It can be convenient to have paper copies of tax returns for quick reference or as a backup, but it’s not a legal requirement. The IRS accepts electronic filing and storage of returns, and electronic copies are considered equally valid as paper copies. However, if you prefer to keep paper copies for peace of mind … Read more
Gifts and bequests are not typically taxable for the recipient, though there are exceptions. Inheritance tax, also known as estate tax, is levied on the estate of the deceased, not the individual inheriting. Gift tax is imposed on the donor, not the recipient, and only if the value of the gift exceeds a certain threshold. … Read more
A divorce decree, a court order that finalizes the legal separation of a married couple, does not override tax laws. Tax laws are established by governments to determine the financial obligations of individuals and entities, and they apply regardless of a person’s marital status. Therefore, even after a couple divorces, each spouse is still responsible … Read more
US Virgin Islands (USVI) residents pay a different set of taxes compared to United States mainland residents. They are exempt from federal income taxes, but they do pay a local income tax, excise taxes, and property taxes. The local income tax rate varies depending on the island of residence, and excise taxes are levied on … Read more
If you have unfiled tax returns, it’s important to address the issue promptly. Failure to file your taxes can result in penalties and interest charges, which can add up over time. Additionally, you could be missing out on valuable tax refunds or credits. In some cases, unfiled tax returns can also lead to more serious … Read more
To retrieve your Tax Identification Number (TIN), you can delve into your personal records to find any documents that mention it. It could be noted on your Social Security card, driver’s license, or pay stubs from previous employers. If those avenues prove fruitless, reach out to the Internal Revenue Service (IRS) via phone or mail. … Read more
Social Security Funding Many people assume that payroll taxes solely fund Social Security benefits. However, this is not the case. Social Security is financed through a combination of payroll taxes, interest earned on its trust fund investments, and general revenue from the federal budget. Payroll Taxes Payroll taxes are the primary source of funding for … Read more
Cash basis taxpayers generally deduct expenses when they pay them, and recognize income when they receive it. Prepaid rent does not fit this rule. Prepaid rent is rent paid in advance, for future use of a property. Instead of deducting prepaid rent when it is paid, cash basis taxpayers must wait and spread the deduction … Read more
Finding your Modified Adjusted Gross Income (MAGI) on TurboTax involves a straightforward process. Start by locating the “Federal” tab in the top menu bar. Under the “Income & Expenses” section, expand the “All Income” category. Scroll down until you see an entry labeled “Gross income.” Directly below it, you will find an entry for “Modified … Read more
General obligation (GO) bonds are a type of municipal bond that is backed by the full faith and credit of the issuing government. This means that the government pledges to use its taxing power to repay the bonds. As a result, GO bonds are considered to be a very safe investment. However, this safety comes … Read more