying portfolio. Mutual funds can invest in stocks, bonds, precious metals and other items. Your mutual funds send you standard Internal Revenue Service ...

    How to Calculate Gross Wages When Self-Employed

    Employees have it easy when it comes to taxes: The employer withholds Social Security taxes and Medicare taxes automatically and sends a W-2 that tells exactly how much income to report on your tax return. But, when you're self-employed, figuring your gross income is all on you ...

    How Often Does the IRS Audit Previous Tax Years?

    The Internal Revenue Service overall audit rate is 1.03 percent for individuals, according to the agency's stats for fiscal year 2012. That includes a 1 percent rate for auditing older returns from fiscal 2011. The odds of an audit for any year are low, but high income or ...

    Stock Options and the Alternative Minimum Tax

    The alternative minimum tax was created in 1969 to solve the problem of a few millionaires using tax deductions and shelters to avoid paying any taxes. Over the years, though, its impact has spread to millions of tax payers. It works by eliminating many tax deductions and ...

    Are Company Paid Insurance Premiums Taxable Income?

    If a company provides benefits to its employees, the business might also be providing taxable income that employees must report to the Internal Revenue Service. This would include any kind of insurance -- with any coverage amount -- with the exception of those insurance policies ...

    Tax Rates for Trusts

    A trust is a separate legal entity for tax purposes. The trustee, who manages and is responsible for the trust's investment results, must file a tax return each year and declare the money earned. The tax return looks similar to your personal Form 1040, with lines for income and ...

    The Truth About Paying Less in Taxes

    Many taxpayers figure that the less money that they give to the Internal Revenue Service, the more money they keep for themselves. They're right, but they may also be missing out on a bigger picture. The IRS is pretty good at collecting taxes, after all, and reducing your tax ...

    What Does Exemption Mean on the 1040 Tax Form?

    When you're filing your taxes, you can reduce your taxes by claiming deductions or claiming exemptions. You get an exemption for each person you can claim as a dependent, including yourself. The more you claim, the larger the tax break -- as long as you're claiming exemptions to ...

    Self-employment Income: Tax Treatment of Self-employed Earnings

    When you set up your own shop or hang your own shingle, you're free from having a boss looking over your shoulder. However, your income won't escape the watchful eye of the Internal Revenue Service. But, on the bright side, you're able to deduct all of your business expenses ...

    Are Dividends Taxed as Income or Capital Gains?

    Dividends are payments of cash or additional shares to stockholders. Many investors factor dividends into their stock picking. Dividend yield is the annual cash payout divided by the stock price. Your after-tax yield depends on how the Internal Revenue Service classifies the ...

    How to Enter the Self-Employed Health Insurance When Filing Taxes

    When your employer pays for your health insurance, that income isn't included as taxable income on your W-2. So, when you're your own boss and pay the premiums out-of-pocket because you don't have an employer, you're usually allowed to write off the expenses on your taxes. But, ...

    Form 1040-ES Description & Tips

    Most people have their income tax withholding requirements satisfied by the money their employer withholds from their paychecks throughout the year. However, if you have other income that isn't subject to withholding, such as self-employment income, interest or capital gains, ...

    Documentation Needed for a Geothermal Tax Credit

    Geothermal energy – earth-based heat -- offers a clean, sustainable alternative to traditional HVAC systems. During winter months, geothermal heat pumps use an air delivery system to move heat from the ground to heat-exchanger pipes located near a building and then into ...

    What Are Schedule K-1 Documents Used For?

    Traditional corporations are the only form of business required to pay income tax on company profits. Other types of businesses allocate those profits to their owners, who are responsible for the taxes on those profits. Such companies use Schedule K-1 to tell individual owners ...

    Income Tax on Trust Disbursements

    In the big picture, trust disbursements are taxable income to the beneficiaries who received the money. But like all things relating to taxes, it gets more complicated. How much is taxable and at what rate depends on the nature of the trust earnings. If you are a beneficiary, ...

    Tax Benefits of Renting Vs. Selling a House

    Although many people sell their houses when they move, that isn't your only option. You can also keep your house and rent it out. Renting out an investment property comes with certain tax implications both while you own it and when you choose to sell it. However, for many ...

    What Does Backup Withholding Mean?

    When you get your paycheck, money's already taken out for taxes. However, that's not the case for all income. Some sources of income, like interest or dividends, aren't typically hit with tax withholding. However, in certain cases, the Internal Revenue Service might subject your ...

