The guidelines aren't so cut and dried.
This post comes from Jim Wang at partner site U.S. News & World Report.
The term "side hustle" has become very popular lately – and for good reason.
If nothing else, the Great Recession has taught us that your job, as stable as it may seem, could disappear at any moment. The unemployment rate peaked at more than 10 percent in October 2009, according to the Bureau of Labor Statistics, which meant millions of Americans were out of work.
The idea of a side hustle is very appealing -- find something you can do to earn a little money on the side. A side hustle can create diversity in your income stream and, with a little bit of luck and lots of hard work, could become something you do full time. Even if it doesn't, an extra hundred dollars each month can go a long way.
But when it comes to tax season, the Internal Revenue Service might not see your side gig the same way. Is your activity considered a hobby or actual business? Does it matter? Here's what you need to know before sending off your tax returns.
Hey, procrastinators, your time is running out. Take a minute to be sure you're not making one of these embarrassing (and potentially expensive) errors.
By Libby Kane, Business Insider
By now, most of us have filed our taxes and called it a day. But for the 15 percent of Americans who didn't submit their tax forms before April 1, time is running out.
Take a deep breath. Rushing through most anything lends itself to silly, last-minute errors, and taxes are no exception.
"It's like homework," says certified financial planner Keith Klein of Turning Pointe Wealth Management in Phoenix. "You can only do so much, so long, and then you get distracted."
If you're scrambling to get your taxes together at the last minute, it's easy to slip up and enter a wrong number, which can lead to even more paperwork in the form of a tax amendment or paying additional fees to the IRS.
Now that we're getting down to the wire, Klein shares some of the dumb, last-minute filing mistakes you'll want to avoid.
1. Mixing up your federal and state taxes. Tax-preparation software and e-filing can catch a lot of errors, but you're the only one who can keep your envelopes straight. "Even if you're using apps to track your spending and software to file your taxes, you can still send your check to the wrong place," Klein reminds us.
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A Slate columnist argues that childless Americans should pony up some more cash for taxes and that parents should get a bigger break.
This post comes from Krystal Steinmetz at partner site Money Talks News.
Nonparents should pay higher taxes so that lower- and middle-income parents can receive a much-deserved tax break. That's the proposal of conservative Slate.com columnist Reihan Salam.
"The willingness of parents to bear and nurture children saves us from becoming an economically moribund nation of hateful curmudgeons. The least we can do is offer them a bigger tax break," Salam, who is childless, said.
Not surprisingly, Salam's proposal has ignited a fiery debate, as you can see on WNYC.org.
"Childless by Choice" from New York City said, "How about couples who have more than two children pay MORE taxes, given that they've now foisted upon a dying planet yet another mouth to feed, another consumer of resources, and another generator of waste and pollution."
It appears that many people, like me, who think Salam's proposal is ludicrous, were surprised and saddened by the anti-child vitriol expressed by many people online. "Dan from New York" spoke up for those with kids:
If you got some Stuff We All Get at a fancy event, or won a cool contest prize, Uncle Sam wants to know about it.
This post comes from Amy Feldman at partner site Reuters.
You might be able to score a free lunch these days, but get anything beyond that and the Internal Revenue Service may come after you for taxes.
Lucky enough to score an $80,000 goodie bag at the Oscars? You'll owe something in the neighborhood of $26,400, if you're in the 33 percent tax bracket. Won an iPad in a raffle at a conference? That would be more than $100.
Stuff We All Get, known to most as "swag," comes with no direct price tag to you. We all score a few promotional t-shirts or pens every now and then, and while you may think they're gifts -- or, worse, utterly useless junk -- they're not gifts for tax purposes since they weren't given to you out of sheer generosity.
Instead, those so-called gifts are taxable income in the amount of their fair market value, and you need to report them to the IRS and pay the appropriate tax on it.
"People go to events all the time, and if you go to an event for your job and get certain swag, it affects you," says Lisa Greene-Lewis, a certified public accountant at TurboTax.
The rules on swag aren't new.
Taxpayers have just days left to file for $760 million in unclaimed 2010 tax refunds or the money will revert to the U.S. Treasury.
This post comes from Krystal Steinmetz at partner site Money Talks News.
