Tag: taxfillings

What Is Really The Tax Filing Season

The 2020 tax filing season is delayed until February 12, so the Internal Revenue Service can do additional programming and testing following the December tax law changes.

“If filing season were opened without the correct programming in place, then there could be a delay in issuing refunds to taxpayers,” the Internal Revenue Service said in a press release. “These changes ensure that eligible people will receive any remaining stimulus money as a Recovery Rebate Credit when they file their 2020 tax return.”

The filing season usually opens in late January when the IRS begins accepting and processing returns. Last year, the season started on January 27.“While I am disappointed that this year’s filing season will begin later than usual, I recognize that the IRS has faced extraordinary challenges throughout the COVID crisis,” Ways and Means Committee Chairman Richard E. Neal (D-MA) said in a statement on Friday.

The $900 billion stimulus deal and government-funding bill that passed together at the end of December included some key tax changes for the 2020 tax year.

Eligible taxpayers who didn’t receive the second round of stimulus payments included in the latest stimulus bill or didn’t receive the full amount they were entitled to can claim them on their 2020 tax returns. They can also claim the first round of payments. How the Child Tax Credit and the Earned Income Tax Credit are calculated for the 2020 tax year also changed under the stimulus deal.

Under the government-funding bill, medical expenses now must exceed only 7.5% of adjusted gross income to be taken as an itemized deduction. Before, that threshold was 10%.

Read more: Here’s what to do if you haven’t gotten your stimulus check

The IRS urges taxpayers to file electronically and use direct deposit as a payment method as soon as possible. The agency anticipates 9 out of 10 taxpayers will. receive their refund within 21 days if they file their returns electronically, used direct deposit, and no issues popped up with their return.

People eligible for free tax filing can begin their taxes now and the returns will be transmitted to the IRS on February 12. These are providers participating in the IRS Free File for 2021:

  • 1040Now
  • ezTaxReturn.com
  • FreeTaxReturn.com
  • FileYourTaxes.com
  • Intuit (TurboTax)
  • On-Line Taxes (OLT.com)
  • TaxAct
  • TaxHawk (FreeTaxUSA)
  • TaxSlayer

Read more:

Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and Reddit.

By: Denitsa Tsekova

More From Yahoo Money:

Furlough vs. Layoff: What’s the Difference for Your Taxes?When a company chooses to reduce its workforce, it may approach that reduction in a few different ways. How a company makes these staffing changes could result in different implications for you and your taxes. Here’s what you should know about the differences between a furlough and a layoff.

Read MoreBrought to you byTurboTax.comCapital Gains and LossesWhat is a capital asset, and how much tax do you have to pay when you sell one at a profit? Find out how to report your capital gains and losses on your tax return with these tips from TurboTax.

Read MoreBrought to you byTurboTax.comStimulus 2020: Unemployment Insurance for Self-Employed IndividualsDue to the recent coronavirus pandemic, many businesses and individuals are facing challenging times — including those that are self-employed. The government has issued unemployment insurance for self-employed individuals to help them manage their finances.

Read MoreBrought to you byTurboTax.comGreat Ways to Get Charitable Tax DeductionsGenerally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.

.

Great Ways to Get Charitable Tax Deductions

Follow these tax tips to get the biggest tax savings when making charitable contributions of cash or checks, household goods, cars or appreciated property.

Choose the right organization

In order for your donation to be deductible, it must go to a nonprofit group that is approved by the IRS. Most often, these are charitable, religious or educational organizations, though they can also be everything from your local volunteer fire company to a group for the prevention of cruelty to animals.

  • If you’re not sure whether the group you want to help is approved by the IRS to receive tax-deductible donations, check online at IRS Exempt Organizations Select Check.
  • This site allows you to enter an organization’s name and location to instantly find out if it qualifies.

Make sure it counts

To write off any cash contributions, no matter how small, you need a canceled check, bank record or a receipt with the charity’s name and donation amount. That means that putting cash in the church collection plate or the Salvation Army bucket is a no-no if you want to be able to take a deduction for it.Your resource on tax filingTax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.Go Now

As with all deductions, timing is everything. You can take the deduction for your contribution in the year that you make it.

