How to File for an IRS Tax Extension Electronically or With Form 4868

tax season lateMy best friend is chronically late for everything: dinner, work, parties, you name it. Unfortunately, this behavior can have dire consequences when tax season rolls around. Several years ago she was in a panic because it was April 14th, just before the tax filing deadline, and she had yet to file her taxes. She rushed through the paperwork and drove to the post office to drop them off in the mail slot at 11:58pm.

What she didn’t know is that the IRS allows you to apply for a six-month extension on filing your tax return. So, if you don’t have it all together by tax day in April, don’t panic. You can extend all the way to October.

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Tax Implications of Retirement Accounts – IRA & 401k Distributions & Withdrawals

seniors retirement moneyWhen your retirement accounts are growing, it’s great to see the numbers climb. But when you retire and start taking money out of your IRA and 401k, the taxes you owe can take a surprisingly big chunk out of your total. Hopefully you’re taking advantage of the tax breaks that come with contributing to most retirement accounts, but are you ready for the taxes and penalties that you’ll deal with when you retire?

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Ultimate Guide to IRS Schedule C Tax Deductions & Expenses For Small Business Owners

stack of receiptsIf you run a small business, perform freelance work, or have other side income, you probably know exactly what you earn – but you may not be keeping a close eye on what you’re spending. And properly tracking the money you spend to run your business is incredibly important come tax time, especially if you’re to get the most out of your tax returns.

Take a look at the following guide to Schedule C deductions, and you may find that you’re missing out on some key tax deductions for self-employed freelancers and small business owners.


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Standard Deduction vs. Itemized Tax Deduction – What’s Better?

writing calculator taxesOne of the biggest breaks the IRS provides is in the form of deductions, which allow you to reduce your taxable income and thereby pay less in taxes. You may be accustomed to taking the standard deduction, which is a preset amount. Or, you may choose to itemize deductions on Schedule A. The choice is up to you.

For most taxpayers, the amount of the standard deduction and the itemized deduction are different. Typically, your tax preparation software or accountant determines which will give you the lowest tax bill. However, understanding the difference yourself, particularly what types of expenses you can deduct on Schedule A, can help you maximize those deductions and make better choices throughout the year to reduce your taxes.

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Deducting Health Insurance Premiums & Healthcare Expenses on Your Taxes

doctor healthcare costsThe cost of healthcare has been growing much faster than inflation, and will likely continue that trajectory considering the changes implemented by the Patient Protection and Affordable Care Act. This unfortunate trend may leave you wondering if you have any recourse to save money and reduce the impact of costly healthcare at all.

Plus, if you were not covered by health insurance previously, you may have been required to purchase it with the implementation of the individual health insurance mandate in 2014. Though some income groups receive assistance to afford coverage, many do not and face a fine for not purchasing adequate coverage.

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4 Education-Related Tax Deductions and Credits for College Tuition & Expenses

college grad moneyUnless you were born with a silver spoon in your mouth or the ability to perform a jump shot on par with LeBron James, your or your children’s college education is going to cost you. In-state public colleges cost an average of $18,943 per year, and private universities boast a massive average tuition price of $42,419, according to the College Board. College seniors who borrowed money to pay those costs now graduate with an average of $28,400 in student loan debt, reported by the Institute for College Access & Success.

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Tax Form 8949 – Instructions for Reporting Capital Gains & Losses

In an effort to help make filing taxes easier this year, we are breaking down the various IRS tax forms to help you know if you need them, and how to use them.

cash pen capital gainsIf you have capital gains or losses to report on your taxes, you’ll want to make sure you’re aware of a process change the IRS made a few years back. Instead of totaling up your transactions on Schedule D, you are required to list them out on Form 8949.

It’s a bit complicated to get started, but once you’re organized, you’ll be able to fill out the Form 8949 and Schedule D very quickly.

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How to Calculate Federal Income Tax – Rates Table & Tax Brackets

income tax bracketsThe United States income tax laws are based on a progressive tax system. Basically, this setup means that you pay a percentage of your income, owing more taxes when you make more money, and contributing fewer tax dollars when you make less money.

Theoretically, a progressive system distributes the tax burden more heavily onto those who make more money and thus have more ability to pay, and away from those who can’t afford as much.

Over time, tax deductions, credits, exemptions, and loopholes have modified and complicated our system. But at heart the American income tax system uses a relatively simple series of stepped tax rates to determine how much you owe.

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What Is the Earned Income Tax Credit (EITC) – Requirements & Eligibility

white piggy bankTaxes are a burden for everyone, but especially for low-income individuals and families who need to hang onto as much money as possible.

Interestingly, low-income earners pay a much larger percentage of their salary to Social Security than high earners do, which makes their tax bite effectively larger. In an effort to help offset this effect and to encourage people to work, Congress created the earned income tax credit (EITC) in 1975.

The program is still going strong today and provides tax relief and extra income to low and moderate earners, especially to those with children.

Understanding the EITC

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Investment Expense Tax Deduction – Which Fees Can You Deduct?

chart coinsIf you have investments, such as stocks or mutual funds, you might be missing out on a commonly overlooked tax deduction. When you itemize, you can add investment fees and expenses to your miscellaneous deductions down at the bottom of Schedule A (line 23).

You can only deduct miscellaneous expenses that are in excess of 2% of your adjusted gross income (AGI), but there are several other items that get lumped in with that, such as unreimbursed employee expenses, tax preparation fees, educator expenses, losses from casualties or thefts, hobby expenses, and certain legal fees.

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