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Taxes

MoneyTips

Social Security is generally considered a tax-free benefit, but that is not always the case. Depending on the amount of alternate income that you have in retirement and your filing status, you could owe taxes on up to 85% of your Social Security benefits.

If you receive Social Security or Social Security Disability Insurance (SSDI) income, you will also receive a Form SSA-1099 from the government. This form tells you the total amount of your benefits but does not tell you if any of your benefits are taxable, or at what percentage.

You can IRS Free File to e-file your return (if you make no more than $72,000), and the software will figure the taxable component of your benefits for you. However, you can get a reasonable estimate by combining half of your Social Security benefits with all other income (includi...

How To Increase Your Social Security Payments After You've Retired

6 Social Security Secrets

How Would You Fix Social Security?

MoneyTips

Social Security is generally considered a tax-free benefit, but that is not always the case. Depending on the amount of alternate income that you have in retirement and your filing status, you could owe taxes on up to 85% of your Social Security benefits.

If you receive Social Security or Social Security Disability Insurance (SSDI) income, you will also receive a Form SSA-1099 from the government. This form tells you the total amount of your benefits but does not tell you if any of your benefits are taxable, or at what percentage.

You can IRS Free File to e-file your return (if you make no more than $72,000), and the software will figure the taxable component of your benefits for you. However, you can get a reasonable estimate by combining half of your Social Security benefits with all other income (includi...

How To Increase Your Social Security Payments After You've Retired

6 Social Security Secrets

How Would You Fix Social Security?

MoneyTips

It is an exciting time when you start your new business. You have so many things to think of that you may forget one of the most important aspects — taxes. Before you dive into the business world, take a few minutes to consider the tax aspects of your new business.

Your tax obligations are strongly affected by the type of business structure you choose. Typical business structures include sole proprietorships, partnerships, C Corporations, S Corporations, or Limited Liability Corporations (LLCs).

Sole proprietorships, partnerships, and LLCs are reported using personal tax returns because profits are passed through to the owners. Other corporate structures require filing a corporate tax return. Corporate structures generally shield personal accounts from business debt but come with varying levels of tax reporting and compl...

Top 10 Home Office Tax Deductions

How To Save For Taxes If You Are A Freelancer

When Credit Card Debt Is Tax-Deductible

MoneyTips

It is an exciting time when you start your new business. You have so many things to think of that you may forget one of the most important aspects — taxes. Before you dive into the business world, take a few minutes to consider the tax aspects of your new business.

Your tax obligations are strongly affected by the type of business structure you choose. Typical business structures include sole proprietorships, partnerships, C Corporations, S Corporations, or Limited Liability Corporations (LLCs).

Sole proprietorships, partnerships, and LLCs are reported using personal tax returns because profits are passed through to the owners. Other corporate structures require filing a corporate tax return. Corporate structures generally shield personal accounts from business debt but come with varying levels of tax reporting and compl...

Top 10 Home Office Tax Deductions

How To Save For Taxes If You Are A Freelancer

When Credit Card Debt Is Tax-Deductible

MoneyTips

You have just received an inheritance. What do you do now? You could spend it on some extravagance, but you would be better off doing two things first: assessing the tax ramifications and thinking about some investment options.

"Death taxes" are somewhat misunderstood, as people can find the two types of death taxes confusing. Estate taxes apply to the front end of the wealth transfer process and are subtracted from the overall value of the estate. They only apply to huge estates and reduce the size of your inheritance upfront; you have no further tax obligation. The Tax Cuts and Jobs Act (TCJA) increased the estate tax lifetime exemption amounts to $11.58 million for single filers and $23.16 million for married couples filing jointly in tax year 2020.

Inheritance taxes, where they exist, apply to recipients. There are no federal inheritance tax...

Best States to Die In... For Taxes

Tax Shelters 101

6 Hot Taxation Topics (Infographic)

MoneyTips

You have just received an inheritance. What do you do now? You could spend it on some extravagance, but you would be better off doing two things first: assessing the tax ramifications and thinking about some investment options.

"Death taxes" are somewhat misunderstood, as people can find the two types of death taxes confusing. Estate taxes apply to the front end of the wealth transfer process and are subtracted from the overall value of the estate. They only apply to huge estates and reduce the size of your inheritance upfront; you have no further tax obligation. The Tax Cuts and Jobs Act (TCJA) increased the estate tax lifetime exemption amounts to $11.58 million for single filers and $23.16 million for married couples filing jointly in tax year 2020.

