Making the Most out of Miscellaneous Deductions

Miscellaneous deductions are tax breaks that generally don’t fit into a particular tax category.  They can help reduce taxable income and the amount of taxes owed.  For example, some employees can deduct certain work expenses like uniforms as miscellaneous deductions.  To do that, they must itemize their deductions instead of taking the standard deduction on their tax return. Here are several tips from the IRS about miscellaneous deductions: The Two Percent Limit. … Read the rest

Summer Newlyweds Should Also Think About Taxes

Spring showers bring summer flowers and weddings typically aren’t far behind. Newlyweds have a lot to think about and taxes might not be on the list. However, there is good reason for a new couple to consider how the nuptials may affect their tax situation. The IRS has some tips to help in the planning: Report changes in: Name. When a name changes through marriage, it is important to report that change to the Social Security Administration.… Read the rest

Members of the Armed Forces Get Special Tax Benefits

Members of the military may qualify for tax breaks and benefits. Special rules could lower the tax they owe or give them more time to file and pay taxes. In addition, some types of military pay are tax-free. Here are some tips to find out who qualifies: Combat Pay Exclusion. If someone serves in a combat zone, or provides direct support, part or even all of their combat pay is tax-free.… Read the rest

How to Handle an IRS Letter or Notice

The IRS mails millions of letters every year to taxpayers for a variety of reasons. Keep the following suggestions in mind on how to best handle a letter or notice from the IRS: Do not panic. Simply responding will take care of most IRS letters and notices. Do not ignore the letter. Most IRS notices are about federal tax returns or tax accounts.… Read the rest

IRS Offers Tips for Teenage Taxpayers with Summer Jobs

  Students and teenagers often get summer jobs. This is a great way to earn extra spending money or to save for later. The IRS offers a few tax tips for taxpayers with a summer job: Withholding and Estimated Tax. Students and teenage employees normally have taxes withheld from their paychecks by the employer.  Some workers are considered self-employed and may be responsible for paying taxes directly to the IRS.… Read the rest

Tips to Know for Deducting Losses from a Disaster

The IRS wants taxpayers to know it stands ready to help in the event of a disaster. If a taxpayer suffers damage to their home or personal property, they may be able to deduct the loss they incur on their federal income tax return. If their area receives a federal disaster designation, they may be able to claim the loss sooner.… Read the rest

Employee or Independent Contractor? Know the Rules

The IRS encourages all businesses and business owners to know the rules when it comes to classifying a worker as an employee or an independent contractor. An employer must withhold income taxes and pay Social Security, Medicare taxes and unemployment tax on wages paid to an employee. Employers normally do not have to withhold or pay any taxes on payments to independent contractors.… Read the rest

IRS Explains How Offer in Compromise Works

Taxpayers who have a tax debt they cannot pay may have heard that they can settle their tax debt for less than the full amount owed. It’s called an Offer in Compromise. Before applying for an Offer in Compromise, here are some things to know: In general, the IRS cannot accept a settlement offer if the taxpayer can afford to pay what they owe.… Read the rest

Helpful Tips to Keep in Mind When Amending Your Tax Return

Taxpayers can fix mistakes or omissions on their tax return by filing an amended tax return. Those who need to amend will find the following tips helpful. File using paper form. Use Form 1040X, Amended U.S. Individual Income Tax Return, to correct the tax return. Taxpayers can’t file amended returns electronically. They can obtain the form on IRS.gov/forms at any time.… Read the rest

What to Do When an IRS Letter Arrives in the Mail

The IRS mails millions of pieces of correspondence every year to taxpayers for a variety of reasons. Below are some suggestions on how to best handle a letter or notice from the IRS: Do not panic. Simply responding will take care of most IRS letters and notices. Most IRS notices are about federal tax returns or tax accounts. Each notice deals with a specific issue and provides specific instructions on what to do.… Read the rest