401(k) plans are a popular retirement savings vehicle that offer tax benefits. Contributions are made on a pre-tax basis, reducing your current taxable income. However, when you withdraw funds from your 401(k), they are typically taxed as ordinary income. Understanding the tax implications of 401(k) distributions is crucial to avoid unexpected tax liabilities. When to … Read more
When it comes to managing your finances, keeping track of your checks is essential. But what about voided checks? Are they worth keeping, or should you shred them? What is a voided check? A voided check is a check that has been canceled before it was cashed. This can happen for a variety of reasons, … Read more
The Internal Revenue Service (IRS) has specific guidelines for determining who is required to file a tax return, regardless of whether they owe taxes or not. Understanding these requirements is crucial to avoid penalties and ensure compliance with tax laws. General Filing Requirements In general, individuals are required to file a tax return if their … Read more
The federal government has the authority to seize funds from your savings account to satisfy unpaid tax obligations. This action is known as a bank levy. The Internal Revenue Service (IRS) can issue a levy without obtaining a court order if you have not paid your taxes after receiving a notice and demand for payment. … Read more
Understanding IRS Audits An IRS audit involves a review of your tax return by the Internal Revenue Service (IRS) to verify its accuracy and compliance with tax laws. If the IRS identifies any discrepancies or errors, it may propose adjustments to your tax liability. Consequences of Failing an Audit If you fail an audit, it … Read more
Understanding IRS Audits An IRS audit is a review of your tax return to verify its accuracy and compliance with tax laws. The IRS may initiate an audit for various reasons, including discrepancies or errors identified during the initial processing of your return. Impact of Receiving a Refund Receiving a tax refund does not guarantee … Read more
Impact of Adding a Second W-2 on Refund Entering a second W-2 into your tax return can result in a decrease in your refund amount. This is because adding a second W-2 typically increases your total income, which can lead to higher taxes and a lower refund. Reasons for Refund Reduction There are several reasons … Read more
When it comes to retirement planning, two of the most popular options are 401(k)s and Roth IRAs. Both accounts offer tax benefits, but there are some key differences between the two that could make one a better choice for you than the other. Key Differences Between 401(k)s and Roth IRAs Feature 401(k) Roth IRA Contribution … Read more
Yes, the IRS audits rich people. In fact, the IRS is increasing its audits of high-income Americans and large businesses. This is due to the Inflation Reduction Act of 2022, which provided the IRS with $80 billion in additional funding. The IRS has stated that it will not increase audit rates for taxpayers earning less … Read more
Estimated taxes are payments made to the Internal Revenue Service (IRS) throughout the year to cover the income tax you expect to owe when you file your annual tax return. These payments are required if you expect to owe more than $1,000 in taxes after subtracting any withholding or credits. Who Needs to Pay Estimated … Read more