After filing a tax return, you may have questions. 1) When will you receive your refund? Go to irs.gov and click on “Get Your Refund Status” to find out. 2) How long should you save tax records? In general, save records for three years after filing although you should keep the actual returns indefinitely. However, […]
Author Archive | James B. Reynolds
Working in the gig economy results in tax obligations
Before the pandemic hit, the number of people engaged in the “gig” or sharing economy was growing. And even more people turned to gig work during the pandemic to make up lost income. There are tax consequences for the people who perform these jobs. Generally, if you receive income from gigs or freelancing, it’s taxable. […]
Tax filing deadline is coming up: What to do if you need more time
This year, the deadline for filing 2020 individual tax returns is May 17, 2021. The April 15 due date was postponed due to the pandemic. If you still aren’t ready to file, request a tax-filing extension. Anyone can request an automatic extension with IRS Form 4868. This extends the filing deadline until Oct. 15, 2021. […]
Why it’s important to meet the tax return filing and payment deadlines
The May 17 deadline for filing your 2020 individual tax return is coming up. It’s important to file and pay your tax return on time to avoid penalties imposed by the IRS. Here are the basic rules. Separate penalties apply for failing to pay and failing to file. The failure-to-pay penalty is 1/2% for each […]
Unemployed last year? Buying health insurance this year? You may benefit from favorable new changes
Many people lost their jobs last year due to pandemic shutdowns. Generally, unemployment compensation is included in gross income for federal tax purposes. But thanks to the American Rescue Plan Act (ARPA), enacted on March 11, 2021, up to $10,200 of unemployment compensation can be excluded from federal gross income on 2020 federal returns for […]
Home Sales: How to Determine Your “Basis”
If you’re buying or selling a home, you should know how to determine your basis. The law allows an exclusion from income for all or part of the gain realized on your home sale. The general exclusion limit is $250,000 ($500,000 for married taxpayers). You want your basis to be as high as possible in […]
Who Qualifies for “Head of Household” Tax Filing Status?
When you file your tax return, you must check one of the following filing statuses: Single, married filing jointly, married filing separately, head of household or qualifying widow(er). Who qualifies to file as a head of household, which is more favorable than single? To qualify, you must maintain a household, which for more than half […]
How to ensure life insurance isn’t part of your taxable estate
If you have a life insurance policy, you may want to ensure that the benefits your family will receive after your death won’t be included in your estate. That way, the benefits won’t be subject to federal estate tax. For 2021, the federal estate and gift tax exemption is $11.7 million ($23.4 million for married […]
New law tax break may make child care less expensive
The new American Rescue Plan Act provides eligible families with an enhanced child and dependent care credit for 2021. This is the credit for expenses paid for the care of qualifying children under the age 13 so the taxpayer can be gainfully employed. For 2021, the first $8,000 of care expenses generally qualifies for the […]
New law: Parents and other eligible Americans to receive direct payments
President Biden has signed the American Rescue Plan Act into law. Among the many relief provisions are direct payments that will be made to eligible individuals. The full amount for eligible individuals is $1,400 ($2,800 for eligible married couples filing joint tax returns) plus $1,400 for each dependent. Most eligible taxpayers will receive direct bank […]
