Are you on the lookout for some good summer season studying? TheRoad has you lined with tax suggestions from among the main CPAs and tax consultants throughout the nation.
Make certain you bookmark this web page, we’ll be updating it with tas suggestions all summer season. TheRoad’s CPAs are answering regularly requested, and regularly searched tax questions.
Tax Questions Answered by CPAs and Tax Experts
1. “I don’t earn a lot of money, do I really need to file my taxes?”
We hear this query so much from Gen Z and millennials. The quick reply is sure! Even for those who do not meet the IRS’s earnings threshold, you actually ought to file your taxes.
“Not paying your taxes is one of the biggest mistakes that Gen Z and millennials make”, in line with Lisa Greene-Lewis, an authorized public account (CPA) and tax skilled for TurboTax.
Quotes | Biggest Mistakes Gen Z and Millennials Make on Their Taxes
Lisa Greene-Lewis, CPA and TurboTax Expert
Lisa Greene-Lewis, CPA and TurboTax Expert
“They could be missing out on the possibility if they had federal taxes withheld, to get that (money) back, as well as some education credits,” in line with Lewis.
2. “How do I organize my tax records?”
“Filing next year begins with being organized now, says Jeffrey Levine, CPA and tax pro from Buckingham Strategic Wealth Partners. “Having a spot the place you retailer every part associated to your taxes is a very powerful factor’.
So what paperwork do you have to hold? Levine says it is best to hold copies of paperwork which are onerous to acquire like tax returns, authorized contracts, insurance coverage claims, and proof of id.
Recommended: Documents You Should Save for Tax Time
Organize Important Documents Now
‘Those who’re extra organized could have a neater time sooner or later, and pay fewer taxes,’ in line with Levine.
Quotes| How to Get a Jump on 2023 Tax Season
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
TheRoad Recommends: Shred-It or Save It: A Guide on Organizing Important Documents
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3. “What are estimated taxes?”
If you’re a small enterprise, you’re possible accustomed to estimated taxes. “Estimated tax is the method used to pay that is not subject to withholding,” in line with IRS. com.
CJ Miller, CFP®, RMA® is a monetary planner with Sensible Money, explains that “estimated tax payments are required because the U.S. tax system is considered ‘pay-as-you-go.’
“The authorities desires its cash up entrance,” Miller says, ‘so they require that you make payments each quarter to cover the expected tax on any income made in that quarter. That is also why tax is withheld from your paycheck each pay period.”
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4. “Who pays the estimated taxes?”
“Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed,” in line with the IRS.com web site.
5. “When are quarterly estimated tax payments due?”
Here is the estimated tax cost schedule. Of course, if the due date falls on a weekend or a vacation, then the cost is due on the following enterprise day.
- April 15
- June 15
- September 15
- January 15 of the next yr
6. “Are my crypto investments taxed?”
If you’re among the many many now shopping for and promoting cryptocurrency, then count on it to be taxed. “Virtual currency transactions are taxable by law just like transactions in any other property,” in line with the IRS.
So, when are your digital transactions taxable? Lisa Greene-Lewis is an authorized public account (CPA) and tax skilled for TurboTax says “I often hear the question people don’t even know when their transactions are taxable. You don’t have a taxable event until you sell your stock or crypto”
Quotes | Cryptocurrency and Stock Advice for New Investors
Lisa Greene-Lewis, CPA and TurboTax Expert
Lisa Greene-Lewis, CPA and TurboTax Expert
“Also, depending on how long you hold your stocks before you sell them, that’s also how you’re taxed. If you hold your stock or crypto for over a year, then you have the benefit of those long-term capital gains, which are less, you know, you’re taxed less,” in line with Greene-Lewis. “And then also remember if you had any losing stock or any crypto losses when you sold, which a lot of people are not having. But if you did, you can offset your gains with those losses. And then your losses can carry over to your ordinary income like, you know, your W-2 income or self-employment income, and that’s up to $3,000.”
TurboTax, TheRoad’s official tax companion, shares a full information for brand spanking new buyers, together with widespread tax types and funding data it is best to hold.
7. “Are my home improvements tax deductible?”
“For most people when you’re doing home improvements it’s a personal expense and so it’s not going to be deductible. Now, of course, every situation is different and that’s why our tax system is so challenging because everything centers around facts and circumstances”, says Levine throughout an interview with Retirement Daily’s Robert Powell.
There is a few excellent news. There are issues that you just do, that will not be deductible however can nonetheless give you a tax profit. “For instance, energy-efficient improvements,” says Levine. “If you put solar panels on your roof, or you replace your windows or doors with more energy-efficient options, can create credits for you.”
