Question: Can I itemize my deductions this year? Answer: If you have enough personal expenses, you may save income taxes if you itemize your deductions. Compare your itemized deductions with the standard deduction for your filing status, and use the larger of the two. Itemized deductions include the following: The standard deduction is indexed annually for inflation. […]
Question: Are my Social Security benefits taxable? Answer: Up to 85% of Social Security benefits can be taxed. Whether your benefits will be taxed depends upon your total income from both taxable and tax-exempt sources. Once your total income reaches $25,000 ($32,000 for married couples), a portion of your benefits will be subject to income […]
Adjusted Gross Income (AGI) is one of the core tax terms used by Federal and many State taxing authorities. So what is it and why is it important? The Federal formula for AGI is: AGI = Gross Income – Adjustments from Gross Income Gross Income. For most of us, Gross Income is our wages as shown […]
W-2 pay stubs are being stolen Scammers were very successful last year with a scheme to pry W-2 pay stub data away from employers. The IRS warns that it may be one of several techniques they use again this year. How the W-2 scam works Fraudsters simply identify employees with access to company payroll data […]
What happens when an ex-spouse files a joint tax return with errors in it that you did not know about? You learn that the tax obligation on a jointly filed tax return can be collected in its entirety from either filer. The IRS refers to this as joint and severable liability. Fortunately, there is some […]
Question: What is the marriage penalty? Answer: The marriage penalty occurs when a married couple pays more federal income tax than two single taxpayers with the same total amount of income. This phenomena occurs whenever there is a tax benefit for a married couple that is not twice the amount of two single taxpayers with the same […]
Question: How do I defend my Fair Market Value determination? Answer: This question can get complicated AND expensive. First start with a definition per the IRS; “Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a […]
Social Security and Medicare income limits and tax rates FICA tax is a combination of a Social Security tax and a Medicare tax. The Social Security tax is assessed on wages up to $160,200; the Medicare tax is assessed on all wages. Self-employed individuals pay a self-employment tax which is the equivalent of FICA tax. For 2023, […]
In business, good recordkeeping is essential not only for tax reporting purposes but also for the success of the company. Generally, you need to retain records for three years after the filing due date or when you actually filed your tax return, whichever is later. Remember to add six months to this requirement for most […]
What is backup withholding? This occurs when someone makes payments to you and they are required by the IRS to withhold some of it and send it to them as an estimated payment of your taxes. This often is done by banks and other businesses that pay you interest, dividends, rent, or for services you […]