tax deduction

Car Loan Tax Deduction New for 2025

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Alright, this is new to me too, so let’s dig in. Consider this a first run at the new tax deduction in Trump’s big tax bill for 2025. I’m sure there is a lot of nuance, but this is a first whack. Proceed accordingly as we examine the new way to deduct car loan interest from taxes. No Tax on Car Loan Interest No tax on car loan interest is dumb. There was never any tax on car loan interest. Car loan interest is an expense, not income. So, you don’t pay tax on car loan interest already. Even if you did pay taxes on car loan interest, a deduction for that wouldn’t be “no tax” it would be less tax. So, now that we’ve dispensed with the marketing, let’s do this. How To Deduct Car Loan Interest Trump pumps out the headlines, congressmen write up the bills so it comes close to what Trump said. Actually, congressional staffers experienced in writing legislation write the bills, or so we hope. In this case, no tax on car loan interest comes with some important limitations. What is a Qualified Vehicle for Deductible Car Interest? People are always complaining about how long …

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Basic Taxes Overview 2024

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taxes

As June 2024 comes to a close Americans everywhere have stopped thinking about taxes, but the real key to paying less in taxes like the rich do is year-round tax planning. So, let’s do a quick overview of tax law in 2024 and how that will affect filing 2024 taxes in 2025. Tax Basics Form 1040 Let’s begin by kicking out anyone who has unusual scenarios of income or assets. This is going to be a basic tax overview for taxpayers that get W-2 forms, or 1099 forms, or own their own small business. If your income comes from something else like royalties, or mining rights, or whatever, this will not apply to you. This is also true if a trust, or other tax situation drives your income or expenses. Frankly, people in this category probably already have accountants, attorneys, or financial managers. Let’s not clog this up with “But what if…” about situations that don’t apply to “average” scenarios. The basic tax form is Form 1040. For the most basic scenarios, that form is the only thing a taxpayer needed to file. For others, a variety of Schedules are required, the results of those schedules are then added in …

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IRA Contribution Limits 2022 and 2023

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ira contribution limits for 2021 and 2020

Not all tax numbers stay the same over time. Many income limits and other tax numbers are adjusted each year, either for inflation, or by another statutory mandate. These tax numbers include the tax tables and tax brackets for each year, for example. It also includes IRA contribution limits. The IRS announces the numbers each fall. Since the numbers are adjusted based on inflation, they only increase if there is enough inflation over the course of the year to increase the IRA contribution limits by the same percentage. With some crazy inflation this year, you would expect some of the IRS numbers to be up significantly. IRA contribution limits for 2023 are higher than they were in 2022. 2022 IRA Contribution Limits The 2022 IRA contribution limits were published by the IRS in late 2021. Note that these limits are for contributions made during the 2022 tax year, for use when filing income taxes due by April 2023. IRA Max Contribution 2022 The maximum IRA contribution for 2022 is $6,000. This is the same as the maximum deduction for 2021, 2020, and 2019. The maximum IRA contribution in 2023 is $6,500, up $500 from the year before. Both the 2022 and …

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Step by Step Guide to Open 529 Plan Online

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colorado 529 plan online

Have you opened that 529 plan account yet? A while back, while discussing whether or not you need a financial advisor, I talked about how just knowing what to do isn’t always enough. As an example, I pointed out that just knowing you need a 529 plan for your college savings account, doesn’t mean that you are necessarily actually ready to just open a 529 account online or otherwise. There can be a lot of small decisions along the way that end up derailing the most determined person’s individual financial plan. Recently, I revisited this train of thought and figured, I could show step-by-step how to open 529 accounts online for the Colorado 529 plans as an example of exactly what it takes to actually implement those financial decisions you make after doing your online financial planning research. 529 Plan Colorado Example If you have ever looked for this kind of step by step directions financial planning guide, you know they can be hard to come by. There are several reasons, but one of the main ones is that going through every possible exception can be very time consuming. Even covering the basics can turn into a big project when …

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What Is Still Deductible

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Trump’s new tax law has caused a lot of confusion. One of the big areas of confusion is that many of the so-called “itemized-tax deductions,” won’t really count for most American taxpayers anymore. It’s not that those deductions are gone, it’s just that triggering the threshold where itemizing tax deductions saves you more money than taking the standard tax deduction has moved. New “Smaller” Tax Forms Politicians are always lying and claiming victory when they have achieved no such thing. One thing many politicians tried to take credit for with the new Trump tax law was making taxes simpler. They did… kind of… sort of… My favorite part of the new tax law is that you can “file your taxes on a postcard.” <insert super eyeroll> You know, if you use both sides of the postcard… with no space for any sort of address for mailing it… and if anyone still used postcards, which the IRS does not recommend for filing your taxes. The official IRS 1040 form would indeed fit on an non-mailable postcard. If you printed it front and back. Sound dumb? It is. Still, here we go, the official IRS Form 1040. Wait a minute. That IS …

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