  • For example, if you mailed a check to your favorite charity on December 31, you can write it off on that year’s tax return.
  • If you charge the donation on a credit card, the write-off is claimed in the year the charge is made, even if you don’t pay the credit card bill until the following year.
  • But a pledge to make a donation is different: Because it’s only a promise to make a future donation, there’s no deduction until you actually follow through.

Donations are limited

There’s also a limit on how much you can deduct. The basic rule is that your contributions to qualified public charities, colleges and religious groups can’t exceed 60 percent of your Adjusted Gross Income (AGI) (100% of AGI in 2020 for qualified charities).

  • The caps are a bit lower for gifts to other types of nonprofits. When it comes to gifts of appreciated property, the limit drops to 30 percent of AGI.
  • If these restrictions limit your write-off in the year of the gift, the excess deduction carries over to the next year.

Also, keep in mind that you can’t write off a contribution to the extent that you get something in return.

For example:

  • If you buy a $50 ticket to a fundraising dinner at a church, but the cost of the dinner is $20, you can deduct $30.
    • $50 donation – $20 return = $30 deduction
  • For donations of more than $75, the nonprofit must give you a written statement telling you the value of what you received in return and reminding you that you can’t deduct that portion of your contribution.

There’s also a special rule for folks who donate to colleges and universities and receive the right to buy tickets to school athletic events: They can deduct 80 percent of their donation.

Appreciated property

Cash may be king, but if you want a really big tax saver, your best bet may be a donation of appreciated property—securities, real estate, art, jewelry or antiques.

  • If you have owned the property more than a year, you can deduct its full fair market value and escape income tax on the appreciation.
  • For property held one year or less, IRS only allows you to claim a deduction on the price you paid for it.

Let’s say you own stock that you bought many years ago for $1,000 that is now worth $10,000, and that you intend to make a $10,000 gift to a major fundraiser for your alma mater. If you write a check for $10,000, the college gets $10,000, and you get to deduct $10,000.

If instead, you give the $10,000 worth of stock,

  • The college still gets $10,000 (it won’t owe any tax on the profit when it sells the stock.)
  • You still get to deduct $10,000.
  • You eliminate the tax you’d owe if you sold the stock for $10,000: Such a sale would trigger a capital gains tax on the $9,000 of profit, and that would cost you $1,350. Making your gift with stock instead of cash saves you that $1,350.

If you don’t really want to part with the stock because you think it’s still a good investment, give it away anyway. Then use your $10,000 of cash to buy the shares back in the open market. That way you’ll only be taxed on future appreciation.

How a gift is used affects donor value

If you’re donating tangible personal property, what the charity does with the item affects how much you can deduct.

AdChoices
  • If you donate land so the local homeless shelter can build a new facility to house more people, you can write off the full market value.
  • If you donate a work of art to the shelter for its fundraising auction, you only get a deduction for the price you paid for the artwork.
  • What if you donated the piece of art to a museum that will display it as part of its collection? In that case, you get to deduct the full market value.

For property worth more than $5,000 ($10,000 for stock in closely-held firms), you’ll need to get a formal appraisal. You’ll also have to make sure the appraiser is a member of a recognized professional group or meets minimum education and experience guidelines. If you don’t, the IRS can disallow your deduction.

Contributing household items

Donating used goods such as clothing, linens, electronics, appliances and furniture gets you a write-off for the item’s fair market value at the time you donated it, which may be considerably less than what you originally paid.

The IRS has a helpful booklet on this subject, Publication 561: Determining the Value of Donated Property.

For items valued at more than $500, you’ll need to fill out Form 8283 and attach it to your return. On this form you have to

  • describe each item over $500 that you donated,
  • identify the recipient, and
  • provide information about the value of the item, including your cost or adjusted basis.

Congress has clamped down on donations of household goods to make sure folks aren’t inflating the value of their used stuff.