Inheritance taxes, where they exist, apply to recipients. There are no federal inheritance tax...

Best States to Die In... For Taxes

Tax Shelters 101

6 Hot Taxation Topics (Infographic)

MoneyTips

The last few years have been difficult ones for the IRS with respect to security issues, and the agency is determined to improve security during this year's filing. Electronic filing is particularly vulnerable because of the speed of the process — it is a favorite method among thieves who steal information from taxpayers and file fraudulent tax returns in their name.

As Bankrate.com Senior VP and Chief Financial Analyst Greg McBride points out, "Tax ID fraud is one of those things where somebody can have your Social Security number and they could have been sitting on it for a while, and you would have no idea until they go and file a bogus tax return under your Social Security number. You only find out at the point where your legitimate return gets rejected." Protect your credit – protect your identity – protect yourself with a Tax Identity Theft

Tax Identity Theft Lower But Still A Problem

How To Avoid Being A Tax-Scam Victim

MoneyTips

The last few years have been difficult ones for the IRS with respect to security issues, and the agency is determined to improve security during this year's filing. Electronic filing is particularly vulnerable because of the speed of the process — it is a favorite method among thieves who steal information from taxpayers and file fraudulent tax returns in their name.

As Bankrate.com Senior VP and Chief Financial Analyst Greg McBride points out, "Tax ID fraud is one of those things where somebody can have your Social Security number and they could have been sitting on it for a while, and you would have no idea until they go and file a bogus tax return under your Social Security number. You only find out at the point where your legitimate return gets rejected." Protect your credit – protect your identity – protect yourself with a Tax Identity Theft

Tax Identity Theft Lower But Still A Problem

How To Avoid Being A Tax-Scam Victim

MoneyTips

Chances are that if you have student loans, you need every bit of extra cash that you can get. Did you realize that your student loans might be able to generate some cash for you?

Under certain circumstances, you may be able to save on your tax bill by deducting the interest that you pay on your student loan. The total deduction from your taxable income could be as much as $2,500. As a final bonus, you do not have to itemize to claim this deduction.

To be eligible for the deduction, your loan must meet certain qualifications. It must have been made to cover qualified education expenses as defined in IRS Publication 970, including tuition, fees, and most room and board charges. The loan cannot have come from a relative or via a qualified employer plan, and the e...

Your Unpaid Student Loan Could Cost You Your Tax Refund

9 Crucial Tax Deductions

Tax Shelters 101

MoneyTips

Chances are that if you have student loans, you need every bit of extra cash that you can get. Did you realize that your student loans might be able to generate some cash for you?

Under certain circumstances, you may be able to save on your tax bill by deducting the interest that you pay on your student loan. The total deduction from your taxable income could be as much as $2,500. As a final bonus, you do not have to itemize to claim this deduction.

To be eligible for the deduction, your loan must meet certain qualifications. It must have been made to cover qualified education expenses as defined in IRS Publication 970, including tuition, fees, and most room and board charges. The loan cannot have come from a relative or via a qualified employer plan, and the e...

Your Unpaid Student Loan Could Cost You Your Tax Refund

9 Crucial Tax Deductions

Tax Shelters 101

MoneyTips

Taxpayers tend to shy away from taking the home office deduction, assuming that they will be targeted for increased scrutiny from the IRS. That is certainly possible, especially if your deductions are unusually large – but if you truly were entitled to the deduction, why wouldn't you take it?

You may feel that you have less incentive to itemize as the Tax Cuts and Jobs Act (TCJA) did away with many itemized deductions and nearly doubled the standard deduction. However, many self-employment deductions remain in place.

Assuming you reviewed IRS Publication 587, "Business Use of Your Home," and determined that you qualify, what are the home office expenses you can write off? They are covered in IRS Form 8829, "

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Protect Your Finances This Tax-Filing Season

MoneyTips

Taxpayers tend to shy away from taking the home office deduction, assuming that they will be targeted for increased scrutiny from the IRS. That is certainly possible, especially if your deductions are unusually large – but if you truly were entitled to the deduction, why wouldn't you take it?

You may feel that you have less incentive to itemize as the Tax Cuts and Jobs Act (TCJA) did away with many itemized deductions and nearly doubled the standard deduction. However, many self-employment deductions remain in place.