    Tax Treatment of Dividends From Trusts

    A trust is a financial entity set up to shelter assets from probate court, or to control the use of funds by a trustee for a specific purpose. The Internal Revenue Service normally taxes dividends received by individuals as either ordinary income, taxed at whatever the ...

    IRS Reporting Rules on 1035 Exchange

    The Internal Revenue Service will allow you to exchange one life insurance policy, annuity or long-term care policy for another, free of any taxes or penalties, as long as you adhere to certain rules on these exchanges, which are known as Section 1035 exchanges. If the ...

    What Does Combat Pay Mean for Taxes?

    Some members of the military may find themselves serving in a combat zone one or more times during their careers. And because of the inherent danger of being in a combat zone, the government gives you a number of tax breaks when you earn combat pay. Because this is a nuanced ...

    Are Testamentary Accounts Taxable?

    People set up trusts for a variety of reasons, including tax planning. A properly structured trust, such as a testamentary account, can lower estate taxes. Such accounts, which are taxable, are trusts that pay out upon the owner's death, according to the grantor’s ...

    Tax Credits for Real Estate Investing

    Your taxable income falls within a certain tax rate that determines the amount you owe to the Internal Revenue Service. You can reduce this amount by claiming tax credits for which you qualify. A tax credit reduces your tax liability, which reduces the amount owed to the IRS. As ...

    Federally Tax-Exempt Interest & Dividend Income

    The Internal Revenue Service taxes your income, including that stemming from investments. The United States uses a graduated tax rate system, meaning that the more you earn, the higher your tax bracket. By careful choice, you can put some of your investments into the zero tax ...

    What Is Tax Form 712 Used For?

    Internal Revenue Service Form 712 is primarily of interest to people serving as the executor of a deceased person's estate. It's the executor's job to wrap up the financial affairs of the deceased, including filing an estate tax return if necessary. Form 712 reports the value of ...

    Tax Liens vs. HOA Liens

    When you fail to pay a debt, you can expect to receive a series of telephone calls and letters from your creditor requesting payment. Enforcement techniques differ depending on the creditor. Homeowner associations and the Internal Revenue Service, however, often use real estate ...

    Difference Between Assessable Income & Taxable Income

    The Internal Revenue Service outlines four types of income categories. Gross income is your total income from all sources. Assessable income is what you earn from passive activities along with your employment income. Non-taxable income is exempt from federal income taxation. ...

    Is a Non-Qualified Plan Award Taxable?

    In an uncharacteristic demonstration of generosity, the Internal Revenue Service doesn't take a cut of some awards that you receive at work. When your employer gives you a non-cash award that follows the IRS' limits, they're writing it off of their taxes. However, you don't have ...

    How Much Should I Depreciate My Oil Royalties for Income Tax Purpose?

    Technically, you don't depreciate royalties. The Internal Revenue Service lets you depreciate buildings and capital equipment as it deteriorates, but the agency has you deplete oil and gas investments as the wells generally empty out. Depletion might not be depreciation, but it ...

    Tax Deductions for Maintaining Two Households

    If you own two homes and itemize deductions on your taxes, some of the expenses of maintaining both households may save you some money in income tax. Each of these home-related deductions have specific eligibility rules that you must satisfy before reporting them on your return. ...

    What Is an Ordinary Gain?

    When it comes to your taxes, your capital gains are taxed in two different categories: ordinary gains and long-term capital gains. You can also generate ordinary gains from selling noncapital assets. Understanding how taxes are structured helps you plan not only for the amount ...

    How Is Foreign Housing Exemption Calculated?

    If your employment abroad allows you to take the foreign earned income exclusion on Form 2555, you may be able to exclude additional earnings from taxable income with some of your housing expenses. Calculating the foreign housing exemption, or foreign housing exclusion as it's ...

    Estimating Future Tax Liability

    If you're like most people, you probably like knowing what your future tax liability will be, rather than dealing with unpleasant surprises when filing your return. You can certainly estimate future income tax bills if you have an idea of how much you'll earn, and of which ...

    IRS Federal Tax Withholding Requirements From a Qualified Retirement Plan

    A qualified retirement plan is any plan that meets specific rules outlined in the Internal Revenue Code. It can be a defined benefit pension plan or a defined contribution plan such as a 401(k), 403(b) or 457. Generally, any benefits you receive from a qualified plan are treated ...

