Taxes

Charitable Contributions Tax Deduction

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charitable contributions

Republicans passed the Tax Cuts and Jobs Act in 2017 reshaping the way many Americans pay taxes. Apart from the uninspired, and obvious marketing, based name, the law made some deductions disappear. It tried to fill in those deductions by giving everyone a higher standard deduction. Theoretically, people pay the same or lower taxes and don’t have to itemize to do it, but politics gets in the way of everything in Washington. Charitable Cash Contributions One of the things that was originally supposed to go away in the bid to make it so fewer people had to itemize was getting rid of the charitable contributions deduction when you took the standard deduction. But there were howls of terrible things to come, whispers of charities disappearing from the country all together, cats and dogs living together, mass hysteria! And so, Congress caved and let people who take the standard deduction still take a deduction for some charitable giving. Line 10b under Adjustments to Income, taxpayers may deduct up to $300 for cash donations. That $300 is the same for filing single or married filing jointly. If you do the married filing separately thing, you have to split it, so each of …

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File Taxes for Free with IRS Free File

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file taxes free

If you are thinking, how can I file my taxes for free, you might also be thinking that the IRS should offer a way to file taxes for free online. After all, how hard can it be to write a simple, free income tax preparation software, when you are the ones that actually write the tax laws. You would be right, except for this is America where big bribes campaign contributions mean that politicians care more about companies that make tax software than they do about taxpayers. Still, there is a way to file your taxes for free online. IRS Free File IRS Free File is a “public/private partnership” where companies that make fully priced commercial tax software also make a free tax filing version in exchange for being on the IRS Free File website. This is the best the citizens of America could get against intense lobbying by Intuit, the maker of TurboTax. File Taxes for Free Limitations There are limits on who can use Free File. The IRS currently lists $72,000 as the maximum income. Also, for people who have more complicated taxes, the commercial paid options might be a better way to go. As a freelance writer, …

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TurboTax Debit Card Refund Review

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atm fees charges

TurboTax is a popular tax filing software package. It also offers quick tax refunds with the TurboTax debit card, or Turbo Card. There are several versions ranging from a free online basic TurboTax edition to a Home and Business TurboTax and more. They all in work in pretty much the same way. The software guides the user through a bunch of fill in the blank entry screens and does all the math and complicated tax worksheets automatically behind the scenes. For a great many Americans, using TurboTax software is just as good as paying an accountant to file taxes. But, watch out for TurboTax debit card fees if you get your refund on the TurboTax card, called the Turbo Card this year. Turbo Tax Debit Card Refund At the end of the Turbo Tax filing process, the software offers users the ability to get their tax refund via a prepaid Visa card, which is kind of like a TurboTax debit card. The Turbo Card is a Visa card offered through Green Dot Bank. Green Dot Bank is most familiar for its reloadable debit cards you can buy at 7-11 and other places, especially drug stores. There are two options for …

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Retirement Tax Triangle for Better Retirement Planning

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tax triangle save money in retirement

Financial advisors make their bread and butter from retirement planning. Unless you’re wealthy (or young), chances are that most of your money is in your retirement savings and home equity. That makes your retirement accounts the main interest of most financial advisors, so it’s in their best interest to make it sound complicated. Unfortunately, they are right. There are a bunch of little tricks to good retirement planning. Fortunately, most of them are easy to straighten out, like the tax triangle. Retirement Taxes Welcome to Retirement. Oh, while you’re here, we need to tax those 401(k) withdrawals. All too many new retirees find themselves surprised that withdrawals from their 401k accounts are fully taxable. It’s an easy mistake to make. After all, when you contributed money to your 401k it was tax-free (technically, pre-tax, but same difference). And, while all of that money sat in your 401k earning interest and dividends, it was tax-free. So, why wouldn’t it keep being tax-free? Unfortunately, that’s the deal you make with the IRS. A 401k plan is actually a tax-deferred account. As the name implies, the IRS allows you to defer, or wait, to pay the taxes. It is a huge advantage and …

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New 2022 Tax Numbers Released – Good News for Taxpayers

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new 2022 tax numbers

The IRS just released the new tax inflation adjustments for 2022. As you are likely aware the IRS adjusts some tax deductions and income limits for inflation each year. The new 2022 tax numbers are higher across the board thanks to higher inflation numbers than the last few years. New 2022 Standard Deduction The Trump tax changes implemented under the Tax Cuts and Jobs Act made the standard deduction higher and eliminated some itemized deductions. As a result, far more people take the standard deduction on taxes than did before. The law did remove the limitation for itemized deductions that do remain. 2021 standard deduction numbers can be found here. The standard deduction for 2022 for married filing jointly is $25,900. The standard deduction for 2022 for single filers is $12,950. New 2022 Tax Brackets The tax brackets for 2022, more formally known as the Marginal Rates, reflect higher starting incomes for each tax bracket in 2022. 2021 tax brackets information is here. New 2022 Tax Brackets Single Filer New 2022 Tax Brackets Married Filing Jointly New 2022 Flexible Spending Accounts (FSA) Limits The new limit for Flexible Spending Accounts, or FSA accounts, is $2,850 with a maximum carryover of …