Assuming you reviewed IRS Publication 587, "Business Use of Your Home," and determined that you qualify, what are the home office expenses you can write off? They are covered in IRS Form 8829, "

How To Save For Taxes If You Are A Freelancer

When Credit Card Debt Is Tax-Deductible

How Long Should Tax Returns Be Saved?

MoneyTips

Few things are more frightening than opening your mailbox and finding a letter from the Internal Revenue Service. You may wrack your brain wondering what you've done to receive an IRS notice. But there’s no need to pretend it didn't arrive or go on the lam.

Relax. The IRS sends out millions of letters each year for a variety of reasons. An IRS letter does not necessarily carry bad news – and if it does, ignoring it is not going to make the situation any better. Take a deep breath, resist the urge to panic, and follow these tips to help you get past your initial shock.

1. Read the Letter Promptly – Putting off opening the letter won't help you, and delaying can even cause you harm. In many cases, the IRS is simply seeking more information or clarification of some aspect of your tax return, which makes it time-sensitive by definition.

2. Check for Incorrect Information – Review the notice for any errors such as a misspel...

How To Avoid Being A Tax-Scam Victim

Prevent Identity Theft From Affecting Your Taxes

1 In 4 Fear A Tax Audit

MoneyTips

Few things are more frightening than opening your mailbox and finding a letter from the Internal Revenue Service. You may wrack your brain wondering what you've done to receive an IRS notice. But there’s no need to pretend it didn't arrive or go on the lam.

Relax. The IRS sends out millions of letters each year for a variety of reasons. An IRS letter does not necessarily carry bad news – and if it does, ignoring it is not going to make the situation any better. Take a deep breath, resist the urge to panic, and follow these tips to help you get past your initial shock.

1. Read the Letter Promptly – Putting off opening the letter won't help you, and delaying can even cause you harm. In many cases, the IRS is simply seeking more information or clarification of some aspect of your tax return, which makes it time-sensitive by definition.

2. Check for Incorrect Information – Review the notice for any errors such as a misspel...

How To Avoid Being A Tax-Scam Victim

Prevent Identity Theft From Affecting Your Taxes

1 In 4 Fear A Tax Audit

MoneyTips

Since 2010, the Internal Revenue Service (IRS) budget has been cut by roughly 20%, and it now has 22% fewer employees than it did in 2010, making IRS customer service challenging, to say the least. The IRS subjected 8.8 million taxpayers to "courtesy disconnects" through the 2015 tax-filing season that ended in mid-2016. "Courtesy disconnects" are a euphemism for hanging up on taxpayers after a prolonged hold time. In the previous tax year, there were “only” 544,000 courtesy disconnects.

Even if a taxpayer managed to get through, he or she wasted lots of precious time just waiting to speak to an IRS representative. In the 2020 fiscal year, IRS received more than 100 million calls on its toll-free telephone lines, but only about 24 million were answered by IRS employees. Taxpayers who got through had to wait an average of 18 minutes on hold. A report from the office of the National Taxpayer Advocate blamed budget cuts, outdated information technology, and insufficient staff...

5 Reasons To File Your Tax Return Now

Itemize Or Take The Standard Deduction On Your Federal Income Tax?

What are Deductions, Credits, and Exemptions?

MoneyTips

Since 2010, the Internal Revenue Service (IRS) budget has been cut by roughly 20%, and it now has 22% fewer employees than it did in 2010, making IRS customer service challenging, to say the least. The IRS subjected 8.8 million taxpayers to "courtesy disconnects" through the 2015 tax-filing season that ended in mid-2016. "Courtesy disconnects" are a euphemism for hanging up on taxpayers after a prolonged hold time. In the previous tax year, there were “only” 544,000 courtesy disconnects.

Even if a taxpayer managed to get through, he or she wasted lots of precious time just waiting to speak to an IRS representative. In the 2020 fiscal year, IRS received more than 100 million calls on its toll-free telephone lines, but only about 24 million were answered by IRS employees. Taxpayers who got through had to wait an average of 18 minutes on hold. A report from the office of the National Taxpayer Advocate blamed budget cuts, outdated information technology, and insufficient staff...

5 Reasons To File Your Tax Return Now

Itemize Or Take The Standard Deduction On Your Federal Income Tax?

What are Deductions, Credits, and Exemptions?