    Do You Have to Pay Taxes on Interest Collected From a Personal Loan?

    The tax laws are written in such a way so that virtually every dollar you earn is taxable unless a specific exception exists. Interest collected on a personal loan you make, unfortunately, has no such exception. In fact, when you lend a friend or family member money, you might ...

    Can We File Jointly if I'm the Only One on the Deed?

    The Internal Revenue Service has one major requirement for you to be able to file jointly. You have to be married. On your joint return, you can claim deductions for shared or individual expenses. Whether you incur the expense, your spouse incurs it, or you both incur it ...

    How to Deal With Taxation of Investment Income

    When you invest money, the Internal Revenue Service expects a piece of your profits. Between capital gains tax and regular income tax on your interest and dividends, you could easily end up losing 20 percent or more of all of your gains to Uncle Sam every year. This is like ...

    Tax Credits for Flood Victims

    According to the National Flood Insurance Program, floods top the list of the most prevalent type of natural disaster. If you've suffered losses as a result of a flood or have experienced difficulty filing your taxes, the IRS can help. Depending on the extent of the flood, you ...

    How Does a Death in the Family Affect My Taxes?

    Depending on your particular situation, the death of a family member usually has tax implications. According to Internal Revenue Service guidelines, the spouse or person in charge of the estate must file a final tax return for the deceased for the year of death. Related tax ...

    How to Claim Tax Treaty Benefits on a Form 1040

    The United States is the only country to tax its citizens regardless of where they earn their income. In addition, the U.S. taxes non-citizens' earnings from activities while they live here. Fortunately, many countries have tax treaties with the United States, trading exemptions ...

    Definition of MAGI in Taxes

    When you sit down to do your taxes each year, you must figure out how much income you earned, called gross or total income. Then you have to calculate your adjusted gross income and possibly a modified adjusted gross income as well. The amount of AGI and MAGI you have will ...

    Are Taxes Due When Taking Receipt of a Gold IRA?

    Individual retirement accounts allow you to save and invest for the long run. You can hold a wide variety of assets in a self-directed IRA, including certain forms of gold and other precious metals. When you die, your beneficiaries receive the assets in your IRA, including the ...

    Paying U.S. Income Tax on Withdrawal of RRSP

    A Registered Retirement Savings Plan is a Canadian trust plan for deferring taxes on income until retirement. It offers advantages similar to an IRA. Money invested in an RRSP goes untaxed until it is withdrawn. Any further income from the assets held in the RRSP is also untaxed ...

    Can One Skip a Generation & Save Estate Taxes by an Irrevocable Trust?

    The irrevocable trust remains a popular means of deferring estate taxes for a generation. It is only cost-effective, however, if the value of the assets held tax-free in the trust is sufficient to justify the considerable expense of trust maintenance. One 2010 change in the tax ...

    Can I Deduct Excise Tax Paid on Selling a House?

    When real estate changes hands, taxes become an important issue. In a typical property deal, the seller agrees to pay excise taxes which are levied on the sale by both state and local taxing authorities. An excise tax is not a "sales tax," even though it is paid when a ...

    Definition of "Adjusted Gross Estate"

    The adjustable gross estate is the decedent’s taxable estate before taking the available deductions and credits. The personal representative, also known as the executor, is responsible for ensuring that Form 706, U.S. Estate (and Generation-Skipping Transfer) Tax Return, ...

    Where Do You Report Railroad Unemployment on a 1040?

    Taxpayers who receive unemployment insurance compensation must report the payments as income when filing one of the federal 1040 income tax return forms. Each of the forms -- 1040, 1040-A and 1040-EZ -- provides a line for reporting unemployment insurance. The Railroad ...

    Military Pay Differential Tax Credit

    Active duty service men and women receive pay from their branch of the United States military. Some troops called to active duty from part-time service in the reserves or as National Guardsman receive pay from their regular employer over and beyond what the military pays them. ...

    What Do You Do if You Forget to Claim a Defaulted Retirement Loan on Taxes?

    Retirement accounts are designed to save money for your golden years. Uncle Sam places limits and penalties on withdrawing from these accounts before retirement to encourage saving. When the chips are down, you can borrow from your IRA or 401(k), but you must pay it back to ...