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Medical Expenses Deduction 2021

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medical-taxes

Can you deduct medical expenses in 2021? Are your medical expenses tax deductible? Yes… but… Medical Expenses Tax Deduction Limit Medical expenses are tax deductible for 2021, but only after they exceed 7.5% of your income. You also must itemize your deductions to claim the medical expenses tax deduction. Finally, medical expenses are deductible in the year you PAY them, not when they happen. If you’re going to hit the medical threshold in 2021, then pay as many as you can by December 31. If you are not going to hit the threshold, push as many medical expenses as you can into 2022. What does this all mean exactly? Let’s dig in. Check out my Grifin review The tax deduction for medical expenses has a floor of 7.5% of income. By income, the IRS means your adjusted gross income (AGI). Usually, when the IRS has rules or regulations that refer to income, they mean your AGI. Your AGI is calculated on your Form 1040. Your adjusted gross income shows up on Line 11. Your total income is basically all of your income from wages, capital gains, interest, dividends, Social Security, business income (if any) and pensions added together. Your adjusted …

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Retirement Saver’s Credit 2021

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savers tax credit

Update: The 2022 Retirement Saver’s Credit income limits have been announced. Remember, these are the Savers Credit limits for your income in 2022, for the taxes you will file in early 2023. You will still use the numbers below for the income taxes you file in early 2022. The 2022 Retirement Savings Contribution Credit income limits for married filing jointly will be $68,000, up from $66,000. For single fillers, $34,000, up from $33,000. The Retirement Saver’s tax credit is a huge bonus for taxpayers who qualify. If you qualify for the Retirement Savings Contributions Credit, or Savers’ Credit, you can get a tax credit of $1,000 on your 2021 income taxes. The maximum Retirement Saver’s tax credit for 2021 is 50% of the contributions you make to a retirement plan like a 401k, or an individual retirement plan like a Roth IRA or traditional IRA, up to $2,000 for a maximum tax credit of $1,000. Retirement Saver’s Credit Qualify The Saver’s Credit is designed to encourage lower-income Americans to save for retirement. To qualify for the Saver’s Credit you must be 18 years or older, not claimed as a dependent on anyone else’s tax return, and not a student. In …

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Is Paying Taxes Patriotic?

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judge learned hand

As the end of the year approaches, I’ll be focusing on tax breaks and deductions that can reduce your 2021 income taxes. Every once and a while as I help readers, friends, and family avoid paying higher taxes someone asks whether avoiding taxes is patriotic. Remember that you are an American. As an American, you live in a democracy (technically a republic) and you vote to elect representatives who go on to make laws, rules, and regulations. As an American, it is your duty to comply with these laws, rules, and regulations. Beyond that you are free to do what is best for you, your family, and your community. The influential jurist Learned Hand (No, I’m serious, he is a real person) once said, Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes. Gregory v. Helvering, 69 F.2d 809, 810 (2d Cir. 1934) Over and over again courts have said that there is nothing sinister in so arranging one’s affairs as to keep taxes as low as possible. …

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Deduct Home Office on Taxes

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Deduct Home Office on Taxes 1

A home office tax deduction can be a great way to reduce your taxes if you own a small business. The home office deduction gets a bad rap because a few years ago, deducting a home office was seen as an “audit trigger.” However, that issue was blown out of proportion then, and it is almost a non-issue these days, provided you do have a business and a legitimate home office. So, how do you deduct home office on taxes? How To Qualify for a Home Office Deduction Qualifying for a home office tax deduction for your business is pretty simple, providing you have a home office that you use. The official rules state that your home office must be your primary place of business, and that you use the office exclusively for that business. In other words, you can’t deduct the little area you have setup in the corner of your living room as a home office. People giving tax advice will often go overboard here saying things like, if there is even one toy in your office, then it is disallowed as a deduction. This scares legitimate small business owners with home offices from deduction them sometimes. Keep …

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Most Americans Pay No Taxes

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tax free

Estimates by The Tax Policy Center show that 61% of U.S. households pay no federal incomes taxes. Before you go off on a rant about the rich not paying their fair share of taxes by using tricky tax-dodging tactics, the reality is that many people are too poor to pay taxes. Why the Majority of Americans Pay No Taxes Ask around America and you’ll find an impression of taxes and the IRS as heartless thugs that squeeze the poor to get money for the “king” back in Washington D.C. This impression is carefully cultivated by politicians as a way to garner votes by saying that you pay too much in taxes and get too little in return. The truth is that there is a lot of compassion built into the tax system. Poor People Don’t Pay Taxes What most people don’t realize while they scream at the rich for not paying their taxes and lamenting how much the poor have to pay, is that poor people don’t pay taxes. If you look at the tax brackets, it certainly seems poorer Americans pay taxes. The lowest tax bracket starts takes 10% and that is only up to $9,950 for those filing …

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