Q: Do I have a choice to file a tax return?

A: Maybe

However the choice is usually not an option.

If you are a U.S. citizen you must file a return if your gross income for the year was at least the combined amount of your filing status standard deduction and your filing status personal exemption(s); for a married couple under 65 that figure would be $20,700 and for a single taxpayer under 65, $10,350.00. Self-employed individuals have to file a tax return if their net earnings from self-employment exceed $400. Other rules apply when it comes to income earned or unearned regarding dependent children.

Gross income

Generally, income is taxable unless it is specifically exempt (not taxed) by law. Your taxable income may include compensation for services, interest, dividends, rents, royalties, income from partnerships, estate or trust income, gain from sales or exchanges of property, and business income of all kinds. GrossRead More

Solvent or Insolvent? That’s the Solution For Debt Forgiveness

Solvent: the liquid in which a solute is dissolved to form a solution. No, that doesn’t sound right.

Solvent: having assets in excess of liabilities; able to pay one’s debts. We are getting closer.

Solution: a liquid mixture in which the minor component is uniformly distributed within the major component (the solvent). Nope, now we are getting colder.

Solution: a means of solving a problem or dealing with a difficult situation. Good, getting warmer.

Insolvent: A taxpayer is insolvent when his or her total liabilities exceed his or her total assets. Perfect! That’s what we are talking about.

Insolvency could be the solution for debt forgiveness

If a debt is forgiven or discharged for less than the full amount owed, the debt is considered canceled in the amount that you do not have to pay. Cancellation of a debt may occur if the creditor cannot collect, or gives up on collecting, theRead More

Unfazed By Your Six Figure Tax Bill?

Phase Out

“How would you feel if you had a six-figure tax bill?” a question posed at a meeting of tax professionals recently. Many in attendance responded with an overall negative point-of-view that is until the point was made that you’d need to have a high income to rack-up six-figures in taxes owed. Then the responses changed, “Well sure, I’d love to have the level of income required for me to have to pay six-figures in tax.”

What exactly is the amount of income required to have a six-figure tax bill? In the simplest terms, for a married couple, if their taxable income is approximately $378,000, their tax bill should be slightly over $100,000. But this is the US Tax Code we are talking about, so $378K isn’t exactly the answer; because of phase outs. @HeinkelTaxLaw

What is an IRS ‘Phase Out’

For the purposes of this post, anRead More

Credit Card To Pay Taxes? Be Careful.

Some choices don’t apply to everything. You typically hear “paper or plastic” at the grocery store, “debit or credit” at most every store, and as with nearly every outlay of funds you have the choice of “cash or credit” when paying taxes. Using a credit card to pay your tax liability is an attractive option if you are also able to pay your card balance in full every month, and avoid accruing interest. It is likewise a good option for those that use cards offering points or other rewards. If you play it just right, you might be able to pay off Uncle Sam and while getting a refund from your credit card company.

You might be able to pay off Uncle Sam while getting a refund from your credit card.

A word of caution though, if you use a card with a low or zero rateRead More

Putting Your Education To Work In More Than One Way

Education Credits: Attending college and obtaining a degree opens employment doors to you that can put you on a path to success. Starting incomes are typically higher for college graduates than for those who opted not to attend a college or university. But, the cost of higher education can be a real deterrent for many, and so the decision might be made to forego college. For those that take the plunge though, their education eventually pays off with a rewarding career, and can even be a tax benefit.

Education credits are one way you can put your education to work for you.

Education credits are one way you can put your education to work for you. There are a few options and ways to claim this credit, such as:

  • The American Opportunity Tax Credit is a credit used by those that pay for qualifying education expenses during the taxRead More