Category: Blog

Individual Shared Responsibility Provision and Income Tax Return: An Overview

The Individual Shared Responsibility Provision is an individual mandate designed with an aim to improve the quality and affordability of health insurance coverage in the US. One of the many Affordable Care Act tax provisions,  requires individuals to have a certain amount of health care coverage or minimum essential coverage (barring few exemptions), when filing the annual federal income tax return. People who do not have a minimum essential coverage or who do not qualify for the coverage exemption are required to pay a fine in the name of the individual shared responsibility payment. In this blog post, we take

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A Brief Guide to Choosing the Right Tax Form

Almost every American with a certain amount of salary is required to fill one of the many IRS tax forms to report their income, expenses, and other financial data. Therefore, learning about some of the most commonly used tax forms can help you choose the correct tax form from the ocean of options available and claim the tax deductions, tax credits, and other financial benefits available to you. Let’s take a look E-filing the Return Though many people prefer filing returns through paper forms, doing it online is one of the easiest ways to file a complete and an error-free

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5 Reasons to File Tax Return, No Matter the Income

Not everyone files a tax return, nor they are required to do so. Filing a tax return, however, has its perks, even if you are not required to based on your income. Filing a return may qualify you to receive certain credits such as additional child tax credit, first-time homebuyer credit, and other benefits, which you will otherwise miss out on. Through this brief post, we’ll look at five reasons you should file your tax return. 1. Tax Paid or Withheld There are various situations when you should file a tax return and claim a refund. Firstly, you paid an

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Stay Alert : 4 Common Tax Scams

The US government has lost almost $3 trillion to tax evasion, during the last decade alone. This is a serious and persistent issue that results in accumulated national debt and budget deficits. To make up for the losses, US taxpayers are required to pay extra tax dollars out of their pocket every year. A study by Demos.org shows that in 2010, on an average, every taxpayer, paid an extra $2,200 to offset the losses attributable to tax scams. These losses occurred not only due to tax evasion, but also due to the ill-tactics of tax planning agencies that resorted to

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A Brief Guide to Taxable and Nontaxable Incomes: Part 2 of 2

In the first of our two-part series we discussed the various types of taxable income. To take the conversation further, we will explore some of the most common nontaxable income types. It is  important to remember that all income is taxable, unless the law categorically specifies it as an exception. Let’s take a look at what  income types qualify for exemption. Nontaxable Income Types S Corporation Income An S Corporation is a closely held entity that is exempt from income tax deductions. The income or losses that S Corporations get are passed on to the shareholders, who in turn report

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A Brief Guide to Taxable and Nontaxable Incomes: Part 1 of 2

Taxpayers often cite a lack of awareness as the main reason for not paying taxes. When the time arrives, many taxpayers find themselves at a loss about their taxable incomes. While it’s best to leave it to the courts to decide whether the person claiming negligence is telling the truth or not, our focus should be on avoiding being under the radar. Therefore, in this two-part series, “What’s Your Income Type – Taxable or Nontaxable?”, we will cover some of the most common taxable and nontaxable income types. Let’s take a look. Taxable Income Types Employee Compensation Everything that you

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All You Need to Know About Earned Income Tax Credit

Each year, working people with low and moderate income receive a federal tax credit known as Earned Income Tax Credit, (EITC) which helps them reduce their tax liability and improve their standard of living. In the U.S. there are also currently 26 states, plus the District of Columbia, that offer EITC to families as a way to supplement the federal EITC credit. The EITC’s main objectives are to: Encourage employment Augment low wages Alleviate poverty Eligibility Criteria for EITC To be eligible for EITC, you must meet the following requirements: If you and your spouse are married, you must file

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IRS Fresh Start Program: 4 Pillars of Hope for Struggling Taxpayers

IRS fresh start program for Struggling Taxpayers

Taxpayers who are unable to clear their tax liabilities live under a constant fear of the IRS finding out about the non-payment. The IRS, in general, has 10 years to collect unpaid taxes, and therefore, the risk of being caught does not go away if the people lay low. It is, therefore, advisable for taxpayers to address all tax liabilities as quickly as possible. If they struggle to pay what they owe, the IRS Fresh Start Program is there to make it easier for them to pay taxes and avoid liens. Let’s explore the four major components of the Fresh

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Tax Evasion vs. Negligence: Know the Differences to Keep Troubles at Bay

Know differences between tax evasion and tax negligence

Lying to the IRS about tax returns is an offense punishable with both civil and criminal penalties. Civil penalties would mean hundreds and thousands of dollars fine, whereas criminal penalties may mean spending anywhere between 5 to 20 years in prison. Although evading taxes is a crime, any negligence in filing taxes is considered a mistake. The core distinguishing factor between tax evasion and negligence is the intent of the tax-payer. Taking this discussion further, let’s learn how the IRS differentiates US taxpayers based on their “intent”. Cause of Non-payment Evasion Tax evasion implies a deliberate act of misrepresenting taxable

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Falsely Padding Deductions: A Prime on IRS’ “Dirty Dozen” List of Scams

Say No to falsely padding deductions

The Internal Revenue Service (IRS), in many cases, does not have the resources to verify every deduction reported on the tax returns it receives from taxpayers. Many taxpayers take it as an opportunity to falsely inflate deductions or expenses on their returns. As a result, they underpay what they owe to the government and receive larger refunds. Every year, a number of taxpayers fail to resist the temptation of fudging their income-related information, which explains the inclusion of falsely padding deductions in the IRS’ Annual “Dirty Dozen” List of Tax Scams. Let’s take a closer look at the situations that

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