Podcast Summary
Stay Organized to Navigate Tax Season: Gather all necessary documents, prepare for potential tax breaks, and stay informed about changes due to the pandemic and stimulus plans to effectively navigate tax season.
Understanding taxes can be a daunting task for many people, but organization is key to making the process smoother. Tax expert Kimberly Washington emphasizes the importance of gathering all necessary documents and being prepared. This year, with the ongoing coronavirus pandemic, there are additional considerations when filing taxes, such as potential tax breaks for home offices and handling taxes on unemployment checks. Biden's stimulus plan may also impact taxes and potentially allow for retroactive stimulus checks. It's essential to stay informed and organized to navigate the tax season effectively. Additionally, sponsors Whole Foods Market and Apple Card offer resources to help make the most of your brunch celebrations and daily purchases, respectively.
Understanding W-2s and Tax Filing for First-Timers: First-timers need to keep taxable income documents, understand deductions, and use free filing resources to meet tax filing requirements.
The W-2 form is an essential document for filing taxes, and it indicates the amount of taxes withheld from your paycheck. You're required to file taxes if your personal income exceeds certain thresholds ($12,400 for singles and $25,600 for married individuals in 2023). Deductions can help lower your taxable income and reduce your tax bill or increase your refund. Common deductions include college tuition and medical expenses. For first-time filers, it's crucial to keep all taxable income documents, such as W-2s, interest statements, and college tuition documents. The IRS offers free filing options for individuals earning less than $72,000 per year. Always ensure you understand what's taxable and what's not, especially in service industries. Don't throw away important documents, and look for free filing resources to make the process easier.
Free Tax Filing for Eligible Americans: 70% of Americans qualify for free tax filing through the IRS Free File program and VITA, but only 3% utilize it. Filing for free directly on the IRS website can save money and it's important to file even if you owe taxes to avoid penalties.
The Internal Revenue Service (IRS) offers free tax filing options for eligible Americans through their Free File program. This partnership with tax providers allows taxpayers to file their taxes online for free, with some even offering assistance through the Volunteer Income Tax Assistance (VITA) program. The VITA program provides free tax preparation and filing for individuals earning less than $57,000 per year. Approximately 70% of Americans qualify for these free programs, but only 3% have taken advantage of them. It's essential to be aware that using the IRS Free File program through the IRS website directly can save you money compared to filing through a tax preparation service's website. Additionally, even if you owe taxes, it's important to file to avoid penalties and potential legal consequences.
Understanding Tax Filing and Payment Options: Determine your filing status, choose between standard and itemized deductions, and file for an extension if necessary to minimize penalties and maximize savings.
Taxpayers have options when it comes to filing their taxes and making payments. If you can't pay in full by April 15th, file for an extension to avoid penalties. Determine your correct filing status, as it impacts your tax bracket and eligibility for credits. Consider the standard deduction or itemized deductions to reduce your taxable income. The standard deduction is a set amount given by the IRS, while itemized deductions allow you to deduct actual expenses, such as medical costs, charitable donations, mortgage interest, and state taxes. Choose the option that results in the higher deduction for you. Remember, accuracy and timely filings are crucial to avoid penalties and maximize potential savings.
Tax rules for home office expenses and unemployment benefits changed in 2020: Self-employed individuals can deduct home office expenses, while employees cannot. Unemployment benefits up to $10,200 are tax-exempt for those below a certain income threshold.
The tax rules for home office expenses changed in 2017, and during the pandemic when many people are working from home, this deduction is only available for self-employed individuals. For employees, the answer is no, but for those with side gigs or small businesses, the answer is yes. Another important point is that those who received unemployment benefits in 2020 will need to report these benefits on their tax returns, but the first $10,200 can be excluded from taxable income due to President Biden's relief measures. This exclusion applies to individuals whose annual income is below a certain threshold. Overall, it's crucial to understand the specific tax implications of your employment situation and any benefits or relief programs you may have received during the year.
Qualifying for Stimulus Payments and Child Tax Credit: Individuals earning under $150,000 can qualify for stimulus payments and child tax credit. Eligibility is determined by either 2019 or 2020 tax returns. The third stimulus check is an advanced tax credit from the 2021 tax year and not taxable. Child tax credit is increased to $3,600 for children under 6 and $3,000 for children aged 7 to 17.
The adjusted gross income of less than $150,000 is required to qualify for stimulus payments, which are not taxable. If individuals did not receive their stimulus checks based on their 2019 tax returns, they can still claim it on their 2020 tax returns using the Recovery Rebate Credit. The IRS will use either 2019 or 2020 tax returns to determine eligibility for the third stimulus check under Biden's COVID relief plan. This third stimulus check is an advanced tax credit from the 2021 tax year, and individuals will not have to pay back the money even if they make more in 2021. Additionally, the child tax credit is being increased to $3,600 for children under 6 and $3,000 for children aged 7 to 17 under Biden's plan. A good mindset for tax season is to set up an IRS online account to access tax documents and simplify the process. Despite the complexity of the tax situation in the US, other countries have more automatic tax systems.
Staying Organized and Informed for Tax Season: First-time filers should hold onto W-2 forms and job-related documents. Utilize the IRS's Free File program for ease and cost savings. File taxes even if unable to pay to avoid penalties. Unemployment income is taxable, but stimulus checks are not. Claim recovery rebate credit for financial changes.
Staying organized and informed is key when it comes to filing taxes. For first-time filers, holding onto W-2 forms and other job-related documents is essential. If you're eligible, utilizing the IRS's Free File program can help make the process easier and free of cost. Even if you can't pay your taxes, it's important to file to avoid penalties. Unemployment income is taxable, but stimulus checks are not. Additionally, if you've experienced a financial change that makes you eligible, you can claim the recovery rebate credit on your taxes. For more resources and information, check out NPR's Life Kit, which offers episodes on personal finance, parenting, and health, among other topics. And remember, staying informed and prepared can help alleviate some of the anxiety that comes with tax season.
Exploring current events with humor and insight: Wait, Wait, Don't Tell Me offers a fun and informative look at the week's news with comedians and special guests.
If you're looking for a podcast that offers a fun, engaging, and thought-provoking exploration of current events, you should check out Wait, Wait, Don't Tell Me from NPR. This quiz-style show covers the week's news in a way that's both informative and entertaining, with a panel of comedians and special guests adding their unique perspectives. Whether you're looking to stay informed about what's happening in the world or just want to laugh and learn something new, Wait, Wait, Don't Tell Me is a great choice. So join the hosts and the audience every week for a lively and meaningful conversation about the news and the world around us.