MoneyTips

Are you planning on joining the gig economy and becoming self-employed? Are you embarking on retirement after years with a traditional employer? We wish you the best, and, along with the IRS, we remind you to pay your quarterly income taxes.

Without an employer to submit payments regularly out of your paycheck, you are now responsible for paying your own taxes in increments to fulfill America's pay-as-you-go tax requirements. You must make quarterly estimated tax payments if you expect to owe taxes of at least $1,000 for the year.

Underpayment of estimated taxes is on the increase, according to analysis of IRS data. The IRS found that the number of taxpayers incurring penalties related to estimated taxes jumped from 7.2 million in 2010 to 10 million in 2017, an increase of nearly 40%. Making matters worse, the Wall Street Journal reports that the potential number of filers owing penalties may be greater than the overall number of taxpayers filing estimated taxes ...

How To Save For Taxes If You Are A Freelancer

Don't Let Taxes Kill Your New Business

Top 7 Tax Deductions And Credits That People Forget

MoneyTips

Are you planning on joining the gig economy and becoming self-employed? Are you embarking on retirement after years with a traditional employer? We wish you the best, and, along with the IRS, we remind you to pay your quarterly income taxes.

Without an employer to submit payments regularly out of your paycheck, you are now responsible for paying your own taxes in increments to fulfill America's pay-as-you-go tax requirements. You must make quarterly estimated tax payments if you expect to owe taxes of at least $1,000 for the year.

Underpayment of estimated taxes is on the increase, according to analysis of IRS data. The IRS found that the number of taxpayers incurring penalties related to estimated taxes jumped from 7.2 million in 2010 to 10 million in 2017, an increase of nearly 40%. Making matters worse, the Wall Street Journal reports that the potential number of filers owing penalties may be greater than the overall number of taxpayers filing estimated taxes ...

How To Save For Taxes If You Are A Freelancer

Don't Let Taxes Kill Your New Business

Top 7 Tax Deductions And Credits That People Forget

MoneyTips

Claiming dependents on your taxes is usually a fairly straightforward procedure, but in some cases, more than one person (or couple filing jointly) will claim someone as a dependent, muddying the process. The most common example is when divorced or separated parents both want to claim their children as dependents for tax purposes.

Dependents can have a large impact on taxes — not just from the ability to claim Head of Household filing status, but also through tax credits such as the Child Tax Credit, the Child and Dependent Care Tax Credit, and the Earned Income Tax Credit. Both the qualification and the amount of potential credit are affected by the dependents that you can claim.

Although the Tax Cuts and Jobs Act (TCJA) removed the personal exemption, it retained the Dependent Care Credit and d...

Top 7 Tax Benefits Of Parenthood

Joint Tax Filing For Married Same-Sex Couples

Should Couples File Taxes Jointly or Separately?

MoneyTips

Claiming dependents on your taxes is usually a fairly straightforward procedure, but in some cases, more than one person (or couple filing jointly) will claim someone as a dependent, muddying the process. The most common example is when divorced or separated parents both want to claim their children as dependents for tax purposes.

Dependents can have a large impact on taxes — not just from the ability to claim Head of Household filing status, but also through tax credits such as the Child Tax Credit, the Child and Dependent Care Tax Credit, and the Earned Income Tax Credit. Both the qualification and the amount of potential credit are affected by the dependents that you can claim.

Although the Tax Cuts and Jobs Act (TCJA) removed the personal exemption, it retained the Dependent Care Credit and d...

Top 7 Tax Benefits Of Parenthood

Joint Tax Filing For Married Same-Sex Couples

Should Couples File Taxes Jointly or Separately?

MoneyTips

Your smartphone is probably full of fun apps, but we have one more app to add to help you deal with a painful task: your taxes. Did you know that the IRS has a free smartphone app to help taxpayers handle basic tax-related functions? They do, and it has been in existence since 2011.

The IRS2Go mobile app can be downloaded from Amazon, Google Play, or the Apple App Store. The latest version, IRS2Go 5.4.7, is available for Amazon and Android 7.0 or up operating systems, and on iPhone and iPad devices running iOS10.0 or later.

Why would you want to be able to access IRS information on your smartphone? You can perform a variety of useful tasks and seek tax information anywhere that your mobile phone has access to a signal. Here are a few examples of the available IRS services.

  • Check Your Refund – Once the IRS has acknowledged receipt of your e-filed return, you can start checking the status of your refund 24 hours after th...

Where's My Tax Refund?

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