You just need to answer simple questions, such as whether you’ve had a baby, bought a home or had some other life-changing event in the past year. With a credit card, expect to pay a service charge of as much as 2.5%. The IRS checks your return to make sure that it is complete, which increases your chances of filing an accurate return. Less than 1% of electronic returns have errors, compared with 20% of paper returns. If you file and pay late, the IRS can slap you with a late-filing penalty of 4.5% per month of the tax owed and a late-payment penalty of 0.5% a month of the tax due. After you have a baby, be sure to file for your child’s Social Security card right away so you have the number ready at tax time.
Medical Expense Deduction – Medical expenses can really add up for individuals and families. The medical expense deduction threshold was set to go back up to 10% in 2019, but the new provision extends the lower 2017 and 2018 threshold of 7.5%. Therefore, you may be able to claim your un-reimbursed medical expenses if they are more than 7.5% of your adjusted gross income and you can claim itemized tax deductions. For example, if your adjusted gross income is $50,000, you can claim your medical expenses that are more than $3,750 ($50,000 x 7.5%) if you can claim itemized deductions. At the 10% threshold, they would need to be more than $5,000. Tuition and Fees Deduction – You may once again have another education tax benefit option with the extension of the Tuition and Fees Deduction if you, your spouse, or your dependent child have college expenses.
Whether your income is high, low or in-between, everyone will likely be affected in some way. Here’s a year-by-year breakdown of what’s on the horizon and details about how the new law may change the amount of tax you pay. Don’t worry about knowing these tax laws — TurboTax has you covered. If you have more questions while doing your taxes, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average 15 years-experience to get your tax questions answered.
“Above that amount, check the IRS reporting limits, which may change from year to year in the future.” One of the latest tax buzzwords is “offshore accounts,” as the IRS has begun taking a closer look at the foreign holdings of American citizens. During the transitional tax year of 2011, only certain taxpayers had to make foreign disclosures to the IRS. As of 2012 and beyond, all taxpayers who meet the minimum threshold, which varies by tax-filing and residence status, must comply. The 100% expensing is also available for certain productions and certain fruit or nuts planted or grafted after September 27, 2017. In 2017 and 2018, all taxpayers, including those under 65, are now subject to the 7.5% of Adjusted Gross Income threshold for deducting medical expenses. Debt cancelled from the short sale, foreclosure, or mortgage modification for Qualified Principal Residences is no longer excludable from income under the Mortgage Forgiveness Debt Relief Act.
Step 5: Enter Number Of Returns
If you have tax questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with an average 15 years experience to get your tax questions answered at tax-time. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can also review, sign, and file your tax return. Changes if you’re a homeowner.If you are a homeowner or are considering buying your dream home, some of the changes in the tax law are very important for you. In the past, these taxes have generally been fully tax-deductible. Due to the cap on these tax deductions, you may now also have to take the standard deduction on your taxes instead of taking itemized deductions since the standard deduction has almost doubled. Don’t worry about knowing if you should take the standard deduction or itemize your tax deductions at tax time.
Otherwise, the IRS will deny any dependent credits that you might be due, such as the Child Tax Credit. Since 10% of the house was an office instead of a home, the IRS said, 10% of the profit wasn’t tax-free. No longer does a home office put the kibosh on tax-free profit. By the way, TurboTax already includes all the tax forms you need, which takes the hassle out of deciding which forms to use. Just answer simple, plain-English questions, and TurboTax fills out all the right forms for you.
Tax Tips From Turbotax
If you’re wondering what the passage of the law means to you and your tax situation, TurboTax is here to help you better understand. With direct debit, you may delay the debiting of your bank account until the actual filing deadline. The IRS also acknowledges that it received your return, a courtesy you don’t get even if you send your paper return by certified mail. That helps you protect yourself from the interest and penalties that accrue if your paper return gets lost. The maximum late filing penalty is 22.5% and the late-payment penalty tops out at 25%. One home office trap that used to scare away some taxpayers has been eliminated. You are entitled to write off expenses that are associated with the portion of your home where you exclusively conduct business .
The Internal Revenue Service can provide you with copies of your tax returns from the most recent seven tax years. You can request copies by preparing Form 4506 and attaching payment of $50 for each one. Once the IRS receives your request, it can take up to 60 days for the agency to process it. If you filed your taxes with a TurboTax CD/download product, your tax return is stored on your computer, so you can print a copy at any time. If you used TurboTax Online, you can log in and print copies of your tax return for free.
In addition to extensive tax experience, Lisa also has a very well-rounded professional background. She has held positions as a public auditor, controller, and operations manager. Prior to becoming the TurboTax Blog Editor, she was a Technical Writer for the TurboTax Consumer Group and worked on a project to write new FAQs to help customers better understand tax laws.
The annual investment limit is reduced to $2,000,000 for 2015 and beyond. The standard business mileage rate is 57.5 cents per mile, up 1.5 cent per mile from the allowance that applied for business driving in 2014. The maximum amount of wages subject to Social Security tax increases to $118,500 in 2015, up from $117,000 in 2014. The standard business mileage rate is 56 cents per mile, down 0.5 cent per mile from the allowance that applied for business driving in 2013. The maximum amount of wages subject to Social Security tax increases to $117,000 in 2014, up from $113,700 in 2013. Starting in 2013 employers must withhold an additional .9% in Medicare tax from the checks of employees earning more than $200,000 per year. The standard business mileage rate is 56.5 cents per mile, up 1 cent per mile from the allowance that applied for business driving in 2012.
