Age Rules. Taxpayers must be under age 70½ at the end of the tax year to contribute to a traditional IRA. There is no age limit to contribute to a Roth IRA.
Compensation Rules. A taxpayer must have taxable compensation to contribute to an IRA. This includes income from wages and salaries and net self-employment income. It also includes tips, commissions, bonuses and alimony. If a taxpayer is married and files a joint tax return, only one spouse needs to have compensation in most cases.
Do you have other questions you have about lowering your taxes with IRAs? Call me at (734) 332-9949.
Taxes and Unemployment Benefits
Unemployment is Taxable. It includes all unemployment compensation as income for the year. Taxpayers should have received a Form 1099-G, Certain Government Payments, by Jan. 31. This form shows the amount received and the amount of any federal income tax withheld.
Tax May be Withheld. Those who receive unemployment can choose to have federal income tax withheld by using Form W-4V, Voluntary Withholding Request. Those choosing not to have tax withheld may need to make estimated tax payments during the year.
Taxpayers facing financial difficulties should visit the IRS.gov page: “What Ifs” for Struggling Taxpayers. This page explains the tax effect of various life events such as job loss. For those who owe federal taxes and can’t pay, the Payments tab on IRS.gov provides some options. In many cases, the IRS can take steps to help ease financial burden.
Beginning in 2017, taxpayers using a software product for the first time may need their Adjusted Gross Income (AGI) amount from their prior-year tax return to verify their identity. Taxpayers can learn more about how to verify their identity and electronically sign tax returns at Validating Your Electronically Filed Tax Return.
Here are important things to remember:
1. Self-employed taxpayers generally need to make quarterly estimated tax payments.
2. Self-employed taxpayers must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, with their Form 1040.
3. For those making a profit, self-employment and income taxes need to be paid. Self-employment tax includes Social Security and Medicare taxes.
4. Taxpayers can deduct expenses paid to run a business that are both ordinary and necessary.
5. Taxpayers can deduct expenses in the year paid or incurred. Some costs must be ‘capitalized.’
Questions? Call (734) 332-9949
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In filing your tax returns, you need to have your drivers license available. Your drivers license number needs to be imputed on my computer to e-file your return, this is required to help prevent identity theft.
State of Michigan : If an individual income tax return has been selected for identity confirmation, the taxpayer will receive a letter from the State of Michigan Treasury.
The 2016 Standard Mileage Rate for Businesses is 54 cents per mile.
Charity Mileage Rate is 19 cents per mile.
If you have any questions please call me at 734-332-9949
Self-employment tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves.
It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.
You figure self-employment tax (SE tax) yourself using Schedule SE (Form 1040). Social Security and Medicare taxes of most wage earners are figured by their employers.
Also you can deduct the employer-equivalent portion of your SE tax in figuring your adjusted gross income. Wage earners cannot deduct Social Security and Medicare taxes.
Call me for help at 734.332.9949. Here are tips for you:
If you missed the April 15 tax filing deadline, don’t panic. Here’s some advice from the IRS.
File as soon as you can. If you owe taxes, you should file and pay as soon as you can. This will help minimize the interest and penalty charges. There is no penalty for filing a late return if you are due a refund.
Pay as much as you can. If you owe tax but can’t pay it all at once, try to pay as much as you can when you file your tax return. Pay the remaining balance as soon as possible to stop further penalties and interest.
I can help you make payment. If you need more time to pay your taxes, I can help you apply for a payment plan with the IRS.
A refund may be waiting. If you’re due a refund, we should file your return as soon as possible to get it. Even if you are not required to file, you may still get a refund. This could apply if you had taxes withheld from your wages or you qualify for certain tax credits. If you don’t file your return within three years, you could forfeit your right to the refund.
For more information, call me for at 734.332.9949.
IRS Tax Tip 2014-58, April 18, 2014