The Best Way to File Taxes

The Best Way to File Taxes

The Best Way to File Taxes When Filing a Tax Return for the First Time

When you do your taxes for the first time, it can be somewhat intimidating. You’re afraid you’ll forget something, or worse, that you’ll mess things up. Don’t sweat it, the best way to file taxes the first time, or for that matter, anytime, is file your taxes online.

Sure, there are lots of rules to look out for, but if you do them online at our site, you don’t have to be concerned with them. We know all the rules and regulations and will make it very easy for you. All you need to do is to answer a few View full post…

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5 Safe Options to Pay Your Tax Balance

5 Safe Options to Pay Your Tax Balance

If I Owe the IRS, What Are My Options?

I know, I know…you go through a lot of stress just in preparing your tax return, but when you owe money also, it’s like getting kicked when you’re already down. Then if you happen to be short of cash, and can’t pay your tax balance in full, what is one to do?

Way back in the “old days”, when I was just starting out with my tax practice, if you had a balance due and didn’t pay it in full, the IRS came after you very quickly. As the years went by, and more and more taxpayers found themselves in that predicament, the IRS decided it was in their best interest to work with the taxpayer, and collect more money in the long run. View full post…

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Should You Itemize Your Deductions

Should You Itemize Your Deductions

Is It to Your Advantage to Itemize Your Deductions?

Under the old tax rules from many years ago, the answer to this question was generally yes, for most filers. Today, and especially after TCJA, more filers are using the new standard deduction. If you want to itemize your deductions, you need to exceed those amounts for the standard deduction.

To itemize your deductions, you need to keep track of medical expenses, various types of taxes that you pay, charitable contributions, qualified mortgage interest paid, and certain casualty losses. It takes more work to keep accurate records for these deductions, but it could payoff in the long haul.

Using the standard deduction or View full post…

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Best Way to File Taxes

Best Way to File Taxes

Best Way to File Taxes if You Are Self-Employed

If you’ve just started a new business, or are planning to open one, you will need to know the best way to file taxes. The steps that you need to take are not complicated, but some of the detail might be. Whatever you do, don’t put off filing, or for that matter paying quarterly estimates, if required.

 The last thing you want, is to end the year with a nice profit, and have a big tax bill for income taxes and self-employment taxes. Like most new business owners, you’ve View full post…

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6 Tips to File a Tax Return for a Decedent

6 Tips to File a Tax Return for a Decedent

File a Tax Return for a Deceased Individual – 6 Tips

We’ve all heard that saying, “the only things that are certain in life are death and taxes.” When a person dies, it doesn’t relieve them of the responsibility to pay any taxes that may be due for the time they were alive.

It may be a spouse, dependent, or a parent that had earned and/or investment income that must be reported to the IRS and the respective state taxing agency. Someone needs to file a tax return and pay any taxes that are due.

Some final returns are very simple like when a deceased person may have worked one job, and had only 1 W-2 form. Many other returns can get complicated very quickly, and we always recommend that you get help from an experienced tax professional.

What needs to be done if the deceased person owes taxes?

When an individual dies, and there are taxes due, all outstanding tax returns must be prepared and filed, both federal and state returns. Taxes that are due to either must be paid as well. Plus, if the deceased individual owes taxes for a previous year, you need to file a tax return for that year too and pay all taxes as well.

I had one this past tax season. An elderly individual was suffering from dementia and had not filed a return for the previous year. Her daughter was caring for her, and the last thing on her mind was taxes.

When she discovered the previous year hadn’t been filed, she called me. I asked her to find the second previous year to make sure it had been filed, and it was. So, for the final filing, I prepared both tax years and everyone was happy.

You need to be aware, that when filing the final return for a deceased individual, it might not be as cut and dry as it appears. If the return is being filed for a surviving spouse, and you had filed married filing jointly the prior year, you can file that same way the year the spouse died.

If a dependent child is involved, the surviving widow (or widower), can file as married joint for the following two years subject to a few IRS conditions. This is important because the married filing joint rate has lower tax rates.

In cases, where the deceased individual has no surviving spouse, then a personal representative will take the responsibility of filing the final return (s). The personal representative may be an individual that is responsible for the decedent’s property or maybe a court appointed administrator.

How you should file a tax return for someone who has no estate

The first item on your agenda is to determine the last year the decedent filed a tax return. It’s very important that you find this return because it can serve as a guide for the type of income that was reported, and you’ll know what forms to look for.

It’s quite possible that you may be required to file two years returns if the individual died early in the tax year.

Gather all forms for income, tax credits, and deductions

Just as you would for preparing your own tax return, gather together all of the necessary forms for the decedent, such as W-2, Form 1099. By using the last return filed, you can have a good idea what to look for when you file a tax return for the decedent.

If you happen to be a beneficiary of the decedent’s estate, it sometimes happens that a portion of the income owed to the decedent must be reported on your personal return. Sometimes individuals make an investment in a small business and a Form K-1 is issued.

