Standard Deduction vs. Itemized Deductions A deduction is something the IRS offers to help maximize your refund or reduce your liability. It is an amount you can subtract from your Adjusted Gross Income to reduce the overall income subject to taxation. There are two types of deductions, the standard deduction and itemized deductions. In [...]
Above-the-Line Deductions There are both itemized and above-the-line deductions. They will affect your Adjusted Gross Income in different ways. In this article, we will go over the basics of above-the-line deductions. Adjusted Gross Income Before you can understand above-the-line deductions, you must understand Adjusted Gross Income. Your AGI includes your combined income from wages, [...]
Home Office Deduction The home office deduction is available to small business owners who regularly and exclusively use a portion of their home for business related activities. This deduction is taken if you file a Schedule C. In this article, we will go over the basics of the home office deduction. The Basics You [...]
Understanding Form 1120-S Form 1120-S is the name of the tax return for S-Corporations. It calculates the business’ taxable income and liability, which is passed on to shareholders to report on their personal tax returns. In this article, we will go over some basic information about Form 1120-S. Required Information First, you will need [...]
Form 1065-Partnership Tax Return A Form 1065 allows a partnership to report their financial activities to the IRS. This would include profits, losses, deductions, and credits. Partnerships do not pay income tax with this return. Rather they pass the profits or losses on to the partners to report to their individual tax returns. Partnerships [...]
Schedule K-1 Basics A Schedule K-1 is an IRS form that reports your share of an income or loss from a pass-through entity. It prevents double taxation by avoiding taxes at the entity level and shifting the liability to the owners/beneficiaries who will report income or loss on their personal tax return. In this [...]
Kiddie Tax Basics The kiddie tax was introduced by The Tax Reform Act of 1986. It was set up to prevent parents from transferring wealth into their children’s names for the sake of reducing tax liability. In this article, we will go over the basics of how the kiddie tax works. The Basics Kiddie [...]
How to Prepare for Tax Season Want tax season to go by smoothly this year? Then you should start preparing now. In this article, we will go over 5 steps that will help you to prepare for tax season. 1. Understand Your Filing Status There are five potential filing statuses. These include single, head [...]
Alternative Minimum Tax Alternative minimum tax ensures that those with high income by ensuring they pay at least a minimum amount of tax. It prevents high net worth tax payers from over utilizing certain tax benefits to greatly limit their tax liability. In this article, we will go over the alternative minimum tax. How [...]
What to do if You Get a Letter From the IRS Everyone’s worst fear is getting correspondence from the IRS. It sends most people into emergency mode, but it does not have to. In this article, we will go over what to do if you get a letter from the IRS. 1. Do Not [...]
