Additional menu

eFile360.com

Where e-filing information return forms comes full circle. We support 1099, 1098, W-2, and Affordable Care Act forms.

Archives for May 2021

Smart Ideas for Spending Your Tax Refund

By

As of May 6, the IRS reported they are holding 29 million tax returns, which means many Americans are still waiting for their refunds. So let’s talk about some smart ways to spend your refund when it comes. Invest in Your Side Hustle or New Business Many people created side hustles in 2020 or started thinking about starting that business they’ve been dreaming about. Why not make that refund money fuel for that dream? Investing your tax refund into a side business is a great way to diversify your income and start building up your new business! Focus on Your Debt Another great way to put your refund to work is to contribute a lump sum to one of your big loans or credit card bills. Paying down those debts with your refund can decrease the total amount of interest you’ll pay over the lifetime of that debt source. Put It in a Retirement Account Saving for retirement is always important, and after a year of income and job loss, it’s also a smart idea to take that refund and put it into a 401(k) or another retirement account.   If you don’t have anything pressing that needs to be paid (big debts or upcoming expenses), putting that extra money into your future is always a solid plan. Put It toward Your House Saving for a home? Use that refund to increase your down payment amount. Looking to sell your home in the next few years? Take your refund and choose a home renovation project that you can put that money toward. Make Forward-Looking Investments There are tons of great options for investing in your future. This can include real estate, a tech startup, or stocks. It can also mean putting that money to use by spending it on products and services that either make your life easier or save you money in the long run. Update old appliances in your house – maybe you need a new refrigerator or air conditioning unit that is more energy-efficient. Research meal delivery kits that save you time and money on groceries, or purchase those big-ticket items that …

Continue Reading about Smart Ideas for Spending Your Tax Refund →

Everything You Need to File Taxes as an Independent Contractor

By

Independent contractors and employees are treated very differently when it comes to tax prep. Independent contractors are their own small businesses, even if they don’t have an incorporated or otherwise legally recognized business or brand. Let’s discuss what it takes to file taxes as an independent contractor. First, You Need a W-9 The beginning of the tax-filing process for independent contractors always starts with a W-9. Before you even start working on a contracting project, you need to be sure you’ve sent a W-9 with your name, address, and TIN (taxpayer identification number) to the company that is hiring you. It’s important to know who you are partnering with. W-9s must be sent to each company that wants to pay you for your contracting work, and they contain important and sensitive information about your business. Contractors Need Contracts No matter who you work with, whether it’s the President, a reputable local company, or your childhood best friend, it’s always best practice to get things in writing. Not only does a contract outline the expectations of the project for both parties, but it is also a great way to legally document the income you are expecting to make (be it hourly wages, cost of materials, or labor and equipment expenses). Nothing messes up your tax preparation and expectations more than a missing or incorrect payment. Contracts and legal agreements can be as itemized or as broad as you like, but you always want to make sure you protect yourself and your business. If you get paid by the company that hires you (which should happen 100% of the time, but it doesn’t always work that way), you will need to report that income. And if you don’t get paid by the company that hires you – whether it be for legal or illegal reasons – you’ll want to make sure you document the time and materials that you should have been compensated for on your taxes. Form 1040 or 1040SR Working as an independent contractor has tons of perks, but one …

Continue Reading about Everything You Need to File Taxes as an Independent Contractor →