Some of those forms can be confusing at best, and you’ll be glad that you engaged the services of an experienced tax professional.

File a tax return at the IRS, state, & local

Now that you’ve gathered all of the information available, you’re ready to complete and file the tax returns. There are certain states that require additional filing, so you need to be aware of that.

As an example, if the decedent lived in Pennsylvania, you could possibly have a state, city, township, or maybe borough returns to file.

Usually filing the final tax return for a decedent is as simple as filing a married filing joint return. Plus, you may itemize deductions or file using the new and higher standard deduction.

There are certain cases where filing the deceased person’s final return that could have an effect on your tax return. As an example, if you’re filing a final tax return for someone who was your dependent, you’ll still be able to claim that person on your return, even if they died very early in the tax year.

Pay all taxes due and/or collect all refunds

As soon as the tax returns are filed, make sure that any taxes that are due are paid to the appropriate agency. If there is a refund on a return that is filed married filing jointly, make sure that it is a direct deposit to a bank account to avoid getting a check in the mail.

On other returns that are filed and there is a refund due, make sure to attach Form 1310. This notifies the IRS who you are and the reason for claiming the refund.

In cases where you have been appointed as an executor or a personal representative of an estate, be VERY SURE that all taxes, federal or state have been paid in full before distributing any assets to beneficiaries. If you don’t, you can be held liable for them personally.

This is one of the most important factors to remember as a representative of an estate. Sometimes, relatives, beneficiaries, will try to pressure you into giving them “their share” of the estate. But never cave in – it could cost you a bundle!

There are a number of different taxes that may come into play when they die. Gift tax, Estate tax, Self-employment tax, Local tax, State tax, Federal tax, and even a Generation skipping transfer tax. Some are very rare, but you still need to be aware of them.

In a vast majority of cases, most decedents only have to file a tax return for federal and state taxes due which makes filing their tax returns relatively straight-forward. However, be aware that some decedents will have more complicated tax returns, and a number of other types of taxes may be involved.

This is why it’s so critical to engage the services of an experienced tax professional to help you get through the complicated maze of tax forms.

If there is an estate involved, what do I need to do?

As we mentioned above, the majority of deceased persons will not owe any estate taxes. For 2020, the value of the estate must be over $11,580,000 before any estate tax could be due. Normally, if the estate exceeds that value, an estate attorney will be handling it. If I were the executor, I can guarantee an estate lawyer would be doing it.

When the estate value is below the $11,580,000 amount, normally you do not need to file a tax return. Above that filing threshold, the attorney would file the estate tax return. The attorney would also advise if the estate was liable for any other type of tax, such as a gift tax return on a recent financial gift to a grandchild or one of the children.

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Best Online Tax Filing – $25 Flat Rate Fee

Best Online Tax Filing – $25 Flat Rate Fee

Looking for the Best Online Tax Filing? We Have It

Have you tried to prepare your tax returns yourself and struggled with all the paperwork? Or perhaps you went to your local CPA or one of the tax franchise operators? Has the sticker shock worn off yet or did their very high fees leave you confused? Not the best online tax filing by any means.

Why spend your hard earned money on an expensive tax preparer? Or become frustrated trying to understand a convoluted tax code that even confuses some accountants? We have a simple and low cost solution. A flat rate of $25.00 and that includes a state return too. Plus View full post…

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Is Unemployment Money Taxable?

Is Unemployment Money Taxable?

Do I have to Report Unemployment Money on my Tax Return?

Short answer…yes, it’s taxable on your Federal return and on most of the states too. We know next year’s taxes are the least of your worries right now when you lose your job. But, if you’ve gotten any unemployment money this year, it’s a good idea to look at this now, and understand just how they’re taxed. You’ll avoid bad surprises that way.

Hang on. I need to Report It and Pay Taxes?

Unfortunately, yes. We know it seems like the government is kicking you in the gut when you’re down and out. It gets worse…that extra $600 a week a lot of people got through the Cares Act is also taxable.

We hate to be the bearer of more bad news, but View full post…

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Speedy Online Tax Services

Speedy Online Tax Services

Online Tax Services Help to Avoid These 7 Tax Return Blunders

If there’s one thing that we can count on, it’s that tax laws are constantly changing. To help us to cope, the better online tax services, such as ours at HBS Financial Group, Ltd., offer assistance to avoid the seven most common tax blunders.

These mistakes are not only made by first time tax filers with a very simple return, but also by those who file more complex tax returns. It is our hope that listing these seven types of errors will help you to avoid them.

Failure to report all taxable income

This is probably the area that so many taxpayers fail View full post…

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Filing My Tax Return Online

Filing My Tax Return Online

Filing My Tax Return Online or Use a Tax Preparation Service?

