The term “exemption” is often one that inspires bewilderment and perplexity among the most intelligent individuals. When filing your personal tax return or even filling out a W-4 for your employer, you may not be sure what exactly an exemption is – and you certainly do not want to ask and look like an idiot. So,…
There are several ways in which education expenses can be used to decrease your tax burden. In addition to the Hope Credit, the Lifetime Learning Credit, and the student loan interest deduction, there is also a deduction available for tuition and fees related to educational expenses. Although this deduction can not be taken if you…
When filing your personal income tax return, there are primarily two ways to reduce your tax liability: deductions and credits. Although any way to pay Uncle Sam less is greatly appreciated, there are advantages to utilizing different techniques in reducing the amount you pay in taxes. Deductions and credits are actually considerably different creatures and…
In all the complexity of tax preparation, it is easy to miss a deduction or credit. This is a particular advantage to utilizing a professional tax service because they ask all the questions you may otherwise overlook. Here is a look at some of the most commonly missed deductions and credits. Tuition and Fees Deduction…
Basically, when it comes to filing your personal tax return, there are five filing statuses you may choose from: single individual, married person filing jointly or surviving spouse, married person filing separately, head of household and a qualifying widow(er) with dependent children. Filing incorrectly can cost you a bundle in tax dollars as well as…
Of all the intricacies of tax preparation, few aspects are as beneficial as electronic filing or e-filing. Not only is this advantageous to the Internal Revenue Service, as it reduces paperwork, it is also a benefit to individuals filing their tax returns. Here are just a few of the ways you can enjoy all electronic…
Every year, the National Taxpayer Advocate’s Annual Report to Congress identifies at least 20 of the nation’s most serious tax problems. These issues can affect taxpayers’ basic rights and the ways they pay taxes or receive refunds, even if they’re not involved in a dispute with the IRS. As your voice at the IRS, the…
Tax credits and tax deductions are two different types of tax breaks. Both can lower your tax bill, but they work in different ways. What is a tax deduction? A tax deduction is an expense that you can subtract from your yearly income. Deductions are taken before you calculate how much of your income is taxable. That means you should subtract any tax…
The percentage of tax returns being audited each year has steadily declined, due in part to dwindling government resources. Still, if you’ve been notified of a pending audit, those percentages don’t mean much. The only thing that matters is the situation that you’re now in. There are two kinds of audits; in person and by…
The Internal Revenue Service launched the new Tax Withholding Estimator, an expanded, mobile-friendly online tool designed to make it easier for everyone to have the right amount of tax withheld during the year. The Tax Withholding Estimator replaces the Withholding Calculator, which offered workers a convenient online method for checking their withholding. The new Tax Withholding…
