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Hobby vs. Business: What's the Difference to the IRS?

Mon, Mar 11th 2019
What's in a word? A world of tax consequences when the word is "business" or "hobby." In a nutshell: If you and the IRS determine that an activity is a business, you'll owe taxes on profits and will be allowed to deduct expenses for conducting that business. But if your passion for, say, making quilts is a "hobby," you cannot deduct the fabric, thread, needles and labor needed to make the bedclothes. Is your time-sapper really a business? Consider these criteria, and don't try to blur the... Read More »

What to Know About Pensions and Taxes

Mon, Mar 4th 2019
The amount of taxes you should withhold from your pension is dependent on your tax rate and your household sources of income and deductions. Basically, you add up all your sources of income and subtract your deductions to get your taxable income. Your taxable income determines your tax bracket, and you can use the tax bracket to estimate how much tax to withhold. It's clear that higher amounts of income are taxed at higher rates. The good news is that in retirement, it's likely you'll be in a... Read More »

Do You Have to File an Information Return?

Tue, Feb 26th 2019
If you engaged in certain financial transactions during the calendar year as a small business or self-employed (individual), you are most likely required to file an information return to the IRS. Below are some of the transactions that you have to report. Services performed by independent contractors — those not employed by your business. Prizes and awards, as well as certain other payments — termed other income. Rent. Royalties. Backup withholding or federal income tax withheld. Payments to... Read More »

Tips to Protect Yourself From Tax Scams

Mon, Feb 18th 2019
Too many people downplay the threat of identity theft because it hasn't been witnessed or experienced firsthand. This false sense of security can leave you exposed, especially during tax season. Here are some tips to keep your identity safe from scammers: Be naturally suspicious. Understand that there are people out there trying to get your information, and others willing to pay for it. With that knowledge, be suspicious of anyone asking for personal information - especially your Social... Read More »

Audit Proof Your Tax Return

Tue, Feb 12th 2019
No one likes the stress involved when your tax return is under the audit spotlight. Here are some ideas to avoid some of the more common audit triggers. Report everything that has an informational tax return. If you are like most Americans, you will receive numerous 1099s, W-2s, and 1095s in the mail. The IRS receives them too. If your tax return does not meet or exceed this reported income you can count on receiving a notice from the IRS. Some hints:Make a list of the forms received last year... Read More »