When is tax due on Series EE savings bonds?

| Tax Briefs

You may have Series EE savings bonds that were bought many years ago. Perhaps you store them in a file cabinet or safe deposit box and rarely think about them. You may wonder how the interest you earn on EE bonds is taxed. And if they reach final maturity, you may need to take action to ensure there’s no loss of interest or unanticipated tax consequences.   Interest deferral   Series EE Bonds dated May 2005 and after earn a fixed rate of interest. Bonds purchased between May 1997 and April Read more [...]

Understanding and controlling the unemployment tax costs of your business

| Business Briefs, Tax Briefs

As an employer, you must pay federal unemployment (FUTA) tax on amounts up to $7,000 paid to each employee as wages during the calendar year. The rate of tax imposed is 6% but can be reduced by a credit (described below). Most employers end up paying an effective FUTA tax rate of 0.6%. An employer taxed at a 6% rate would pay FUTA tax of $420 for each employee who earned at least $7,000 per year, while an employer taxed at 0.6% pays $42. Tax credit Unlike FICA taxes, only employers — and Read more [...]

Uncle Sam may provide relief from college costs on your tax return

| Tax Briefs

We all know the cost of college is expensive. The latest figures from the College Board show that the average annual cost of tuition and fees was $10,230 for in-state students at public four-year universities — and $35,830 for students at private not-for-profit four-year institutions. These amounts don’t include room and board, books, supplies, transportation and other expenses that a student may incur. Two tax credits Fortunately, the federal government offers two sizable tax credits for Read more [...]

2019 Q4 tax calendar: Key deadlines for businesses and other employers

| Tax Briefs

Here are some of the key tax-related deadlines affecting businesses and other employers during the fourth quarter of 2019. October 15 If a calendar-year C corporation that filed an automatic six-month extension: File a 2018 income tax return (Form 1120) and pay any tax, interest and penalties due. Make contributions for 2018 to certain employer-sponsored retirement plans. October 31 Report income tax withholding and FICA taxes for third quarter 2019 (Form 941) and pay any tax Read more [...]

Expenses that teachers can and can’t deduct on their tax returns

| Tax Briefs

As teachers head back for a new school year, they often pay for various expenses for which they don’t receive reimbursement. Fortunately, they may be able to deduct them on their tax returns. However, there are limits on this special deduction, and some expenses can’t be written off. For 2019, qualifying educators can deduct some of their unreimbursed out-of-pocket classroom costs under the educator expense deduction. This is an “above-the-line” deduction, which means you don’t have Read more [...]

The next estimated tax deadline is September 16: Do you have to make a payment?

| Tax Briefs

If you’re self-employed and don’t have withholding from paychecks, you probably have to make estimated tax payments. These payments must be sent to the IRS on a quarterly basis. The third 2019 estimated tax payment deadline for individuals is Monday, September 16. Even if you do have some withholding from paychecks or payments you receive, you may still have to make estimated payments if you receive other types of income such as Social Security, prizes, rent, interest, and dividends. Pay-as-you-go Read more [...]

What to do if your business receives a “no-match” letter

| Tax Briefs

In the past few months, many businesses and employers nationwide have received “no-match” letters from the Social Security Administration (SSA). The purpose of these letters is to alert employers if there’s a discrepancy between the agency’s files and data reported on W-2 forms, which are given to employees and filed with the IRS. Specifically, they point out that an employee’s name and Social Security number (SSN) don’t match the government’s records. According to the SSA, the purpose Read more [...]

The tax implications of being a winner

| Tax Briefs

If you’re lucky enough to be a winner at gambling or the lottery, congratulations! After you celebrate, be ready to deal with the tax consequences of your good fortune.   Winning at gambling   Whether you win at the casino, a bingo hall, or elsewhere, you must report 100% of your winnings as taxable income. They’re reported on the “Other income” line on Schedule 1 of your 1040 tax return. To measure your winnings on a particular wager, use the net gain. For example, if a $30 bet at Read more [...]

The “kiddie tax” hurts families more than ever

| Tax Briefs

Years ago, Congress enacted the “kiddie tax” rules to prevent parents and grandparents in high tax brackets from shifting income (especially from investments) to children in lower tax brackets. And while the tax caused some families pain in the past, it has gotten worse today. That’s because the Tax Cuts and Jobs Act (TCJA) made changes to the kiddie tax by revising the tax rate structure.   History of the tax   The kiddie tax used to apply only to children under age 14 — which provided Read more [...]