Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.
If you’ve moved within the last year, you may have questions on how to prepare your tax return and how you should file in the current state you live in or the state you moved from. It’s also important to know if you will need to file multiple tax returns depending on whether or not the state you moved to has an income tax.
It can be confusing to know how you should file and how many tax returns you need to prepare. Here are a few answers to some questions that you may have:
Filing part-year resident tax returns
A part-year resident tax return will be filed for the year of your move. Taxpayers don’t have to worry about paying double the state tax since most states don’t tax the income earned in the other state.
If income was earned through interest or dividends that were paid during the year, a taxpayer will need to divide that in accordance with the number of days spent at each location.
Reporting income earned in some states
Some states require that all your income for the year is reported if you are a resident in that state at the end of the year. There’s also no need to worry about having to pay double the state tax on your income if you have to report some of the income you earned to the previous state that you lived in. On the tax return for your new state, you can claim a tax credit to your old state on the same income. The tax credit will offset any additional tax on the income that you reported to both states.
If you need tax help, contact us for a free consultation.
Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.
The Earned Income Tax Credit (EITC) is known as a refundable tax credit that applies to low and moderate-income workers. For those who have children, the amount will vary based on the number of kids placed on their tax return. For the tax year 2020, the current earned income credit ranges from $538 to $6,660.
If you qualify for this tax credit, be sure to claim it on your tax return so you can get the most out of your tax refund. Here’s how you know whether or not you qualify.
In order to know if you qualify for EITC you have to ensure that your earned income does not exceed a certain range. Taxpayers can meet the requirements for EITC without a qualifying child if you have a child that meets all the qualifying child rules for you or your spouse if filing a joint return. Taxpayers can utilize the EITC Assistant to find out their filing status and how they can qualify.
In order to meet the standards for an EITC credit you must use one of the following statuses:
Married filing jointly
Head of household
Qualifying widow of widower
Single
For those filing married filing separately, they will not be able to claim the EITC. If you or your spouse are a nonresident alien for any part of the year, you will be unable to claim the EITC unless your filing status is married filing jointly.
Additional 2019 income rules taxpayers must follow in order to qualify for the EITC:
Tax year investments must be $36,000 or less.
Form 2555, Foreign Earned Income, Form 2555-EZ, and Foreign Earned Income Exclusion can’t be filed.
Total earned income must be at least $1.
If you need tax help, contact us for a free consultation.
Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.
If you’re debating whether or not to donate to charity, it’s important to understand the tax benefits and tax-saving opportunities that could be available to you. Here’s a breakdown of what you need to know when understanding what you could qualify for when it comes to charitable donations.
Some donations may not be eligible for deductions. In order to make a donation, it must be to a charity with a tax-exempt status determined by the IRS. This means that charitable donations cannot be made to friends, relatives, or groups that do not fall under the tax exempt status. The list of approved organizations are the following:
A community chest, corporation, trust, fund, or foundation, organized or created in the United States or its possessions, or under the laws of the United States, any state, the District of Columbia or any possession of the United States, and organized and operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals.
A church, synagogue, or other religious organization.
A war veterans’ organization or its post, auxiliary, trust, or foundation organized in the United States or its possessions.
A nonprofit volunteer fire company.
A civil defense organization created under federal, state, or local law (this includes unreimbursed expenses of civil defense volunteers that are directly connected with and solely attributable to their volunteer services).
A domestic fraternal society, operating under the lodge system, but only if the contribution is to be used exclusively for charitable purposes.
A nonprofit cemetery company if the funds are irrevocably dedicated to the perpetual care of the cemetery as a whole and not a particular lot or mausoleum crypt.
Some contributions may lead to only a partial credit. For particular donations, a taxpayer will only receive a portion of a credit. For example, if you purchase a shirt that is a part of a charitable cause, the entire price of the shirt is not deductible. The fair market value must be determined and subtracted from the cost of your purchase in order to determine the amount of your donation.
When determining how much of a charitable donation you would like to make, it is important to know there is a limit on all donations you make throughout the tax year. Total charitable contributions are generally limited to no more than 50% of your adjusted gross income.