Taxpayers have less than two weeks to file their 2013 tax returns. And if you are one of the nearly 1 million who didn't file their taxes for 2010, April 15 is the ultimate D-Day.
April 15 is the last day of a three-year grace period for filing your 2010 taxes. And the stakes are huge -- $760 million is up for grabs, Forbes said. If you're owed a refund, there's no penalty for filing your taxes late. But if you don't file by April 15, all unclaimed refunds will be turned over to the U.S. Treasury.
If you meet certain income requirements, you aren't obligated to file a tax return. But that doesn't mean you aren't owed a refund. According to Quicken Loans:
Even if you don't have to file a tax return, the reality is that it can still be a good idea. Perhaps you have had money withheld from your paycheck. If that is the case, and your income is low enough that you don't owe, then you have a refund coming.
Forbes said the IRS estimated that more than half of refunds waiting to be claimed are more than $571 each.
Retirement experts call it a game changer for the 50 million or so households in the US that own an individual retirement account.
This post comes from Robert Powell at partner site MarketWatch.
This column has been updated to clarify that the one-year period during which two or more IRA-to-IRA rollovers should be avoided starts when the IRA owner receives the distribution.
Uncle Sam's Tax Court just ruled that the one-rollover-per-year rule applies to all of a taxpayer's IRAs rather than to each IRA separately. And that ruling, experts say, is in direct conflict with IRS Publication 590, the bible for IRAs.
"Industry leaders, financial advisers, and everyone else who handles IRAs are stunned," said Denise Appleby, the editor and publisher of The IRA Authority.
According to Appleby, there are two ways to move money between IRAs:
- Transfers, which are not reported to the IRS and not reported on a tax return. The IRA owner never touches the money. You can do this as often as you like, whenever you like, Appleby said.
- And rollovers. With this method, the IRA owner takes the money as a distribution and they have 60-days to rollover (put back) the amount in an IRA. And this, you can do only once per 12-month period, said Appleby.
According to Appleby, the IRS, through their publications and regulations, has said for at least 20 years that the rollover method applies on a "per-IRA" basis. In other words, if you have 10 IRAs, you can do 10 rollovers for the year (12-month period), as long as an IRA does it only once (or the year).
It costs an arm and a leg -- and sometimes another arm -- to raise a child. These tax breaks can help you recoup some of that money you spent on diapers.
This post comes from Carolyn O'Hara at partner site LearnVest.
It’s no secret that raising kids is expensive—but did you know that it’s now reached price-of-a-vacation-condo-at-the-beach and splurge-on-a-Bentley expensive proportions?
The cost of rearing a middle-class American child from infancy to the age of 18 is now an estimated at $241,000—and that’s before you start getting those college bills.
Fortunately, parents get a little bit of financial relief every April, courtesy of the U.S. government.
Your little ones can nab you a number of tax breaks, but unless you’re an accountant yourself, it can be easy to miss out on them.
That’s why we asked Michael Goldfine, a New York City–based certified public accountant, and Jeffrey Schneider, an enrolled tax agent based in Royal Palm Beach, Florida, to highlight the 11 deductions, credits and tax strategies that every parent should know about—whether you have a toddler, or a college senior who’s just about to graduate.
Many Americans think the IRS is the villain of tax season, but identity fraudsters are lurking. Don't let them wreck your finances and your life.
A few weeks ago, a friend of mine – let's call her Mallory - got an unsettling call from her accountant. The accountant had been preparing Mallory’s taxes, hit "Send" to e-file the finished return, and it was rejected. Someone had already filed a tax return using Mallory's Social Security number. She'd been a victim of tax identity theft.
The accountant called the IRS, but they wouldn’t talk to her. Mallory called and was directed to the fraud department. While she was on hold, she made more calls: one to a friend at the FBI, another to the FTC and the last one to me.
Mallory had just become a statistic. The aftermath of tax identity theft is messy, and since 2012, the number of victims has been on the rise. Millions of Americans who expected refunds—often desperately needed to make ends meet -- have waited the better part of a year to get their money back -- and even then only after they had traversed a paper labyrinth to prove to the IRS they had been the victims of a crime.
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