Tax Update: What’s New in 2022


We’re happy to share some relatively good news for 2022, as the IRS schedule for federal tax rates and income brackets for 2022 provide some tax breaks for the substantial inflationary impact we’ve all experienced in 2021. While the tax rates themselves remain unchanged, you’ll be able to pocket some extra cash as each of the seven income brackets have been increased for inflation. Continue reading

Home Office Deductions for Small Businesses

If you are a small business owner or you’re self-employed and work from home, you will likely be able to take advantage of the home office deduction in 2020. According to the IRS, small business owners are leaving money on the table each time they file their taxes. Of the 23.4 million returns filed by sole proprietors for tax year 2011 (the latest year for which statistics are available), 7.6 million filers claimed a home office deduction. Continue reading

How to Prepare for Potential Tax Increases in 2021

 

The economic turmoil of 2020 has many worried about their savings. COVID-19 has lead to the second-highest unemployment rate in American history, with about one in five people collecting unemployment benefits. State governments are reportedly experiencing extreme budget problems, and the US GDP was down 32.9%, the largest quarterly drop since the Great Depression. 

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How to Maximize Your Social Security Retirement Benefits

As you get closer to retirement, you may start to think about collecting social security. According to the Social Security Administration, 68 million US citizens collected Social Security benefits in June 2019. Many people, however, plan to keep working at least part-time after they can begin collecting Social Security benefits. This can impact your taxes significantly – here’s what you need to know about the financial consequences of working during retirement. Continue reading

How To Plan for Retirement Financially

For many Americans, retirement feels like a far-off and distant dream. The most common age to retire in the US is 62 years old, which is also the minimum age to collect Social Security.

However, as demographics change in the US, Social Security will become less and less of a dependable, viable source of full income for future generations of retirees. It is of paramount importance that young people begin to plan and save for retirement sooner, rather than later.

There are several ways to predict and budget for the money you will need in retirement. Here’s how to estimate how much you need to save to live comfortably in your later years.

How much money do you need to live on after you retire?

The first step is establishing what your general living costs are and trying to adjust how much you will need to live on in retirement. The overall goal is to get a clear picture of how much you need, and then finding the sources of retirement income to match that result. Continue reading

What You Need to Know About the 529 College Savings Plan

There are many misconceptions about the 529 college savings plan. This tax-advantaged savings plan is a great option for saving for college expenses; yet more than 70% of Americans are unfamiliar with the advantages it presents.

College costs – as well as student loans – are on the rise. The average in-state college tuition, room, and board bills at $20,770, while private college costs are nearly $188,000. It can take years to pay off student debt or college loans. Parents (or grandparents) who own a 529 plan are making a smart investment in their student’s future.

To clarify some of the confusion around the 529 plan, read our guide on who should own the 529 plan, the tax benefits and types of plans available, as well as how to set one up.

The 529 Plan: Background

The 529 plan is an education savings plan that is sponsored by a state or a state agency. It’s named after Section 529 of the Internal Revenue Code (IRC) which authorizes tax-free status for “qualified tuition programs.” The section was added after Michigan established the first prepaid tuition plan, the Michigan Education Trust, in 1986. Continue reading

Get Your Tax Refund Quicker

Income tax-filing season started on January 28 and the tentative government shutdown and reopen has tax returns on everyone’s mind, especially when the IRS is one of the agencies that is unfunded while our government is closed. Despite the uncertainty of a future shutdown, the IRS will still pay tax refunds, according to the White House.

Many American families rely on getting money back in their annual tax refund. The average refund was more than $2,890, according to the IRS. And, by some estimates, more than 70% of Americans expect to get money back.

Following these tips will help you to get your tax refund quicker.

Get your tax return filed ASAP

The faster you get your taxes filed, the sooner you’ll see your return. Filing as soon as the window opens lowers the risk of refund theft. Tax refund theft has been on the rise in recent years. A fraudster steals personal information and then uses it to file a fake tax return, taking the refund amount for themselves. Then, when the real taxpayer goes to file their return, they’ll get an error message saying they’ve already filed. It could take months for the IRS to verify your identity, sort out the fraud, and get you your actual tax refund. It’s better to file early and avoid the risk altogether.

File your taxes electronically

Paper tax returns are time consuming for the IRS to process. An employee at the agency has to manually input and process your records. The IRS estimates that it takes roughly two weeks to process an e-filed return – versus six weeks to process a paper tax return. Continue reading

New Updates for 2019 Taxes – Part 2

In part 1, we covered changes to taxable income brackets and tax rates for individuals and married filing jointly. In part 2, we will cover deductions and other updates.

Changes to Standard Deduction Amounts

A standard deduction is the dollar amount that reduces the amount of income on which you are taxed and varies according to your filing status. At the beginning of 2018, the new tax plan brought higher standard deductions with the intention of helping families keep more of what they earn. Higher standard deductions often benefit middle-income families who see their income subject to lower tax rates.

This coming tax year, new standard deduction amounts will increase to: $12,200 for individuals, $18,350 for heads of household, and $24,400 for married couples filing jointly and surviving spouses.

There are also a few specific standard deduction changes you need to know for 2019:

  • Additional standard deduction amount for the aged or the blind: $1,300 (increases to $1,650 for unmarried taxpayers).
  • The standard deduction for an individual claimed as a dependent by another taxpayer cannot exceed $1,100 OR the sum of $350+ the individual’s earned income, whichever is greater.
  • There will be no personal exemption amount for 2019 per the Tax Cuts and Jobs Act.
  • Alternative minimum tax (AMT) exemption amounts will be adjusted for inflation. The AMT exemption is a mandatory alternative to the standard income tax for taxpayers who make more than the exemption.

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