Many investors choose to invest in dividend-bearing stocks, or mutual funds focusing on dividend payers, as part of their portfolio. And those dividends can pay off in a major way. Investing in dividend-bearing stocks can be a great choice for investors who are thinking long-term. You may receive dividends in stock or cash, and you can frequently reinvest cash dividends to buy more stock.Depending upon how you receive dividends, you may need to plan ahead for tax day. Specifically, it is important to understand the different types of dividends, what you can expect as far as paying taxes on … [Read more...]
Kira Botkin
IRS Tax Form 1099-MISC – Instructions for Small Businesses & Contractors
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.If you're a freelancer or run a small business and use independent contractors, you're probably familiar with the 1099-MISC form. This form is used to report income to freelancers, independent contractors, and other self-employed individuals who, as their own employer, are generally responsible for paying the employer's and employee's portion of taxes.Thanks to its versatility, businesses and clients use the 1099-MISC form for … [Read more...]
How to File Your Tax Return – 2017 Basics & Guide
Doing your own taxes can be confusing, but it's a life skill that all financially informed people should develop. We've gathered information to help you learn about tax basics, prepare for completing your return, and understand the various credits and deductions you may be entitled to.But it's not all over once you file. You need to know what might happen after you file and tips to prepare for next year. Tax Basics History of Income Taxes in America – Taxes have played an important role in the formation of the United States, and understanding their history helps us understand the tax … [Read more...]
What Is a 1098 IRS Tax Form – 1098-C, 1098-E, 1098-T
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.There are multiple versions of Form 1098: the 1098, the 1098-C, 1098-E, and 1098-T. 1098 FormThe original 1098 form is used to report mortgage interest to the Federal Government, as well as to the person who paid the interest. That person can then deduct the interest they paid on Schedule A.Deducting this interest requires you to itemize your deductions. So, if your mortgage interest is below your standard deduction, you … [Read more...]
Taxes on Government Benefits – Unemployment, Social Security, Disability & More
You may think that government benefits are tax-free, but that isn't necessarily the case. In fact, several of the most common benefits claimed by Americans - unemployment, Social Security, and disability - do generate a tax bill. If you receive government benefits, understanding and keeping track of what can be taxed is key to getting the most out of the program and not setting yourself up for any unpleasant surprises.At first glance, this may seem difficult. However, there are several fairly simple steps to understanding how much tax you must pay on your benefits each … [Read more...]
What Is IRS Capital Gains & Losses Tax – Calculate Rates & Deductions
Whether you're new to the world of investing, or you're thinking of selling stocks, bonds, or real estate you've had for some time, it is important to consider how you'll be taxed on those items.Since you only pay tax on the profit you make, it's necessary to keep good records from the time you acquire an asset through the sale process. A few different factors, including how long you held the asset and your marginal tax bracket, influence how much you'll pay.Below are the definitions and general tax rules for capital gains and losses. What Are Capital Gains and Losses? In order to … [Read more...]
Filing Taxes After Divorce – Tax Implications & Claiming Children
In addition to the many challenges presented by divorce, you must work to untangle your financial situation. And following a complicated divorce, tax issues become more complex than they were when you filed as a couple. Fortunately, the IRS has a comprehensive list of circumstances for divorced and separated individuals in its Publication 504.The terms of your divorce are unique to you, so work closely with your accountant, especially the first time you file taxes after your divorce is finalized. This can help you figure out your filing status and possible tax deductions and credits. Your … [Read more...]
Tax Deductions for Charitable Contributions & Donations
As you may know, you can deduct qualified charitable contributions on your taxes - and this is one reason why December is such a great month for many charities. Not only is everyone is in the holiday spirit, but they are also preparing for tax season.However, beyond simply writing a check, there are many other ways you can help the less fortunate while lowering your tax bill. The IRS gives generous allowances for many types of donated items, but it's up to you to save your records and know how much you're entitled to deduct. The Basics Organizations That Accept Tax-Deductible … [Read more...]
Filing Taxes for Kids: Does My Child Have to File a Tax Return?
If your kids discovered the joys of capitalism this year, raking in the dough from paper routes or pizza delivery, or receiving stocks or bonds instead of toys for their birthdays, they may also get to experience the joy of taxes this April. You may be surprised to find that, as dependents, your children face different rules concerning when to file taxes, and on what income, than you do.When you pay your own taxes, you're entitled to a personal exemption of $4,000 for tax year 2015. Therefore, the first $4,000 of your income isn't taxed. When you claim your children as dependents, you get … [Read more...]
How to File for an IRS Tax Extension Electronically or With Form 4868
My 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 15th, the tax filing deadline that year, 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, you don't … [Read more...]
Tax Implications of Retirement Accounts – IRA & 401k Distributions & Withdrawals
When 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?The general rule for retirement accounts is that you must either pay taxes on the money before you put it into the account, or when the money comes out. Determining which is better … [Read more...]