Marginal vs. Effective Tax Rates

Understanding marginal and effective tax rates is important for tax planning purposes; however, many taxpayers don’t fully understand the differences.

Let’s take a closer look:

Which Educator Expenses Are Tax Deductible?

Teachers and other educators should remember that they can deduct certain unreimbursed expenses such as classroom supplies, training, and travel – even when schools switched to hybrid or remote learning models during the pandemic last spring. Deducting these expenses helps reduce the amount of tax owed when filing a tax return.

Changing Jobs? Don’t Forget About Your 401(K)

One of the most important questions you face when changing job is what to do with the money in your 401(k) because making the wrong move could cost you thousands of dollars or more in taxes and lower returns.

Tax Breaks for Families with Children

If you have children, one or more of these tax credits and deductions could help your family reduce the amount of tax owed when you file your 2020 tax return. Let’s take a look:

WORKING REMOTELY COULD AFFECT YOUR TAXES

While some workers have returned to their offices, many have not. If you’re working remotely from a location in a different state (or country) from your office, you may be wondering if you will have to pay income tax in both jurisdictions.

INDIVIDUAL TAXPAYERS: RECAP FOR 2020

As we close out the year and get ready for tax season, here’s what individuals and families need to know about tax provisions for 2020.

Choosing a Retirement Destination: Tax Considerations

With health care, housing, food, and transportation costs increasing every year, many retirees on fixed incomes wonder how they can stretch their dollars even further. One solution is to move to another state where income taxes are lower than the one in which they currently reside.

TAX TIPS FOR WORKERS IN THE GIG ECONOMY

The gig economy, also called sharing or access economy, is defined by activities where taxpayers earn income providing on-demand work, services, or goods. This type of work is often carried out via digital platforms such as an app or website. There are many types of sharing economy businesses including two of the most popular ones: ride-sharing, Uber and Lyft, for example, and home rentals such as Airbnb.

IT’S NEVER TOO EARLY TO CHECK TAX WITHHOLDING

While it might seem like tax season just ended, it is never too early to do a “Paycheck Checkup” to make sure the right amount of tax is withheld from earnings – and avoid a tax surprise next year when filing your 2020 tax return. As a reminder, because income taxes operate as a pay-as-you-go system, taxpayers are required by law to pay most of their tax as income is received.

SMALL BUSINESS: TAX CONSEQUENCES OF CROWDFUNDING

With the onset of the coronavirus pandemic, crowdfunding websites such as Kickstarter and GoFundMe have become an increasingly popular way for small business owners to stay afloat. The upside is that it’s often possible to raise the cash you need; the downside is that the IRS considers that money taxable income. Let’s take a closer look at how crowdfunding works and how it could affect your tax situation.