If you need tax help, contact us for a free consultation.
Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for a free consultation.
Being self-employed comes with a lot of benefits like being your own boss and making your own hours. Although there are a lot of perks to being self-employed, there are also a lot of additional responsibilities you will have to take on that most W-2 employees don’t have to deal with. For instance, you are responsible for keeping track of all your expenses you incur throughout the tax year, tracking your mileage and maintenance associated with your work vehicle, and ensuring that you are making estimated tax payments throughout the year to avoid owing when filing your taxes.
If you are self-employed or have worked on a contract basis where no taxes were withheld from your pay, it is extremely important to understand the difference between a 1099-MISC versus a 1099-K when filing your taxes.
1099-MISC
This form is issued to independent contractors or those that are self-employed who have been paid $600 or more. If you were paid under $600, this may not trigger a 1099-MISC to be generated, however, you are still responsible for reporting all tax income that you have received throughout the tax year. It is also required to report all self-employment income if your net earnings are $400 or more.
When a taxpayer receives their 1099-MISC form, they can also claim deductions against their income that should be listed on their schedule C. Adding any work expenses as deductions can help reduce a possible balance you may owe at the end of the tax year.
1099-K
A 1099-K, also known as a Payment Card or Third Party Network Transactions, is used by credit card companies and third-party processors like Paypal and Amazon to report payment transactions they process for retailers or other third parties. You’ll typically receive a 1099-K if you have accepted credit cards or third-party processors and also had more than $20,000 in sales as well as over 200 individual transactions through a third-party processor.
If you need tax help, contact us for a free consultation.
Optima Tax Relief provides assistance to individuals struggling with unmanageable IRS tax burdens. To assess your tax situation and determine if you qualify for tax relief, contact us for afree consultation.
Taxpayers can expect to see an increase in identity and tax theft during tax season.
Scammers most commonly reach out to taxpayers by calling them or leaving an automated message.
The IRS will never leave threatening voicemails about your tax account and will typically send notices via ground mail to notify you of any discrepancies they may have found.
During tax season, tax filers can expect to see an increase in fraudulent activity from scammers looking to make money quick. As a taxpayer, you must be vigilant of any criminal activity that may be occurring and always be sure to protect your sensitive information.
The IRS will never email, call, or reach out to you via social media although, quite a few people have reported receiving supposed messages from someone claiming to be from the IRS via one of the platforms mentioned above every year.
The most common way a scammer will attempt to reach out to a taxpayer is by phone call. Most people who see that an unknown caller is calling them will ignore the call and go about their daily routine only to check their phone later and see that they have received an automated message that is supposedly coming from the IRS.
These messages will typically tell you that they’re from the IRS and that they’re calling you regarding a time sensitive and urgent matter regarding a large sum of money you owe. These messages may even sometimes claim that you will get sued or arrested if you don’t respond immediately.
Some people may even encounter speaking to someone that is impersonating an IRS agent. These scammers will threaten to take action against you if you do not send them the tax balance you supposedly owe right away and sometimes will ask that the payment be made using random forms of payments such as placing the money on gift cards. The impersonator may even ask for personal information like your social security number or banking information over the phone.
The IRS will never leave you threatening voicemails about any possible tax balance or fraud regarding your account and will never ask for you to provide personal information or payments over the phone. If the IRS is attempting to get in contact with you, they will send you a notice via ground mail letting you know if there are any discrepancies on your tax return and will allow you time to respond accordingly.
Taxpayers should never return a phone call that they receive from someone claiming to be from the IRS and should instead contact the IRS directly to address any concerns they may have. Individuals can reach out to the IRS directly at 800-829-1040 and business owners can call them at 800-829-4933.
It is important to reiterate that the IRS will never discuss your personal tax issues through unsolicited emails, texts, or social media. Always be cautious of any phone calls you receive from someone claiming to be from the IRS who tells you that you owe money.
If you receive an unexpected and suspicious email from the IRS, forward it to phishing@irs.gov.
If you need tax help, contact us for a free consultation.
