Deciding whether to claim medical expenses on your taxes requires careful consideration. The threshold for deducting these expenses is 7.5% of your adjusted gross income (AGI). If your total medical costs exceed this amount, it may be beneficial to itemize your deductions and include them. However, if your AGI is relatively high, the savings from … Read more
With 401(k) loans, it’s important to understand the tax implications. When you take out a loan from your 401(k), you’re essentially borrowing money from yourself. The amount borrowed is not taxed, so you don’t pay taxes on it now. However, when you repay the loan, you’re using after-tax dollars. This means that you’re paying taxes … Read more
Trustee fees are payments made to individuals or organizations for managing and overseeing trusts. Generally, these fees are treated as taxable income for the trustee. They are subject to federal income tax and may also be subject to state and local income taxes. However, there are some exceptions to this rule. For instance, if the … Read more
The likelihood of an individual tax preparer being audited by the Internal Revenue Service (IRS) is relatively low. However, certain factors can increase the risk of an audit. These include preparing returns that contain errors or omissions, representing clients who are involved in questionable tax practices, and having a history of preparing returns that have … Read more
An ad valorem tax is a levy imposed on the value of something. It is commonly encountered in the context of real estate property taxes, where the taxable value is determined by an appraisal. The tax rate is then applied to this value to calculate the amount of tax owed. Ad valorem taxes are also … Read more
Temporary differences between financial accounting and tax reporting can cause a deferred tax asset. This happens when expenses are recorded earlier for tax purposes than for financial reporting purposes, or when revenues are recognized later for tax purposes than for financial reporting purposes. As a result, a temporary difference arises between the book value and … Read more
When your tax return is filed with one bar, it simply means that the IRS has received your return and is processing it. There are a number of reasons why your return may be taking longer to process, including errors or missing information. If you have filed your return electronically, you can check the IRS … Read more
Income Level The amount of income a person earns is a major factor in determining how much tax they pay. In general, the higher a person’s income, the more tax they will owe. This is because tax rates are progressive, meaning that they increase as income increases. The table below shows the federal income tax … Read more
Payroll taxes are expenses incurred by employers to fund various government programs, such as Social Security, Medicare, and unemployment insurance. These taxes are calculated as a percentage of an employee’s wages or salary. The employer is responsible for withholding these taxes from each employee’s paycheck and then remitting them to the appropriate government agency. Payroll … Read more
When determining how much tax you pay on a company car allowance, it depends on how much the allowance covers your car’s annual running costs. If the allowance covers less than your actual running costs, you won’t have to pay tax on it. However, if the allowance covers more than your running costs, the excess … Read more