Tax Shelter

Last updated 23rd Sep 2022

In this article, we'll continue the approach taken in the past, explaining the significant income tax changes in 2020. That discussion will include changes to Social Security and Medicare, federal income tax standard deductions and exemptions, mileage deduction rates, earned income credits, Hope and Lifetime Learning tax credits, in addition to changes to retirement accounts such as the 401(k), 403(b), IRAs, and Roth plans.

Our guide to taxes takes aim at helping you to better understand the federal and state income tax return preparation and refund process.  By helping you to better understand how your income taxes are calculated, we hope that you can make better investment decisions.  This includes choices such as whether or not to take a long term capital gain on your investments, or if a retirement tax shelter, such as a 401k, IRA, or 403b, is right for you.

Assembling the required documentation ahead of time will minimize the effort it takes to fill out an income tax return.  With the availability of electronic files and the help of sophisticated software tools, the process can be fast, secure, and comprehensive.

The majority of taxpayers prepare their own income tax returns, and that's the way it should be.  After all, the IRS is supposed to ensure the average American understands how to complete a tax form.  The Internet has made that process even simpler by providing direct access to tax preparation software programs.  These applications walk a taxpayer through the process of preparing an income tax return.

While the single most important day of the tax season is April 15, there are a number of important dates to consider each year. A tax calendar is a handy reference document, which can help all taxpayers avoid both penalties as well as late fees.

Taxpayers that didn't take advantage of the IRS e-file system last year are among a shrinking segment of Americans that still file paper copies of their federal tax forms.  Anyone that reads this article has access to the Internet, and the ability to file electronically.

Several years ago, the federal government extended its e-file service to include Free File Fillable Forms.  This program allows taxpayers with access to a computer and the Internet to prepare and file their federal income tax returns.  As was the case with earlier programs, electronic filing is both a fast and accurate way to securely file a return.

As the April filing deadline approaches, individuals look for information on the changes to the tax code, as well as what a change might mean to their individual tax return. The Internal Revenue Service (IRS) wants people to pay their income taxes on time; finding mistakes makes more work for everyone involved.

The Internal Revenue Service (IRS) is a wealth of information when it comes to federal income tax forms. To help round out this section of this website, we've taken some of the most common income tax forms and grouped them together by topic in this article.

This article provides a brief overview of the most common federal income tax forms individuals will use when completing a tax return.  This includes the three versions of Form 1040, as well as Schedules A and B.

In casual conversation, the term tax return is used rather loosely for two related, but entirely different topics.  Sometimes the term is used when talking about filling out an income tax form.  The same term is also used when talking about a refund.

This article contains the latest information on federal income tax brackets for the years 2020 and 2021.  Also known as tax tables or rate schedules, this information can be used to figure out the incremental federal taxes owed on each additional dollar of income.

Online publications typically circulate their tax planning tips at the end of the year.  But tax planning can take place all year long; it doesn't matter whether the April filing deadline is 12 months away or just around the corner.

Whether it's the start of a new year, or the April filing deadline, there's usually something that can be done to reduce a tax bill.  When it comes to taxes, having a plan can help maximize savings on a return.

Audits can be a nerve racking experience.  Many times they feel like an investigation, and the outcome is often painful.  This is especially true when the audit involves the Internal Revenue Service.

Every year, taxpayers go through the ritual of gathering the information needed to file their federal income tax return. Once completed, those records are often filed with those of prior years.

Each year, the Internal Revenue Service (IRS) releases their latest statistics on the billions of dollars it has in unclaimed tax refunds. The most common cause of a refund going unclaimed is failure to file a tax return. But there are also undeliverable refunds attributed to bad mailing addresses too.

The objective of a federal income tax return is to calculate taxable income.  While completing IRS Form 1040 may seem complex at times, the entire process can be broken down into two parts:  identifying all sources of taxable income, as well as expenses that can be deducted from income.

When completing a tax return, individuals are faced with the decision of filing itemized deductions or the standard deduction.  That decision is made on line 39 of the IRS Form 1040.  If the itemized deductions are greater than the standard deduction, then income taxes owed will be lower.

Anyone that uses part of their home to conduct business may be eligible to take a home office deduction on their federal income tax return. The requirements are fairly simple and the deductions are reasonably generous.

Several years ago, important changes were made to the tax code regarding gifts to a charity.  There were also significant tax breaks introduced for IRA owners, if the accountholder is willing to transfer funds to a charitable organization.

