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Category: Individual Tax Tips

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Are You Allowed to Contribute to a Roth IRA?

Confused about whether you can contribute to a Roth IRA? The IRS suggests checking these simple rules: 1. Income To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses). As of 2020, your modified adjusted gross income must be less than: $196,000 — Married Filing Jointly. $10,000 —…
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There’s Still Time For Your IRA

If you haven’t contributed funds to an Individual Retirement Arrangement (IRA) for last tax year, or if you’ve put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April 15 due date for filing your tax return for last…
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What Is a Coverdell Savings Account?

A Coverdell Education Savings Account (ESA) is a savings account created as an incentive to help parents and students save for education expenses. The total contributions for the beneficiary (who is under age 18 or is a special needs beneficiary) of this account in any year cannot be more than $2,000, no matter how many…
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How Much Can Educators Deduct?

If you are an educator, you may be able to deduct up to $250 of expenses you paid for purchases of books and classroom supplies, even if you don’t itemize your deductions, according to the IRS. These out-of-pocket expenses may lower your current year tax bill. The Working Families Tax Relief Act of 2004 reinstated…
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You Might Save Money By Itemizing

Whether to itemize deductions on your tax return depends on how much you spent on certain expenses last year. According to the IRS, money paid for medical care, mortgage interest, taxes, contributions, casualty losses, and miscellaneous deductions can reduce your taxes. If the total amount spent on those categories is more than the standard deduction,…
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Don’t Forget About the Earned Income Tax Credit

Millions of Americans forgo critical tax relief each year by failing to claim the Earned Income Tax Credit (EITC), a federal tax credit for individuals who work but do not earn high incomes. Taxpayers who qualify and claim the credit could pay less federal tax, pay no tax or even get a tax refund. In…
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Tips Are Taxable Income

Do you work at a hair salon, barber shop, casino, golf course, hotel or restaurant or drive a taxicab? The tip income you receive as an employee from those services is taxable income, advises the IRS. As taxable income, these tips are subject to federal income, Social Security and Medicare taxes, and may be subject…
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Blue pen sitting on top of 1040 tax form

10 Tips For Tax Preparation

Looking for ways to avoid the last-minute rush for doing your taxes? These tips can help: 1. Don’t Procrastinate Resist the temptation to put off your taxes until the last minute. Your haste to meet the filing deadline may cause you to overlook potential sources of tax savings and will likely increase your risk of…
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A Name Change Could Affect Your Tax Return

Newlyweds and the recently divorced should make sure that names on their tax returns match those registered with the Social Security Administration (SSA). A mismatch between a name on the tax return and a Social Security number (SSN) could unexpectedly increase a tax bill or reduce the size of any refund. For newlyweds, the tax…
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What You Can Deduct On Your Taxes

Did you know that you may be able to deduct certain taxes on your federal income tax return? The IRS says you can if you file Form 1040 and itemize deductions on Schedule A. Deductions decrease the amount of income subject to taxation. There are four types of deductible non-business taxes: State and local income…
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