In some cases, employers who hire workers may find that their employees actually meet the standards for independent contractors. If this is the case, these business owners may be submitting payroll taxes on their employees' income when it is not legally required. The good news is that the IRS now allows these employers to change the status of their workers for tax purposes if they meet certain conditions. The arrangement for this change is called the Voluntary Classification Settlement Program (VCSP).
Adjusted gross income (AGI) is one of the most important figures on Form 1040. This amount determines your applicable tax rate and, by extension, your actual tax liability for the year. However, many taxpayers are unfamiliar with how adjusted gross income is calculated, which means that they may not be aware of how their AGI amount fluctuates from year to year. Knowing how to calculate your AGI can help you prepare for your taxes based on the potential change in the amount of income tax you owe.
College students have been using work study as a way to earn additional income for school for many years. While work study provides a regular stream of income, it is not actually classified as a job because it is a form of financial aid provided for needy students. Despite this classification, though, receiving work study income can have an impact on your federal income tax liability at the end of the year. For this reason, it's important to know why work study is significant and how to include this school related tax on your tax form.
If you follow financial news, you may have the heard the phrase "tax-free bond" used quite often. Some news reports discuss that investors are purchasing tax-free bonds in droves to take advantage of rising interest rates. What is a tax-free bond? Why would it be beneficial for the interest rate on these bonds to rise? Are there any risks in purchasing tax-free bonds? Do I need assistance managing tax free bonds?
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.
