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Under the Foreign Account Tax Compliance Act (FACTA), US taxpayers holding financial assets outside the US must report those assets to the IRS using Form 8938, Statement of Specified Foreign Assets, if you meet the following criteria: You are required to file Form 1040 and, For unmarried or married taxpayers filing separate returns who live…
Read MoreYou might get a special error notice if your tax filings include one or more of the forms below: Form 1099-B, Proceeds from Broker and Barter Exchange Transactions Form 1099-DIV, Dividends and Distributions Form 1099-G, Certain Government Payments Form 1099-INT, Interest Income Form 1099-K, Payment Card and Third-Party Network Transactions Form 1099-MISC, Miscellaneous Income Form…
Read MoreIn general, a hobby is an activity that a person pursues because they enjoy it and with no intention of making a profit. People operate a business with the intention of making a profit. Many people engage in hobby activities that turn into a source of income—it can be confusing to determine if that hobby…
Read MoreFiling the Final Tax Return
As a survivor, executor, or administrator of an estate, you are obligated to file an income tax return reporting all the deceased’s income up to his or her date of death. You will need to be aware of all the credits and deductions the deceased is allowed as if that person had been alive to…
IRS Updates Recovery Rebate Credit FAQ
The IRS has updated its Recovery Rebate Credit FAQ, which is organized into eight categories. The full document is available online, but you can find some of the updates below. How does the 2021 Recovery Rebate Credit differ from the 2020 Recovery Rebate Credit? 2020 Recovery Rebate Credit The first two rounds of Economic Impact Payments were…
Income Tax Credit for Residential Solar Devices
Arizona Department of Revenue (ADOR) is reminding homeowners who installed a solar energy device in their residential home during 2021 to submit Form 310, Credit for Solar Energy Devices with their individual income tax return and Form 301, Nonrefundable Individual Tax Credits and Recapture. ADOR defines a solar energy device as a system or series of mechanisms which…
Intro to the Accounts Payable Process
The term “accounts payable” encompasses almost all the non-payroll payments a business makes. It’s an integral part of your company’s financial statements. If you fail to track billing properly, the ramifications can be costly; compromised vendor relationships can lead to production and supply problems, creating cascading problems. It’s important to get it right. The accounts…
Cryptocurrency Basics
Cryptocurrency has been in the news a lot lately as it continues to gain traction as an alternative currency. Many are considering whether this is the time to invest in or start using cryptocurrency. After all, the IRS has taken notice and has instituted measures to ensure income from cryptocurrency is accurately reported. Important terminology…
Should I Itemize My Deductions?
When filing your individual income tax returns, you are allowed to deduct certain expenses from your taxable income, thus reducing the amount of income tax you must pay. There are two ways you can take deductions on your federal tax return: you can deduct a defined amount, the standard deduction, or you can list specific…
Small Business Owners May Qualify to Deduct Their Home Office Expenses
If you own a small business and “exclusively and regularly” use part of your home as your primary place of doing business, you may be able to deduct some of the expenses of operating your home office on your federal income tax return. Unfortunately, employees are not eligible to claim the home office deduction to the…
Can You Claim the Credit for Other Dependents?
If you’re taking care of adult children, relatives or parents, you know that this can create an additional financial strain. To ease it, the IRS offers a credit for dependents who are too old to qualify for the child tax credit. You may qualify for a $500 credit for each dependent who meets these criteria:…
Credits vs. Deductions: What’s the Difference?
Tax deductions and tax credits can both help you, but that doesn’t mean they’re the same thing. Knowing how they work can help you understand your tax situation. Tax credits are subtracted from your final tax liability, dollar for dollar, after it is calculated. A tax credit valued at $1,000, for example, lowers your tax…