π‘ Form 8938 (FATCA) β Specified Foreign Financial Assets :- If you are a U.S. taxpayer and your foreign financial assets exceed certain thresholds, you must report them on Form 8938 (attached to your Form 1040). π Main Points :- β’ Applies to U.S. citizens, residents & certain entities. β’ Report bank accounts, stocks, bonds,…
π‘ Itemized Deductions vs Tax Credits β Whatβs the Difference? π Itemized Deductions β reduce your taxable income:- Examples: β’ Medical expenses β’ State & local taxes β’ Mortgage interest β’ Gifts to charity π If your deductions are higher than the standard deduction then you select itemize. π Tax Credits β reduce your tax…
π‘ Schedule SE (Form 1040) β For the Self-Employment Tax :- If you work for yourself, you donβt have an employer to withhold Social Security & Medicare taxes β so you pay both parts yourself through Schedule SE. π Self-Employment Tax π Rate: 15.3% of your net earnings (12.4% Social Security + 2.9% Medicare) π…
π‘ Common IRS Forms That Report Taxpayer Income (with Form 1040) Each of these forms can indicate potential sources of gross income for tax reporting:- 1)π W-2 β Wage and Tax Statement 2)π° W-2G β Certain Gambling Winnings 3)πΉ Form 1099-B β Proceeds from Broker & Barter Exchange Transactions 4)πΈ Form 1099-C β Cancellation of…
π‘ Notable Changes for Tax Year 2025 (Income tax returns to be filed starting tax season 2026) Standard deductions AND Marginal Tax rates:- These updates apply to income tax returns filed in 2026 (for the 2025 tax year) π§Ύ Standard Deductions: *Single / Married Filing Separately: $15,000 (increase of $400 from 2024) *Married Filing Jointly:…
π‘ FBAR (FinCEN Form 114) β Foreign Bank Account Report :- If you are a U.S. person and your total foreign bank/financial accounts exceed $10,000 at any time during the year, you must file an FBAR. π Easy-to-understand points: *Applies to all U.S. citizens, residents, and entities (LLCs, Corps, Trusts). *Includes bank, brokerage, mutual…
Qualified Business Income (QBI) was introduced as part of the Tax Cuts and Jobs Act (TCJA), which was signed into law on December 22, 2017 and will remain valid till the end of 2025 unless extended or modified through legislation. TCJA included several provisions that benefited larger corporations and small businesses alike. It lowered the…
As tax season approaches, itβs important to understand how the Kiddie Tax impacts children with investment income. The Kiddie Tax was introduced to prevent parents from shifting investment income to their children to take advantage of lower tax rates. Here’s a quick breakdown of how it works for the 2024 tax year and how it…
If youβre a U.S. taxpayer investing abroad, Form 8621 might be on your radar. Itβs used to report income, distributions, or even ownership in Passive Foreign Investment Companies (PFICs) β often foreign mutual funds or similar entities. Hereβs a quick breakdown: πΉ Who Needs to File? If you own shares in a PFIC (directly or…
ππ£πππ§π¨π©ππ£πππ£π ππ€πͺπ§ πππ‘ππ£π ππ©ππ©πͺπ¨ ππ€π§ ππ€π§π’ ππ¬π°π¬: When it comes to filing your taxes, choosing the right filing status is crucial as it directly impacts your tax rate, deductions, and potential credits. The IRS offers five different filing statuses, each with its own requirements and benefits. In this post, Iβll break down each status in…
