Articles Index
Wage and Salary Income
Persons working as employees receive compensation in the form of wages, salary, and/or tips. Compensation for an employee's labor is taxed partly to the employee and partly to the employer. There are at least four federal taxes imposed on wage and salary income, plus any state and local taxes.
Foreign Financial Assets
American taxpayers may need to report any investments and financial assets held outside the United States to the Internal Revenue Service using Form 8938, Statement of Specified Foreign Financial Assets. This reporting requirement is part of the larger Foreign Account Tax Compliance Act (FATCA). Taxpayers with more than $50,000 of foreign assets may need to disclose their holdings to the IRS.
Roth IRA Conversions
If you have been saving for retirement in a traditional IRA, you are eligible to convert some or all of your traditional IRA funds into a Roth IRA. Beginning in the year 2010, all restrictions on converting to a Roth IRA have been removed. Prior to 2010, individuals were not allowed to convert to a Roth IRA if their income exceeded 100,000. Is converting to a Roth a good idea? That depends on several factors.
Rental Income and Expenses
Mastering the IRS Form 1040 Schedule E is easy once you organize your income and expenses. Benefit from the generous tax rules regarding rental income with handy tax tips from the About.com Guide to Tax Planning.
Self-Employment Tax
The self-employment tax is an extra tax that self-employed business owners, independent contractors and other freelancer professionals pay in addition to the income tax. The self-employment tax covers the Social Security and Medicare taxes and is similar to the FICA tax paid by employees. Tips to help you plan and calculate your self-employment tax on Schedule SE.
Reduced Social Security Withholding for 2011 and 2012
Workers will see less taxes deducted from their paychecks for Social Security. For the years 2011 and 2012, Congress has legislated a temporary payroll tax holiday designed to put more money into the hands of American workers.
Social Security Taxes
An overview of Social Security taxes in America.
Wash Sale Rule
A wash sale is selling an investment at a loss and repurchasing the same (or very similar) investment within a short period of time (30 days before to 30 days after selling at a loss). Wash sales result in a deferral of the loss for tax reporting purposes. Wash sales can be avoided through careful investment planning.
Reporting Capital Gains and Losses on Schedule D and Form 8949
Starting in 2011, American taxpayers will use new Form 8949 along with Schedule D to report income from the sale of stock, bonds, mutual funds and other investments. Form 8949 will detail various transactions, with summary totals transferred to Schedule D.
Capital Gains Tax
A capital gain is the difference between what you paid for an investment and what you received when you sold that investment. If you made a profit on the investment, then you have a capital gain. If you lost money on the investment, then you have a capital loss. Covers record-keeping, calculating capital gains and cost basis.
Claiming Dependents
These rules enable you claim a person as a dependent on your tax return. A dependent means that the person relies on you for their support. A person can be either independent (supporting themselves) or the dependent of at most one taxpayer. If more than one taxpayer attempts to claim the same person as a dependent, each taxpayer will be audited to determine who is legally entitled to claim the dependent.
Personal Exemptions
Taxpayers are entitled to claim one personal exemption for themselves and each dependent.
Alternative Minimum Tax
The alternative minimum tax, or AMT, is a second tax system parallel to the regular income tax. The alternative minimum tax adjusts or eliminates certain tax deductions or credits. Your tax may be higher under the alternative minimum tax rules if your income is over the AMT exemption amount.
Report of Foreign Bank and Financial Accounts
You may need to fill out Treasury Department Form 90-22.1 every year if you own, or have an interest in, any foreign bank accounts or other types of financial accounts based outside the United States.
Foreign Earned Income Exclusion
Americans working abroad can exclude up to $95,100 per year from their US taxable income. Find out about the foreign earned income exclusion (IRS Form 2555), along with helpful tips for preparing an expatriate tax return.
American Jobs Act
President Obama has submitted to Congress several proposals for changing American tax laws. Proposals include a new payroll tax holiday for workers and businesses, new and expanded tax credit for hiring and increasing salaries, as well as limiting the value of tax deductions.
Incentive Stock Options
Incentive stock options enjoy favorable tax treatment compared to other forms of employee compensation. Income from incentive stock options is taxable for federal income tax (including the alternative minimum tax), but are not taxable for Social Security and Medicare taxes. Upon meeting all the criteria for a qualifying sale, income from incentive stock options qualify for the preferred long-term capital gains tax rate.
Understanding Form W-2, Wage and Tax Statement
You will need to report all wages you earned from your job or jobs during the year. Your employers are required to provide you with Form W-2, Wage and Tax Statement. Form W-2 must be mailed out or hand-delivered to you no later than January 31st.
10 States Allow Same-Sex Couples to File Joint Returns
Eleven states and the District of Columbia allow same-sex couples to file their tax returns jointly. See if your state is on the list of states that allow gay couples to file joint tax returns.
Married Gay and Lesbian Couples Can File as Married in New York State
New York's Marriage Equality Act, which took effect starting July 24, 2011, provides that all married couples will be treated equally under state law, without regard to the gender of the spouses. For state tax purposes, same-sex couples in NY will file as married, even though they must file as unmarried for federal taxes.
Taxes and Freelancing
Tax tips and strategies for freelancers, independent contractors, and self-employed people. There are special circumstances that apply to freelance writers and other independent professions, so I will highlight what you need to know to prepare your taxes and to avoid IRS investigations.
Federal Tax Liens
The IRS often files tax liens when an outstanding federal tax has not yet been paid in full. Taxpayers who owe the IRS can protect themselves and their credit by taking steps to prevent a federal tax lien from being filed. After a tax lien has been filed, it may be possible to get the lien withdrawn or released.
State Tax Amnesty Programs in 2011
A list of states offering tax amnesty in 2011. See if your state will hold a tax amnesty program.
Michigan Tax Amnesty Slated for 2011
Michigan's governor has approved a tax amnesty program for 2011. Eligible taxpayers who apply for Michigan tax amnesty will have all civil and criminal penalties waived. See if you qualify for Michigan tax amnesty.
Self-Employment Income
Self-employed persons incur three federal taxes on their earnings: federal income tax, Social Security tax, and Medicare tax. These taxes are imposed on net self-employed income, after various work-related expenses have been subtracted. State and city taxes, and various local business taxes may also apply.