The Internal Revenue Service (IRS) generally has 10 years to collect unpaid taxes, penalties, and interest. This 10-year period is known as the Collection Statute Expiration Date (CSED). After the CSED expires, the IRS can no longer pursue collection activities for the specified tax debt. Exceptions to the 10-Year Rule There are certain situations where … Read more
Understanding State Tax Obligations State income taxes are levied by 43 states in the United States, with each state having its own set of tax laws and regulations. As a taxpayer, it’s crucial to understand your state’s tax requirements to avoid unexpected tax liabilities. Reasons for Owing State Taxes There are several reasons why you … Read more
Understanding IRS Audits of Deceased Individuals The Internal Revenue Service (IRS) has the authority to audit deceased individuals just as they would living taxpayers. This can be a confusing and challenging process for the estate executor or loved ones responsible for handling the deceased person’s tax affairs. Who is Responsible for Filing Taxes for a … Read more
Understanding the Student Loan Interest Deduction The student loan interest deduction allows taxpayers to reduce their taxable income by the amount of interest paid on qualified student loans during the tax year. This deduction is available to both undergraduate and graduate students, and it can provide significant tax savings for those who qualify. Income Limit … Read more
An IRS installment agreement is a formal arrangement between a taxpayer and the Internal Revenue Service (IRS) that allows the taxpayer to pay off their tax debt in monthly installments. While installment agreements can provide taxpayers with much-needed relief from the burden of tax debt, it’s crucial to understand the consequences of defaulting on the … Read more
The second stimulus check, officially known as the Economic Impact Payment 2, was a one-time payment of up to $600 for individuals and $1,200 for married couples filing jointly. The payments were issued in December 2020 and January 2021, and most eligible Americans received the full amount. However, some individuals reported receiving only half of … Read more
Filing taxes can be a daunting task, and it’s easy to make mistakes. One common mistake is forgetting to claim a 1099 form on your tax return. 1099 forms are used to report income from sources other than your employer, such as self-employment income, dividends, and interest. If you fail to report all of your … Read more
The United States tax system is a progressive tax system, which means that the tax rate increases as your income increases. This is accomplished through the use of tax brackets. Tax brackets are ranges of income that are subject to a specific tax rate. There are seven tax brackets for most ordinary income for the … Read more
Inheritance tax, a state-level levy imposed on the transfer of property or assets from a deceased individual to their beneficiaries, is distinct from the federal estate tax. While the federal government does not impose an inheritance tax, six states currently maintain this form of taxation: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Understanding which … Read more
The Cohan rule is a legal doctrine that allows taxpayers to estimate certain tax deductions when they lack precise records of actual expenses. Named after the taxpayer in the landmark case Cohan v. Commissioner, this rule provides taxpayers with a degree of flexibility in substantiating their deductions, particularly when faced with incomplete or missing documentation. … Read more