According to IRS rules, you must pay 100% of last year’s tax liability or 90% of this year’s tax or you will owe an underpayment penalty. If you didn’t pay enough to the IRS during the year, you may have a big tax bill staring you in the face. Plus, you might owe significant interest and penalties, too. if you are eligible, you must have adjusted gross income of $65,000 or less for singles, or $104,000 or less for married couples filing jointly. You don’t have to file your 2013 first, but if you have a refund coming for 2014 the IRS will not process it until your 2013 is filed and processed.
Perfect For Independent Contractors And Small Businesses
Debt cancelled from the short sale, foreclosure, or mortgage modification for Qualified Principal Residences can be excluded from income under the Mortgage Forgiveness Debt Relief Act. This can also apply to debt that is discharged in 2017 provided that there was a written agreement entered into in 2016. The credit of $1,000 per eligible child continues through 2017. The credit was extended by two years by the 2010 Tax Relief Act.
TurboTax Self-Employed helps automatically find industry-specific business deductions. Also, if you already use QuickBooks Self-Employed to track your income, expenses, mileage, capture your receipts; your information can then be easily exported to TurboTax Self-Employed at tax-time. Instead of using TurboTax Deluxe, you must use TurboTax for business now if you are self employed but you can claim your business related expenses using it. It was not allowing expenses against my 1099 income on the TurboTax Deluxe program so I upgraded in the middle of preparation.
529 College Savings Plans can now be tapped tax-free to pay for a computer or Internet access. If you convert a second home into a principal residence after 2008, you may not be able to exclude all of your gain. A portion of the gain on a subsequent sale of the home will be ineligible for the home-sale exclusion of up to $500,000, even if the seller meets the two-year ownership-and-use tests. The portion of the profit that’s subject to tax is based on the ratio of the time after 2008 when the house was a second home or a rental unit, to the total time you owned it.
A middle-class taxpayer who uses a home office and pays $1,000 a month for a two-bedroom apartment and uses one bedroom exclusively as a home office can easily save $1,000 in taxes a year. People in higher tax brackets with greater expenses can save even more. The eligibility rules for claiming a home office deduction have been loosened to allow more self-employed filers to claim this break.
For U.S. citizens living abroad, the reporting limits rise dramatically. Single filers need only report accounts exceeding $200,000 at year-end, or $300,000 at any point during the year. For joint filers, the limits are $400,000 at year-end, or $600,000 at any time during the year.
The retirement money may also bump you into a higher tax bracket, which can result in the taxation of other income, such as social security, that you may have not been taxed on otherwise. If you are missing any of your tax documents from the last 10 years, you can request a copy from the IRS by filing Form 4506-T, Request for Transcript of Tax Return. Bonus depreciation has been changed for qualified assets acquired and placed in service after September 27, 2017. The old rules from 2015 still apply for qualified assets acquired before September 28, 2017.
- For 2009 and 2010, Congress gave workers a credit of 6.2 percent of their earned income, capped at $400 for single filers and $800 for joint filers.
- to help recover financially from the impact of a disaster when the federal government declares a certain location to be a major disaster area.
- Taxpayers with earned income greater than $200,000 for single or $250,000 for married filing jointly will also pay a higher Medicare payroll tax.
- For example, if you are requesting your 2017 tax return, enter “12/31/2018” and not just “2018”.
- The annual investment limit was raised to $2 million for 2010.
- If you are one of them, you are probably racking up interest and penalties on back taxes every month you are late.
Here are 10 tax tips and steps you can take after January 1 to help you lower your taxes, save money when preparing your tax return, and avoid tax penalties. The IRS has a simple rule for many personal deductions, including the property tax you pay on your home. In other words, if you pay your property taxes early, you can claim the deduction early, and if you pay your property taxes late, you have to claim the deduction late, as well, but you don’t lose the deduction. Yes, you would need to use your 2013 software to file a 2013 return.
The rest qualifies for the home-sale exclusion of up to $500,000. The tax credit for the cost of energy-saving home improvements is 30 percent for 2010, up to a combined maximum of $1,500 in both 2009 and 2010. It applies to qualified insulation, windows, outside doors, biomass fuel stoves and high-efficiency furnaces, water heaters and central air conditioners. However the executors of estates where the taxpayer died in 2010 can elect to apply the 2011 exemption of $5,000,000, with a maximum estate tax of 35%. Different rules for the step up in cost basis apply in these two years, meaning some estates may find the 2011 rules more beneficial. Starting in 2010, individuals with any amount of modified Adjusted Gross Income are free to convert a traditional IRA to a Roth IRA. Conversions are fully taxable at your regular tax rate. For conversions in 2010, taxpayers can spread the tax due over two years.
And if you want the returns sent directly to a third party, such as a bank that’s evaluating your application for a mortgage loan, you must provide the bank’s contact information on the form. Luckily, the Internal Revenue Service can provide you with copies of your original tax returns. As long as you filed the original tax return on Form 1040, 1040-SR, 1040A or 1040EZ, you can request a copy by filing Form 4506 with the IRS. It can take up to 60 days for the IRS to process your request, but when you do receive the tax return, you will have a copy of the original tax form as well as all schedules and forms that you attached to it. TurboTax software programs include the tax forms you’re likely to need to file your federal and state taxes.