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02/23/2023

Earned Income Tax Credit – Did You Know?

Many Americans may qualify for the Earned Income Tax Credit (EITC), but do not claim it because they do not know it is available. The EITC is a fully refundable tax credit, which means that eligible filers can use it to get a tax refund even if they owe no tax.

To qualify for the credit, your 2022 income must include earned income, such as employee pay or earnings from self-employment activities like freelance or gig economy work. You also cannot have more than $10,300 in investment income, such as interest or dividends.

In addition, your adjusted gross income (AGI) for 2022 must be below the limit set by the IRS for your filing status and number of qualifying dependents. For married taxpayers who file joint returns, the 2022 AGI limit ranges from $22,610 (no dependents) to $59,187 (three or more qualifying dependents). For those who file under single, head of household or surviving spouse status, the AGI limit ranges from $16,480 (no dependents) to $53,057 (three or more qualifying dependents).

In order to claim the EITC, you must file a 2022 federal tax return, even if you would not ordinarily be required to file based on your income. A tax professional can help you file your return electronically, and set up direct deposit to get your refund as quickly as possible.

02/21/2023

Tips for Filing an Accurate 2022 Return (2/2)

Here are some additional key points to keep in mind as you prepare your 2022 tax returns. To avoid processing delays and potential IRS penalties, taxpayers must report all forms of potentially taxable income. In addition to wages or a salary that you receive as an employee, make sure to accurately report any income you had from:

- Business activities, including selling goods online, independent contract work, side gigs or other forms of self-employment
- Interest, dividends, gains from digital assets (cryptocurrency, non-fungible tokens, stablecoins) transactions or other investment returns
- Seasonal or other temporary or part-time work
- Prizes, awards, bonuses or gambling winnings

A tax professional can help you properly report all your income, and file your return electronically for faster processing.

02/15/2023

IRS Clarifies Which 2022 State Tax Payments Are Non-Taxable – Did You Know?

Many states issued special tax rebates or other relief payments in 2022 and until now, it has been unclear whether recipients of these payments had to report them as taxable income on their 2022 federal tax returns.

According to the IRS, certain payments issued by 17 state governments may qualify as disaster relief or general welfare payments, which taxpayers may exclude from their income. Therefore, those who received these special rebates or relief payments generally do not have to report the payments on their federal tax returns as taxable income. The 17 states are: Alaska, California, Colorado, Connecticut, Delaware, Florida, Hawaii, Idaho, Illinois, Indiana, Maine, New Jersey, New Mexico, New York, Oregon, Pennsylvania and Rhode Island. The IRS has published a list of the specific payments covered by this rule (link below).

Meanwhile, taxpayers in Georgia, Massachusetts, South Carolina and Virginia who received certain state tax payments in 2022 may be able to exclude these payments from their income if they were a refund of state taxes paid and either the recipient claimed the standard deduction or itemized their deductions but did not receive a tax benefit.

A tax professional can help you determine whether any state tax payments you received in 2022 may be taxable, and if so, how to properly report them on your tax return.

List of State Tax Payments Covered: https://www.irs.gov/newsroom/state-payments.

02/13/2023

Tips for Filing an Accurate 2022 Return (1/2)

The first step toward completing an accurate return and claiming every deduction and credit that you are entitled to is assembling critical records and documents. These include:

- Earnings statements like W-2s, 1099s and/or 1098s
- Social Security or other taxpayer ID numbers for all people listed on your return
- Any IRS letters you received in 2022 about deduction or credit amounts, adjustments made to your past tax returns, etc.
- Form 1095-A (Health Insurance Marketplace Statement), if you claim the Affordable Care Act Premium Tax Credit
- Form 1098-T (Tuition Statement), if you claim education expense credits or deductions

In addition, having your bank account and routing numbers handy will enable you to request your refund by direct deposit. A tax professional can help you file your return electronically and set up direct deposit for the fastest possible processing.

02/08/2023

Missing or Incorrect W-2s or 1099s – Did You Know?

When the time comes to get your taxes filed, it can be frustrating to discover that you have not received the documents you need to complete your return. This problem occurs most often with Form W-2 (Wage and Tax Statement for employees) or the various versions of Form 1099 (for earnings as an independent contractor, pension or IRA distributions, etc.).

If you have not received an anticipated W-2 or 1099, you should first contact the employer or payer to request the missing document. The same applies if a form you received contains incorrect information.

If you have received an incorrect Form 1099-G for unemployment compensation from your state employment office, contact the agency immediately. An incorrect form may indicate that a scammer collected unemployment benefits using your Social Security Number (SSN).

02/06/2023

Benefits of Filing Early - Did You Know? (2/2)

The IRS deadline for filing 2022 tax returns is April 18, 2023 but there are multiple advantages to filing electronically as soon as possible. These advantages include:

- Faster Refund: Processing of returns by the IRS may slow down in April, as the number of returns submitted increases. For early filers who provide direct deposit information, the IRS issues most refunds within 21 days, or by as soon as February 28 for those who claim the Additional Child Tax Credit or Earned Income Tax Credit.
- No Need to Request A Filing Extension: If you start early, then even if a problem comes up like a missing wage statement or other tax document, you will have plenty of time to resolve the issue before the filing deadline.
- More Time to Request An Installment Plan: Discovering at the last minute that you owe more tax than you can pay may lead to tax problems, including IRS penalties. Filing early may give you time to properly request an installment payment arrangement with the IRS, helping to minimize penalties and interest charges.
- Easier to Get Help: If you need assistance preparing and/or filing your tax return, help will be easier to find in February or early March than during the final days before the filing deadline.

A tax professional can help you efficiently complete your tax return, and file it electronically for greater security and faster processing.