The best approach to tax planning is starting early in the year.  But it's never too late, even as the April tax filing deadline approaches, for some last minute tax savings tips.  After all, a taxpayer's obligation is to pay their fair share of income taxes, and not a dollar more.

A tax credit is not the same as a deduction.  In fact, they are far more valuable.  Unlike a tax deduction, most credits also have income phase out limits, which reduce the number of taxpayers that qualify.

Generally, a tax shelter is a program that allows individuals or businesses to permanently reduce or defer the payment of income taxes. These programs are not right for everyone; even legitimate ones involve a level of risk that not every investor will be comfortable undertaking.

The American Recovery and Reinvestment Act of 2009 contains a number of tax relief provisions aimed at saving both individuals and families money over the next several years. In total, there are ten different provisions under this economic stimulus package that can help lower the tax burden of many Americans.

When property is transferred to an heir after the passing away of the original owner, federal inheritance tax is paid.  Also known as estate taxes, inheritance taxes are calculated based on the fair market value of the property transferred to the beneficiary of the estate.

One of the most efficient ways to transfer someone's property after their passing away is through a revocable living trust.  These trusts also allow a trustee to manage the distribution of the grantor's property, without going through a potentially extended probate process.

The Alternative Minimum Tax isn't something new; in fact, it first appeared on tax forms back in 1978.  The American Taxpayer Relief Act of 2012, or ATRA, significantly changed this tax, but its purpose is still confusing to many.

Generally, capital gains tax, or CGT, is owed on any property sold for a profit.  Accurately determining a capital gain involves both an understanding of its cost basis, which is the amount of money paid for the asset, as well as any dollars spent on improvements.

On December 22, 2020, the IRS revised the standard mileage reimbursement rates for the calendar year 2021. These rates should be used to calculate the tax-deductible costs for using a car for business, charitable, medical, and moving purposes. The most common use of these mileage rates is to reimburse employees for expenses involving use of personal cars for business purposes.

While the activity of fraudulent offers and tax scam artists peaks around the April 15 filing deadline, vulnerable individuals are a constant target throughout the year. If offers of free stimulus and government subsidies sound too good to be true; maybe they're not.

You have a new job, and they're offering $1,000 a week to start!  That's good news, but even more important than how much money you're making each week, is how much money is making it into your pocket.  Payroll taxes can take quite a large bite out of a weekly paycheck.

The money owed on purchases can be confusing due to differences in state sales tax rates.  Adding to that confusion is the World Wide Web, which makes purchasing merchandise from a company doing business in another state an everyday affair.

Unlike the federal government, which has a series of tax brackets that apply to all U.S. taxpayers, state-level income tax rates are not standardized.  In fact, several states do not even have an income tax but rely on other sources of funds to provide essential services to their residents.

In this article, we're going to discuss the topic of tax-friendly states.  That point of view will be from both a residential standpoint as well as a business perspective.  Taxes provide state-level governments with a source of income so they can provide the essential services that everyone enjoys.  But there is no doubt that some states are more tax-friendly than others.

According to the U.S. Treasury Inspector General for Tax Administration, over 2 million taxpayers fail to take a state sales tax deduction on their federal income taxes.  This works out to nearly $4 billion in missed deductions each year.

As the close of the year draws near, taxpayers grow concerned about limiting their tax liability in 2021. By understanding their incremental federal income tax rates, individuals can appreciate the benefit received from a potential deduction.

Payroll taxes for Social Security benefits are collected under the authority of the Federal Insurance Contributions Act, or FICA.  This tax has its origins back in 1935, when it was introduced as part of the Social Security program.

Federal income taxes and the issuing of debt are the two largest sources of U.S. government funding.  But with a national debt of $23 trillion, the government is looking for additional sources of money to fund their spending.  One of those potential sources is a national value added tax, or VAT.

For many homeowners, property taxes represent a large proportion of their monthly mortgage payment. While politicians like to talk about lowering property taxes, in most towns across the nation, this tax increases nearly every year.

Owners of rental property, or property used for business purposes, should be familiar with Section 1031 of the Internal Revenue Service (IRS) Code, which states that no gain or loss will be recognized on the exchange of property held for productive use in a trade or business, or for investment, so long as the property is exchanged for like kind.

A tax lien can be thought of as a claim filed against a real estate property whose owner has failed to pay their taxes. The property usually can't be sold or refinanced until the lien is paid off.

Over the last several years, taxpayers in the United States have been affected by a number of natural disasters. Fortunately, there is a special disaster tax-relief provision that can help them recover from the financial impact of nature's wrath.

Moneyzine Editor

Moneyzine Editor