    Method for Placing the Value of Stock Gifts to Charity

    When you make a donation of stock to charity, the amount of your charitable contribution deduction is based on the fair market value of the shares on the day the gift is made. There isn't a standard method to follow for placing the value of stock donations. Instead, the ...

    What Reimbursements Enter Tax Returns?

    Whether you run a business or work for one, the reimbursements you receive from clients and employers may impact the income and deductions reported on your tax returns. When the reimbursements are paid by an employer to cover deductible job expenses you pay out-of-pocket for, ...

    Tax on MLP Funds

    The master limited partnership has been around since the 1980s, when these "pass-through" investments began paying out their first dividends on oil wells and other forms of energy production. The Internal Revenue Service allows valuable tax benefits to these ...

    Tax Treatment of Exchange-Traded Funds

    For exchange-traded funds that invest in stocks or bonds, the ETF structure is typically more tax efficient than many mutual funds. However, if you invest in the more exotic forms of ETFs such as precious metals or commodity funds, the tax picture becomes more muddled. Strange ...

    Federal Tax Laws on Pensions & Annuities

    The laws regarding taxes on pension and annuity income are different if you're on disability, if your pension plan is qualified, if you have a government pension, if you're a current plan participant, if you're a participant's survivor and if you've contributed after-tax income. ...

    Covered vs. Uncovered Shares

    New tax rules over the years have been aimed at alleviating the burden on taxpayers to maintain a record of cost and acquisition date for their securities investments. Brokers and mutual fund companies now track cost and holding periods for recently purchased shares. However, ...

    De Minimis Assets Defined

    Employers must normally keep a separate ledger for each business asset and make an entry for every transaction. However, the Internal Revenue Service exempts employers from this record-keeping chore if the asset has a low monetary value and is only occasionally purchased. ...

    Can an Offer of Settlement Be Made at the Time of Filing Late Federal Taxes?

    Your past-due tax balances can add up quickly, especially when penalties and interest are tacked on to the principal balance that appears on your late returns. If you are unable to pay the amount you owe within a reasonable amount of time, you may qualify to make a settlement ...

    Can I Choose Whether to Have My Health Insurance Deductions Pre-tax or Post-tax?

    You can only choose whether to have your health insurance premium deductions made with pre-tax or post-tax money if your company offers a flexible benefits or cafeteria-style benefits program. If you're self-employed or your company doesn't offer such a plan, you have to use ...

    If I Owe Back Taxes, Will My Lottery Winnings Be Withheld?

    When you owe back taxes, the Internal Revenue Service uses a number of methods to collect the money from you if you don't pay voluntarily. If you win the lottery, your prize is always taxable, and the state lotto agency that pays the prize may have an obligation to report your ...

    Can You Double Count the Energy Efficient Deduction With a Home Office Deduction on Taxes?

    Claiming expenses related to operating a home office helps reduce your tax liability by providing deductions against your business income. Eligible self-employed taxpayers can deduct direct expenses as well as a portion of common expenses related to the entire house. ...

    If I Owe Federal Taxes Will It Affect My Background Check?

    Before making a job offer, employers want to know whether potential employees have a history of, say, drug use or employee theft. Background checks are a common hoop for job-seekers to jump through. What the employer checks varies from company to company and with what state law ...

    Are Social Secuity Repayments Tax Deductible?

    Believe it or not, as a big federal agency, Social Security can make mistakes, and in some cases, will claim an overpayment of benefits. If you're returning money to Social Security, voluntarily or not, you will have a little extra tax accounting on your hands. The IRS wants you ...

    Is the Mortgage Interest Paid to Acquire a Property Included in the Depreciation Basis?

    The interest paid on a mortgage you take out to acquire real property can save you money in tax, but not by including it in the property's depreciable basis. Provided it's income-producing property you acquire, such as a rental home, the loan principal is usually included in the ...

    Is Renting a Room Taxable?

    If you owned rental property, you would treat the property like a business on your taxes by recording the income you received, deducting the expenses you incurred and paying tax on the net gain. However, if you're renting a room in the house you use as your home, the tax laws ...

    Tax-Free Payments to Your Spouse

    When it comes to marriage, "what's mine is yours" isn't just a nice saying. It's pretty much the law of the land, especially when it comes to taxes. Payments between spouses are treated differently by the tax code than just about any other kind of payments. Except in ...

    Are Death Benefits From a Company Retirement Plan Taxable?