  • No tax deduction is allowed unless an item is in good condition or better.
  • If an item in less-than-good condition is valued at more than $500, you can take a deduction only if you get the item appraised and attach the appraisal to your return.
  • Congress also gave the IRS broad authority to deny deductions for low-value items such as used socks and underwear.

When preparing your taxes with TurboTax, you can use ItsDeductible Online to help you value and track your donations. This free program gives guidance on prices for commonly donated items and is designed to transfer your donation information to your tax return. ItsDeductible is a built-in feature on TurboTax Deluxe and above.

Donating vehicles

If the claimed value of your donated vehicle is more than $500, in most cases your deduction is limited to the amount the car brings when it’s sold at auction.

  • The charity has 30 days after it sells your vehicle to issue you a Form 1098-C that shows the sale price.
  • You must attach that form to your tax return or the IRS will disallow the deduction.

There are, however, some situations where you’re permitted to claim the car’s estimated market value:

  • If the charity significantly improves the vehicle,
  • makes significant use of it, or
  • gives the vehicle (or sells it at a discount) to a poor person who needs transportation.

For more information, check the IRS article: IRS Guidance Explains Rules for Vehicle Donations.

Volunteer services

Don’t overlook the volunteer work you perform, which may also generate a deduction. You can write off many out-of-pocket expenses you incur to do good work, such as costs for:

  • materials
  • supplies
  • uniforms
  • stationery
  • stamps
  • parking
  • tolls

You can also deduct the cost of driving to and from your volunteer work, at a rate of 14 cents per mile. If you take public transportation, that bus or rail fare is deductible, too.

But here’s the bad news: The value of services you provide as a volunteer don’t merit a write-off. For instance, if you’re a carpenter and you help a nonprofit group build a home for the poor, you can deduct travel costs and building supplies you buy, but not the value of the work you do. (That’s not as hard-hearted as it may seem. If you were paid to do the work, you’d have to report the pay as income, which would drive up your tax bill.)

For more tax tips in 5 minutes or less, subscribe to the Turbo Tips podcast on Apple Podcasts, Spotify and iHeartRadio

Brought to you by TurboTax.comTags

More From TurboTax:

By: TurboTax Staff

.

.

Retirement Planning Demystified

What you need to know about taking tax deductions for charitable donations. Links in this video: Retirement Planning Insights – https://www.tenonfinancial.com/newsle… Taxes in Retirement – https://www.facebook.com/groups/taxes…#RetirementPlanning#TaxPlanning#CharitableDonations

5 Things You Should Know About Capital Gains Tax

A capital gain occurs when you sell something for more than you spent to acquire it. This happens a lot with investments, but it also applies to personal property, such as a car. Every taxpayer should understand these basic facts about capital gains taxes.

Capital gains aren’t just for rich people

Anyone who sells a capital asset should know that capital gains tax may apply. And as the Internal Revenue Service points out, just about everything you own qualifies as a capital asset. That’s the case whether you bought it as an investment, such as stocks or property, or for personal use, such as a car or a big-screen TV.

If you sell something for more than your “basis” in the item, then the difference is a capital gain, and you’ll need to report that gain on your taxes. Your basis is usually what you paid for the item. It includes not only the price of the item, but any other costs you had to pay to acquire it, including:Your resource on tax filingTax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.Go Now

  • Sales taxes, excise taxes and other taxes and fees
  • Shipping and handling costs
  • Installation and setup charges

In addition, money spent on improvements that increase the value of the asset—such as a new addition to a building—can be added to your basis. Depreciation of an asset can reduce your basis.

In most cases, your home is exempt

The single biggest asset many people have is their home, and depending on the real estate market, a homeowner might realize a huge capital gain on a sale. The good news is that the tax code allows you to exclude some or all of such a gain from capital gains tax, as long as you meet three conditions:

  1. You owned the home for a total of at least two years in the five-year period before the sale.
  2. You used the home as your primary residence for a total of at least two years in that same five-year period.
  3. You haven’t excluded the gain from another home sale in the two-year period before the sale.

