Are you the administrator of a qualified nonprofit organization? Since these organizations are often exempt from taxation by the IRS, you might mistakenly fail to file an annual tax return with the government because you thought you didn't need to file your taxes. While it's true that your nonprofit may not have to pay taxes, your group may still be obligated to provide certain information to the IRS annually.
Have you heard the term "investment income"? Do you know what it means? If you're an American citizen who has money in an interest-earning bank account, mutual fund, or stock, you need to know about your personal investment income and whether it's taxable. If it is, you'll have to calculate the appropriate tax rate and include it in your taxable income for the year. Since tax rates for investment income can fluctuate, understanding how different types of investment earnings are calculated is critical to complying with IRS regulations.
The prospect of an IRS audit is enough to frighten any American taxpayer. An audit is a lengthy, investigative process that examines every aspect of your financial history for the tax year in question. According to the findings, you may owe additional taxes, penalties and interest to the IRS. Here are 10 frequently asked questions about IRS audits.
If you're a small business owner who is looking to hire on a few workers, you may be searching for ways to reduce your payroll budget. It's no secret that hiring employees can be costly, especially considering employers are responsible for paying federal payroll taxes, unemployment taxes, and health benefits. Some companies have used a workaround by hiring independent contractors or temporary employees, rather than full-time employees, to their workforce. While it may seem that independent contractors and temporary workers are interchangeable, they are not. The two statuses are very different, and they should be treated differently by business owners.
Some taxpayers might feel that they don't need to keep their income tax documents unless they have particularly complex tax situations. The reality is that all taxpayers should keep their essential tax documents on file. Depending on your circumstances, you may need to keep your records for several years, in case of an audit or to back up a claim.
Seasonal employees are workers who take jobs that only last for a few weeks or a couple of months during a specific season. Most commonly, these employees are hired on to give a business additional help during a busy period such as the summer season or the retail holiday season. In many cases, seasonal employees are students who work during school breaks or adults who are supplementing their full-time pay with part-time work. No matter their individual situations, it's important for seasonal employees to understand their tax implications so that they can avoid paying tax penalties with their returns.
When an individual or a family considers adopting a child, one of the biggest concerns is the high cost of the adoption process. Prospective parents often have to spend large amounts of money before they ever see their potential child. In addition, they may be left with unpaid bills, even if the adoption is ultimately unsuccessful. The federal government initially approved an Adoption Tax Credit in the mid-1990s that would ease the financial burden on an adopting family. Taxpayers who take advantage of the provision can reduce their tax liability for the year.
Since the IRS released the electronic filing, or e-filing, method for submitting federal income tax returns, the popularity of the practice has grown considerably. In fact, the agency is now encouraging as many taxpayers as possible to file electronically to cut down on the amount of paperwork involved in the process and to speed up the turnaround time for refunds. Declaration Control Numbers (DCNs) were originally a vital part of e-filing, serving as an electronic method of identifying returns, but the IRS has since discontinued use of them in favor of a streamlined e-filing process.
Around tax time, many citizens start wondering about their applicable tax bracket. While it may seem that the IRS randomly assigns tax brackets to certain individuals, the agency actually uses a straightforward method to calculate the appropriate tax rate for each citizen. It's important for individuals to understand the tax bracket to which they belong. This knowledge will help taxpayers prepare to pay their incoming tax bill. Learning to figure your tax bracket may also help you to find ways to reduce your tax rate for next year.
Are you getting close to retirement? If so, you're probably excited about leaving the workforce behind and starting the next chapter of your life. Planning for your retirement can help you make sure that this new era is exactly what you're hoping it will be. Good retirement planning includes considering tax issues and deciding when to begin receiving your pension. Here's a quick review of what you need to know about planning your taxes for retirement.