    When your spouse dies, whatever life insurance payments or other death benefits has set up become available to you. Depending on the circumstances and terms, it may also pay off for the IRS. Many employers offer death benefits as part of the company's retirement planning, but ...

    If I Borrow From a Foreign Relative, Is It Taxable?

    Loans are not income, because you have to pay them back. It doesn't matter whether you borrow from your parents, a relative overseas or a bank, and it doesn't matter how much you borrow: You don't have to pay income tax on loans. If you don't pay the loan back, that's another ...

    Tax Rate Schedule & Rate Concepts

    The United States tax code is a complicated beast. Even something as seemingly simple as calculating how much tax you owe once you've added up all of your income and taken out all of your deductions can be complicated. As of the 2013 tax year, the tax system has seven different ...

    Is There a Way to Adjust Line 69 of Form 1040?

    "Excess social security and tier 1 RRTA tax withheld" on line 69 of Internal Revenue Service Form 1040 (U.S. Individual Income Tax Return) is a definitive number, resulting from an entry on the taxpayer's Form W-2 (Wage and Tax Statement). The amount is not subject to ...

    What if My W-2 and Pay Stub of Year-to-Date Federal Taxes Withheld Show Negative Totals?

    If your level of earnings warrant it, your employer is legally obligated to withhold the correct amount of federal income taxes from your salary. This means that, even if you weren't subject to withholding, your pay stub and W-2 would report zero -- the smallest figure that can ...

    Where Can I Write off My Startup Investment Costs?

    When starting a new business, you may initially have to make a cash investment to cover various types of startup costs -- the expenses incurred before you open for business. You can write off this initial investment on the same tax return where you report the business's ...

    Tax Relief on Pension Payments

    The Internal Revenue Code doesn't provide special tax relief for the money you receive from a pension, whether it's a defined benefit plan that provides fixed payments or a defined contribution plan that bases your benefit on the account's investment performance. A lack of ...

    Does a Trust Have a Federal Gift Tax Exemption?

    A trust offers a way to set aside assets for heirs or to manage money for a beneficiary. If you bequeath money or property to heirs through a trust, your estate will avoid probate court, although the estate may still be subject to estate taxes at the federal and state levels. If ...

    How to Adjust Capital Gains for an Alternative Minimum Tax

    The Alternative Minimum Tax, called AMT, is a parallel income tax system that was originally designed to stop a small number of high-income taxpayers from using creative deductions to avoid paying any taxes. It works by eliminating most itemized deductions and by replacing them ...

    Why Is There Double Taxation for the Stock of an Insurance Company?

    Insurance companies, as well as other types of businesses, commonly choose the corporate structure because of the personal liability protection it provides shareholders for obligations that arise through the business. The downside of a corporation is the potential for double ...

    The Tax Effects of a Liquidation of a Partnership

    When a business operates as a partnership, the partners each report a percentage -- which is usually the same as their percentage of ownership -- of annual earnings on their personal returns. As a result, the tax effects of a partnership that makes liquidating distributions only ...

    The Taxes on Money Gifted From an Appreciation Fund

    When you gift money, the Internal Revenue Service treats the gift the same way, regardless of where the money comes from. However, when you sell shares to get money, that sale is a taxable event in and of itself. Given that capital appreciation funds are likely to have built-up ...

    Taxation of Distributions From Qualified Settlement Fund

    When you win a settlement from a lawsuit, the tax on the payout depends on the type of damages. Certain damages, such as medical bills, are exempt from tax. Others, such as lost wages, are taxable. When any part of the settlement is taxable, timing issues could result in you ...

    Are EHR Incentive Payments Taxable?

    Medicare and Medicaid pay doctors and hospitals to make good use of electronic health records, or EHRs. The EHR incentive program offers doctors up to $44,000 through Medicare and $63,750 through Medicaid. The payments kick in when the practice meets benchmarks for using EHRs in ...

    What is Joint Annuity Taxation?

    Because of changes to the tax code in 1986, it's no longer tax advantageous to jointly own an annuity. Joint ownership is regarded as joint tenancy with right of survivorship, which can complicate administration and have unintended tax consequences for the owners. Passing an ...

    How to Account for Insurance Proceeds

    When tax time rolls around, insurance can be a head-scratcher. Some of the proceeds are not only tax-free, you don't even need to report them on your return. Other insurance checks go on your Form 1040 like any other income. It depends partly on whether your insurance is ...

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