Tax day is a source of dread to many people, which is why so many taxpayers neglect to file their taxes until the very last minute. If you'd like to look at the lighter side of the tax code, here are five fun tax facts to take your mind off your potential tax bill.
Are you the administrator of a qualified nonprofit organization? Since these organizations are often exempt from taxation by the IRS, you might mistakenly fail to file an annual tax return with the government because you thought you didn't need to file your taxes. While it's true that your nonprofit may not have to pay taxes, your group may still be obligated to provide certain information to the IRS annually.
Have you heard the term "investment income"? Do you know what it means? If you're an American citizen who has money in an interest-earning bank account, mutual fund, or stock, you need to know about your personal investment income and whether it's taxable. If it is, you'll have to calculate the appropriate tax rate and include it in your taxable income for the year. Since tax rates for investment income can fluctuate, understanding how different types of investment earnings are calculated is critical to complying with IRS regulations.
Since the IRS released the electronic filing, or e-filing, method for submitting federal income tax returns, the popularity of the practice has grown considerably. In fact, the agency is now encouraging as many taxpayers as possible to file electronically to cut down on the amount of paperwork involved in the process and to speed up the turnaround time for refunds. Declaration Control Numbers (DCNs) were originally a vital part of e-filing, serving as an electronic method of identifying returns, but the IRS has since discontinued use of them in favor of a streamlined e-filing process.
Around tax time, many citizens start wondering about their applicable tax bracket. While it may seem that the IRS randomly assigns tax brackets to certain individuals, the agency actually uses a straightforward method to calculate the appropriate tax rate for each citizen. It's important for individuals to understand the tax bracket to which they belong. This knowledge will help taxpayers prepare to pay their incoming tax bill. Learning to figure your tax bracket may also help you to find ways to reduce your tax rate for next year.
A college graduate has a lot to be excited about, including finishing school, finding a new job, or even moving out of his or her parents’ house. However, the excitement of jumping in to a new career can quickly diminish once a graduate has to pay his or her first tax bill. Instead of waiting until tax time to find out how much you'll owe, it's wise to learn about potential tax issues in advance so that you can prepare to pay your taxes in the future.
Estate taxes carry some of the highest tax rates in the
IRS tax code. In fact, it’s not uncommon for wealthy individuals who have died to have their estates decimated by income taxes due to poor planning. In these cases, heirs may end up with very little property or assets, even though the estate was worth a large amount of money. To distribute an estate in the best possible way for heirs, individuals should look into methods that reduce the
taxable amount of their estates. If they do, they'll be able to lessen the impact of tax rates on their heirs.
Read More >
Identity theft has become a worldwide problem, affecting many consumers and damaging their credit scores, their bank accounts, and even their employment. But did you know that identify theft can also cause trouble for you at tax time? Unfortunately, falling victim to identity thieves can make tax filing a real hassle, especially if you're expecting a sizable refund. Here's a primer on what you can do if identity theft interferes with your tax filing.
Gambling winnings are completely taxable by the Internal Revenue Service. While this can be disappointing to taxpayers who win prizes or cash as a result of gambling, they may be relieved to hear that their gambling losses may be completely deductible as well. Those who win any prize of value from gambling activities should learn how to properly report them so that they can comply with the IRS standard for gambling winnings.
Read More >
If you're facing tax trouble such as a review or an audit, you may be wondering where you can turn for assistance. Many taxpayers are familiar with tax professionals such as certified public accountants (CPA) and tax attorneys, but another valuable resource for tax assistance is an IRS enrolled agent (EA). Enrolled agents are highly trained and qualified to provide tax advice and help for just about any possible situation.