If you meet these conditions, you can exclude up to $250,000 of your gain if you’re single, $500,000 if you’re married filing jointly.

AdChoices

Length of ownership matters

If you sell an asset after owning it for more than a year, any gain you have is a “long-term” capital gain. If you sell an asset you’ve owned for a year or less, though, it’s a “short-term” capital gain. How much your gain is taxed depends on how long you owned the asset before selling.

  • The tax bite from short-term gains is significantly larger than that from long-term gains – typically 10-20% higher.
  • This difference in tax treatment is one of the advantages a “buy-and-hold” investment strategy has over a strategy that involves frequent buying and selling, as in day trading.
  • People in the lowest tax brackets usually don’t have to pay any tax on long-term capital gains. The difference between short and long term, then, can literally be the difference between taxes and no taxes.

Capital losses can offset capital gains

As anyone with much investment experience can tell you, things don’t always go up in value. They go down, too. If you sell something for less than its basis, you have a capital loss. Capital losses from investments—but not from the sale of personal property—can be used to offset capital gains.

  • If you have $50,000 in long-term gains from the sale of one stock, but $20,000 in long-term losses from the sale of another, then you may only be taxed on $30,000 worth of long-term capital gains.
    • $50,000 – $20,000 = $30,000 long-term capital gains

If capital losses exceed capital gains, you may be able to use the loss to offset up to $3,000 of other income. If you have more than $3,000 in excess capital losses, the amount over $3,000 can be carried forward to future years to offset capital gains or income in those years.

Business income isn’t a capital gain

If you operate a business that buys and sells items, your gains from such sales will be considered—and taxed as—business income rather than capital gains.

For example, many people buy items at antique stores and garage sales and then resell them in online auctions. Do this in a businesslike manner and with the intention of making a profit, and the IRS will view it as a business.

  • The money you pay out for items is a business expense.
  • The money you receive is business revenue.
  • The difference between them is business income, subject to employment taxes.

For more tax tips in 5 minutes or less, subscribe to the Turbo Tips podcast on Apple Podcasts, Spotify and iHeartRadio

Brought to you by TurboTax.com

More From TurboTax:

Capital Gains and LossesWhat is a capital asset, and how much tax do you have to pay when you sell one at a profit? Find out how to report your capital gains and losses on your tax return with these tips from TurboTax.Read MoreBrought to you byTurboTax.comStimulus 2020: Unemployment Insurance for Self-Employed IndividualsDue to the recent coronavirus pandemic, many businesses and individuals are facing challenging times — including those that are self-employed. The government has issued unemployment insurance for self-employed individuals to help them manage their finances.Read MoreBrought to you byTurboTax.comGreat Ways to Get Charitable Tax DeductionsGenerally, when you give money to a charity, you can use the amount of that donation as an itemized deduction on your tax return. However, not all charities qualify as tax-deductible organizations. While there are many types of charities, they must all meet certain criteria to be classified by the IRS as tax-deductible organizations. There are legitimate tax-deductible organizations in many popular categories, such as those listed below.Read MoreBrought to you byTurboTax.comManaging Your Retirement Account and Taxes During Economic UncertaintyIn times of economic uncertainty, you might start to notice some alarming changes to your retirement account. It’s usually unwise to panic and withdraw early, even if the temptation is strong.Read MoreBrought to you byTurboTax.com

.

.

Jazz Wealth Managers

If you have a robinhood or active trading account it’s very likely you have just past tax return season with a lot of questions on long term and short term capital gains. While that is not our main focus here at jazz wealth, today we give you a brief and basic overview. We’re an investing service that also helps you keep your dough straight. We’ll manage your retirement investments while teaching you all about your money. —Ready to subscribe— https://www.youtube.com/jazzwealth?su… For more information visit: http://www.JazzWealth.com — Instagram @jazzWealth — Facebook https://www.facebook.com/JazzWealth/ — Twitter @jazzWealth Business Affairs 📧Support@JazzWealth.com

%d bloggers like this: