Tax Tips for March 2022

Tax Tips for March 2022

Click on the links below to jump to each section in this article: There's Still Time To Make an IRA Contribution for 2021 What Is the Credit for Other Dependents? Business Meals Fully Deductible in 2021 and 2022 Employee Business Expense Deductions: Who Qualifies? The Facts: Taxable vs. Nontaxable Income There's Still Time To Make an IRA Contribution for 2021 If you haven't contributed funds to an Individual Retirement Account (IRA) for tax year 2021, or if you've put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April 18, 2022, due date (April 19 if you live in Maine or Massachusetts), not including extensions. Be sure to tell the IRA trustee that the contribution is for 2021. Otherwise, the trustee may...

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Reminder: Social Security Benefits May Be Taxable

Reminder: Social Security Benefits May Be Taxable

Social Security benefits include monthly retirement, survivor, and disability benefits; they do not include Supplemental Security Income (SSI) payments, which are not taxable. Generally, you pay federal income taxes on your Social Security benefits only if you have other substantial income in addition to your benefits. Your income and filing status affect whether you must pay taxes on your Social Security. About 40 percent of people who get Social Security have to pay income taxes on their benefits. At the end of each year, the Social Security Administration sends a Form SSA-1099, Social Security Benefit Statement, showing the amount of benefits you received. Use this statement when you complete your federal income tax return to find out if you must pay taxes on your benefits. Although...

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Small Business Financing: Securing a Loan

Small Business Financing: Securing a Loan

At some point, most small business owners will visit a bank or other lending institution to borrow money. Understanding what your bank wants and how to approach them properly can mean the difference between getting a loan for expansion or scrambling to find cash from other sources. Unfortunately, many business owners fall victim to several common, but potentially destructive myths regarding financing, such as: Lenders are eager to provide money to small businesses Banks are willing sources of financing for start-up businesses When it comes to seeking money, the company speaks for itself A bank is a bank, is a bank, and all banks are the same Banks, especially large ones, do not need and do not want the business of a small firm Understand the Basic Principles of Banking It's vital to...

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What To Know About the Gig Economy and Your Taxes

What To Know About the Gig Economy and Your Taxes

The gig economy, also called sharing or access economy, is defined by activities where taxpayers earn income providing on-demand work, services, or goods. This type of work is often carried out via digital platforms such as an app or website. There are many types of sharing economy businesses, including two of the most popular ones: ride-sharing, Uber and Lyft, for example, and home rentals such as Airbnb. If taxpayers use one of the many online platforms to rent a spare bedroom, provide car rides, or other goods or services, they may be part of the sharing or gig worker economy. Understanding how gig work can affect taxes may sound complicated, but it doesn't have to be. Let's take a look at what taxpayers should keep in mind: Income is Taxable Whether it's a full-time job or just a...

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Tax Breaks for Taxpayers Who Itemize

Tax Breaks for Taxpayers Who Itemize

Many taxpayers opt for the standard deduction, but sometimes itemizing your deductions is the better choice - often resulting in a lower tax bill. Whether you bought a house, refinanced your current home, or had extensive gambling losses, you may be able to take advantage of tax breaks for taxpayers who itemize. Here's what to keep in mind: Deducting State and Local Income, Sales, and Property Taxes The deduction that taxpayers can claim for state and local income, sales, and property taxes is limited to a combined, total deduction of $10,000 - $5,000 if married filing separately. State and local taxes paid above this amount can't be deducted. Refinancing a Home The deduction for mortgage interest is limited to interest paid on a loan secured by the taxpayer's main home or second home....

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Filing a Tax Return: Avoid These Common Errors

Filing a Tax Return: Avoid These Common Errors

While not all mistakes on tax returns cause delays in refunds, as the April 18 deadline approaches, taxpayers are advised to steer clear of the common tax return errors listed below to ensure a timely refund. Not Using Electronic Filing While this isn't necessarily a mistake per se, electronic filing is the best way to cut the chances for many tax return mistakes while maximizing deductions to reduce the amount of tax owed. The reason for this is that the tax software your tax professional uses automatically applies the latest tax laws, checks for available credits or deductions, does the calculations, and asks taxpayers for all required information. Due to the backlog of returns related to COVID-19, processing paper tax returns could take much longer than usual, and electronic filing is...

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Working Remotely Could Affect Your Taxes

Working Remotely Could Affect Your Taxes

When COVID-19 struck, many employers quickly switched to a work-from-home model for their employees. Many of them began working in a state other than where their office was located. While some workers have returned to their offices, as the pandemic drags on, more offices continue to work remotely with no back-to-office dates insight. If you're working remotely from a location in a different state (or country) from that of your office, then you may be wondering if you will have to pay income tax in multiple jurisdictions or whether you will need to file income tax returns in both states. Here's what you should know: Generally, states can tax income whether you live there or work there. Whether a taxpayer must include taxable income while living or working in a particular jurisdiction...

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What’s New for IRS Form 1040 This Year

What’s New for IRS Form 1040 This Year

If you’ve gathered your tax documents and are ready to tackle your tax return, there’s one more step you should take: becoming familiar with what’s new on the 2021 Form 1040. While the format of Form 1040 and its schedules remain similar to 2020, there are several changes. Many of these changes can be attributed to the American Rescue Plan Act of 2021 (ARP).

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Tax Tips for March 2022

Tax Tips for January 2022

Click on the links below to jump to each section in this article: Standard Mileage Rates for 2022 Why Using the Correct Filing Status Matters Tax Credits for Accommodating Disabled Workers Watch Out for Holiday Gift Card Scams What To Know About Keeping Good Tax Records Standard Mileage Rates for 2022 Starting January 1, 2022, the standard mileage rates for the use of a car, van, pickup, or panel truck are as follows: 58.5 cents per mile driven for business use, up 2.5 cents from the rate for 2021 18 cents per mile driven for medical or moving purposes for qualified active-duty members of the Armed Forces, up 2 cents from the rate for 2021, and 14 cents per mile driven in service of charitable organizations. The charitable rate is set by statute and remains unchanged. The standard...

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