5 Common Tax Problems and How to Avoid Them

By

Taxes are confusing, and they change every year. Let’s go through some common tax problems and how to avoid them. Filing Late 1 in 5 taxpayers waits to file their taxes until just one week before the (typical) April 15th deadline. Missing the filing deadline is expensive: if you fail to file on time, you can expect to pay a penalty of 5% of the unpaid tax for every month or part of a month that the return is late, up to 25% of the unpaid tax. To avoid this, the best practice is to file early. Start thinking about tax prep in January, whether that means gathering your documents and sending them to your preferred tax preparer or gathering all documentation and applicable forms for completing your return yourself. However, if you think you are going to miss the deadline, you should always file for an extension. You can file Form 4868 to push the filing deadline back 6 months – but you still need to pay any taxes you still owe at the same time that you file for the extension. Click here for accurate deadline dates. Typos & Missing Information There are lots of boxes to check and lines to fill out, and it’s very easy to accidentally mess up your SSN or report your income as $52,986 instead of $52,896. Errors that occur when filling out the complicated and often numerous tax forms are very common. To avoid this, you should always go through your forms slowly and deliberately, and also more than once. A good double-check is often the best way to fix errors before you file. Be sure to reference your tax forms and banking information (routing and account numbers) to ensure all the data is correct and present. If you are unsure how to find certain information or are looking for a second opinion, you can always contact a trained tax professional to have them check your work. Miscalculations Because it’s so easy to make small but mighty mistakes when you are entering your information on the appropriate forms, it also means that it’s very easy to file a …

Continue Reading about 5 Common Tax Problems and How to Avoid Them →

Minimum Income Requirements: How Much Money Do I Have to Make to File Taxes?

By

It’s been a year of job changes and layoffs. Let’s discuss minimum income requirements and how much money you have to make to file taxes. Minimum Income Requirements & Tax Status Let’s get right to it. Not everyone has to file taxes, and the need to file is based on minimum income requirements. If you don’t meet the minimum income requirements, you don’t have to file a tax return. Here are a few things you’ll need to have to determine your minimum income requirements: filing status, federal income tax withheld for the year, and basic information to help calculate your gross income. For taxpayers under the age of 65, here are the minimum income requirements by filing status: Single: $12,400 Married, filing jointly: $24,800 Head of household: $18,650 Married, filing separately: $5 Qualifying Widow(er): $24,800 For taxpayers 65 and older, the minimum income requirements are: Single: $14,050 Married, filing jointly: $26,100 and $27,400 if both are 65 or older Head of household: $20,300 Married, filing separately: $5 Qualifying Widow(er): $26,100 There are also a handful of parameters that mean you have to file a tax return, regardless of income: You made a self-employment net income of at least $400 You got any health savings account, Archer Medical Savings Account, or Medicare Advantage MSA distributions You currently owe taxes on IRA, health savings account, or other tax-favored accounts You owe alternative minimum tax You made more income than $108.28 from a church or church organization You owe recapture taxes You owe Social Security or Medicare tax on tips that you didn’t report to your employer or that your employer didn’t already take out of your pay You had advance payments of the premium tax credit made for you, your spouse, or a dependent who received insurance marketplace health coverage You had advance payments of the health coverage tax credit made for you, your spouse, or …

Continue Reading about Minimum Income Requirements: How Much Money Do I Have to Make to File Taxes? →

Everything You Need to Know about Taxable Income

By

Are you just starting your tax journey? Have you been employed by someone else in the past and are now working for yourself as a small business owner, independent contractor, or freelancer? Did your side hustle take off? Let’s talk about taxable income. What is Taxable Income? According to Investopedia, taxable income is “the portion of an individual’s or company’s income used to calculate how much tax they owe the government in a given tax year.” Taxable income includes wages, salaries, bonuses, tips, investment income (profits and dividends), and some types of unearned income (unemployment compensation, pensions, annuities and some social security benefits). Basically, if you received money from a person, business, or government program this year, there’s a large chance it is considered taxable income. One big exception to this rule is if the business is a nonprofit. Non-profit businesses are exempt from paying federal income tax, sales tax, and property tax if they meet certain criteria. The amount of taxable income you are responsible for will vary based on how much you made in the tax year you are filing for. And the taxes on your income get increasingly higher as you make more money, so it is important to take a close look at your earnings every year. How to Calculate Taxable Income There are a few steps to calculating your taxable income: Determine your filing status. There are 5 filing statuses to choose from, and taxpayers always want to choose the filing status that results in the lowest taxes possible for their situation. The filing statuses are: single, married filing jointly, married filing separately, head of household, and qualifying widow(er) with dependent child. Gather all documents. You’ll need to gather all documents from all sources of income for you, your spouse, and your dependents, based on your living and family situation and the filing status you chose. Form W-2s are given when income is earned by a traditional …

Continue Reading about Everything You Need to Know about Taxable Income →