I’ve asked this question a few times, and depending on the individual, I’ve received a different answer. Those who knew more about taxes said filing my tax return online is the way to go. A few others who may not have known much about taxes, but were turned off by high tax preparer fees, agreed with them.

Others who doubted their ability to file taxes online said they would use a professional tax preparer. Some others said that a family member would prepare their taxes for them. They didn’t want the hassle and possible liability of an incorrect return.

Most all agreed and said that filing my tax return online made more sense. This method of filing your taxes has become View full post…

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10 Personal Money Management Concepts

10 Personal Money Management Concepts

10 Personal Money Management Concepts High Schools Should Teach

Personal money management topics are highly neglected in the school system and I believe this is something we all should be very concerned about. Our children grow up with virtually no concept of personal money management, the importance of money, or what to do with it when they have it.

It’s a mistake to rely only on parents to teach their children these things because many parents don’t practice good personal money management themselves. It’s a vicious cycle and it needs to be broken.

We all benefit from learning about the basic concepts of personal money management from an early age. Of course, it’s never too late, but money education should begin in the early grades and progress throughout high school. It’s the only way to prepare these kids for college and the real world.

Here are the 10 core personal money management concepts high schools should be teaching:

  1. Budgeting

Every graduating high school student should understand budgeting and know how to apply it effectively to their personal finances. Sure, they don’t have many resources to manage at this stage in their lives, but they still need to be able to budget. They will need it sooner rather than later, so it’s important to introduce them not only to the concept, but also to the available budgeting tools.

  1. Loans & Borrowing

Loans and borrowing are another important core concept that students need to understand. After all, they’ll be exposed to student loans very soon and they need to understand interest rates as well as the repercussions of not paying their loans on time. Providing the knowledge of loans and borrowing now will allow them to make good choices in the future. Applying for a mortgage when buying their first home can really be a big eye-opener.

  1. Use of Credit Cards

Most adults don’t understand how to properly use credit cards, so why do high schools assume that it’s not essential to teach children about it? Buying things now and paying for them later may seem simple enough, but when you max out your card and you don’t have the money to pay, you get yourself into a vicious cycle. This can be avoided if kids are taught proper credit card use from an early age!

  1. Good Credit Score

This is another very important personal money management concept everyone should learn from an early age. Having a good credit score and maintaining it throughout your life will have a positive effect on many aspects. It determines the credit cards and loans you’ll be able to obtain, your interest rate, and it will even improve your chances of getting a job.

  1. Interest Rates

Interest is discussed very vaguely in most math courses, but it’s never explained in a way that’s applicable to real life. Students need to be taught how interest rates can affect them and how to navigate them. Especially when it comes to loans and borrowing, because interest rates will determine if they’re getting a good deal or not.

  1. Debt

No one wants to be in debt, which is why it’s so important our children are taught how to avoid it, if possible. College tuition is high and student loans are increasing, so it’s very easy for students to accumulate high debt that will take them many years, or even a lifetime, to pay up. Having a better understanding of debt will allow students to avoid the most common traps and steer away from it or at least handle it intelligently.

  1. Insurance

Insurance is rarely discussed in high school and never expanded upon, but it’s a very important concept because we absolutely need it. Most students are vaguely aware they need auto insurance for their car, but they may not understand what it covers, what the benefits are, and why all states require it. Most adults don’t fully understand the concept of insurance either, so it’s important for students to be exposed to the subject. Understanding the types of insurance policies available, why they’re necessary, and how they work is key to purchasing the right ones and staying safe.

  1. Saving for Retirement

Young people don’t think seriously about retirement simply because it’s too far away. But that doesn’t take away from the fact that saving for retirement is an important concept to understand as soon as possible. Setting aside a small amount of money every month for retirement will allow young people to create a sizable net to fall on when the time comes. The sooner you start, the earlier you’ll be able to retire. Imagine that!

  1. Stocks, Bonds and Investment

Saving money and managing it is important, but so is investing it intelligently and securely. That’s why it’s so important children understand stocks, bonds and investment from an early age. The topic of investment is covered to some degree in school, but I believe it should be an important part of the curriculum. Learning how to make money grow through investment is not simple; the more resources our children have, the better decisions they’ll be able to make in the future.

  1. Taxes

Last but certainly not least, is the concept of taxes, which has a huge impact on our lives. Children hear about taxes from adults, but not enough to fully understand why they exist, how they should be assessed or how to use them. It’s when they get their first paycheck and see social security, Medicare, federal, state, and local taxes deducted from their earnings, does it hit them. That’s wrong! They should know much sooner. Understanding taxes allows us to manage and budget our money more effectively, which is why it’s so important we give our children this knowledge.

I don’t deny the fact that some states have introduced courses about personal money management to some degree. What I believe is, there’s a greater effort that needs to be made. Every state should be required to introduce courses about these core concepts we’ve discussed today and have it be a part of the curriculum. Learning about personal money management truly makes a difference, so why not give our children the best possible chance for a sound and secure future?

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