Many retailers and online businesses now accept virtual currency for sales transactions, but the federal tax implications were relatively unknown until recently when the IRS issued a set of FAQs on virtual currency such as bitcoins. The FAQs provide basic information about the U.S. federal tax implications of transactions in, or transactions that use, virtual currency. Here’s what you need to know. Sometimes, virtual currency such as bitcoins operate like “real” currency–i.e., the coin and paper money of the United … Read More
More than 52 percent of businesses today are home-based. Every day, people are striking out and achieving economic and creative independence by turning their skills into dollars. Garages, basements and attics are being transformed into the corporate headquarters of the newest entrepreneurs–home-based businesspeople. And, with technological advances in smartphones, tablets, and iPads as well as a rising demand for “service-oriented” businesses, the opportunities seem to be endless.
1. Adjust your withholding. Why wait another year for a big refund? Now is as good a time as any to review your withholding and make adjustments for next year, especially if you’d prefer more money in each paycheck this year. If you owed money at tax time, perhaps you’d like next year’s tax payment to be smaller. Give us a call if you need assistance in adjusting your withholding. 2. Take action when life events occur. Life events include the birth … Read More
The IRS has revised Publication 17 and posted it online. It has been updated for 2013. Find it here.
Generally, you are taxed on income that is available to you regardless of whether it is actually in your possession. But there are some situations when certain types of income are partially taxed or not taxed at all. Here are some examples of items that are NOT included in your income: Adoption expense reimbursements for qualifying expenses Funding of your Health Savings Account with a one-time direct transfer from your individual retirement plan, health reimbursement account, or health flexible spending … Read More
Question: How do I know if I have to file quarterly individual estimated tax payments? Answer: If you owed additional tax for the prior tax year, you may have to make estimated tax payments for the current tax year. You must make estimated tax payments for the current tax year if both of the following apply: You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. You expect your withholding … Read More
Did you know that you may be able to deduct certain taxes on your federal income tax return? You can receive these deductions if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation. There are five types of deductible non-business taxes: State and Local Income or Sales Taxes You can choose to claim a state and local tax deduction for either income or sales taxes on your return. You can … Read More
What Is Estimated Tax? Estimated tax is the method used to pay tax on income that is not subject to withholding, such as self-employment income, interest, dividends, rents, alimony, etc. In addition, if you do not elect voluntary withholding, you should make estimated payments on other taxable income, such as unemployment income and the taxable portion of social security benefits. Both the IRS and California’s Franchise Tax Board require estimated tax payments in certain circumstances. The thresholds are very similar, … Read More
Despite the slumping real estate market, houses are still being sold and there is money to be made. Sellers need to take a close look at the exclusion rules and cost basis of their home to reduce taxable gain on their house. First, the IRS home sale exclusion rule now allows an exclusion of a gain up to $250,000 for a single taxpayer or $500,000 for a married couple filing jointly. This exclusion can be used over and over during … Read More