Kiddie Tax Basics
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 tax applies to individuals who are under 18 and full-time students under 24. Only unearned income is subject to kiddie [...]
How to Prepare for Tax Season
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 of household, married filing jointly, married filing separately, and qualifying widow/widower with a dependent child. The status you choose will [...]
Alternative Minimum Tax
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 AMT is Calculated You must calculate tax liability twice. Once under the ordinary income tax and once under alternative minimum [...]
What to do if You Get a Letter From the IRS
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 Ignore the Letter The worst thing you can do is ignore the letter, it will not make things go away. [...]
10 Ways to Identify IRS Scams
10 Ways to Identify IRS Scams There are many IRS scams that are out there. Learning red flags can help you spot scams and avoid them. In this article, we will go over 10 ways to identify IRS scams. 1. They’re Calling You First First contact from the IRS will always be through the mail. They will never initiate contact with a phone call. If you are getting calls from people claiming to be [...]
Business Tax Classifications
Business Tax Classifications There are several different types of business tax classifications that you can choose from with the IRS. Which one you decide to implement will have a large effect on your taxes, so it is important that you understand how they all work. In this article, we will go over the four business classifications. These include sole proprietorship, partnership, S corporation, and C corporation. Sole Proprietorship A sole proprietorship is owned and [...]