Quotes| What Are Some Tax-Deductible Home Improvements?
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Read extra about capital enhancements, enhancements vs repairs, and extra: Home Improvements and Your Taxes.
8. “I’m self-employed, can I get a tax break for my home?”
There are greater than 9 million self-employed employees, in line with the June numbers from the Bureau of Labor Statistics. So, it is no shock that the self-employed are asking if they’ll get a tax break by claiming their house.
“When you’re self-employed, first of all, you don’t have taxes taken out on a regular basis, you know, as a withholding. So if you think you’re going to owe $1,000 or more, you need to pay estimated taxes,” says Lewis.
Quotes| Taxes & Remote Working: Deductions for Employees Working From Home
Lisa Greene-Lewis, CPA and TurboTax Expert
Lisa Greene-Lewis, CPA and TurboTax Expert
“But then on the flip side, there are a lot of deductions that you can take when you’re self-employed as long as they’re directly related to your business. So expenses like computer equipment or if you designed a website for your business, or office furniture and things for your office, remember that those things can be deductible and really help your tax situation.”
Watch under for extra deductions or learn TurboTax’s information on house workplace tax deductions.
9. “I’m self-employed, what forms do I need?”
If you are self-employed, you’re making cash, get able to fill out quite a few self-employed types.
“So they (self-employed) should be looking out for 1099-NEC, that’s fairly new,” in line with Lewis. “It used to be the 1099-MISC, but now it’s the 1099-NEC, and it reports any income of $600 or more that you made. Also, all of your income, as well as your deductible expenses, will be on a Schedule C. And that will be filed with your personal tax return.”
Those types could be discovered on the IRS.com web site. We’ve saved you some looking out, right here they’re:
You can be taught extra about self-employed tax obligations, types to think about, and even methods to file your annual return on the IRS Self-Employed Tax Center.
Recommended Read: Beginner’s Tax Guide for the Self-Employed
10. “Is a Virtual Currency Transaction Taxed?”
We at the moment are in a day and age the place we now have forex and digital forex. Currency is that stuff you usually hold in your pocket, a regular type of cash that’s utilized in every nation.
Virtual forex, however, is a forex that acts as an alternative choice to actual forex. Bitcoin, for example, is a digital forex. It can finally be transformed into U.S. {dollars}.
So, can a digital forex transaction have tax implications? According to the IRS, “Taxpayers transacting in virtual currency may have to report those transactions on their tax returns.”
Recommended Read: Your Crypto Tax Guide
11. “Can I rent my home tax-free?”
Are you enthusiastic about renting your own home on Airbnb or VRBO? Under the best circumstances that rental might be tax-free, in line with Jeffrey Levine, CPA and tax professional from Buckingham Strategic Wealth Partners.
Quotes| Rent Your Home Tax-Free With This Overlooked Tax Exception
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
Jeffrey Levine, Chief Planning Officer, Buckingham Strategic Wealth
“This might be your house where you live most of the time. And if that’s the case then part of this will depend upon how much you rent out using Airbnb,” says Levine. “If it’s only for a short period of time, like two weeks or less, you can actually have that income be, get this Bob, tax-free. Two of my favorite words are tax-free.”
12. “Do I have to pay taxes if I receive over $600 from Venmo transfers this year?”
The guidelines round what you need to declare as earnings haven’t modified, however the guidelines round reporting for person-to-person cash switch corporations like Venmo and PayPal have. As of 2022, for those who obtain $600 or extra by way of any of these platforms and people funds are categorized as purchases or for Goods and Services, they’re required to report it to the IRS utilizing Form 1099-Ok, whereas additionally sending a replica to you. This mustn’t current a problem since any cash you obtain as enterprise earnings is taxable anyway, so it’s presumed that you just have been already planning to assert that earnings in your tax return. If you’re sending cash to a pal to reimburse them for bills, simply be sure to classify that as a Friends and Family cost to keep away from the reporting as a result of the IRS will count on to see quantities reported on 1099-Ok types included as earnings in your tax return, usually on Schedule A for those who’re a sole practitioner or single-member LLC.
Panelist Bio| More About Our Tax Expert
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Editor’s Note: The opinions expressed on this article are these of the authors. The content material was reviewed for tax accuracy by a TurboTax CPA skilled.
Zachary Faulds contributed to the writing of this text and produced the video and/or the graphics related to it.
Source: www.thestreet.com”