💡 Itemized Deductions vs Tax Credits – What’s the Difference? 📌 Itemized Deductions → reduce your taxable income:- Examples: • Medical expenses • State & local taxes • Mortgage interest • Gifts to charity 👉 If your deductions are higher than the standard deduction then you select itemize. 📌 Tax Credits → reduce your tax…
💡 Schedule SE (Form 1040) – For the Self-Employment Tax :- If you work for yourself, you don’t have an employer to withhold Social Security & Medicare taxes — so you pay both parts yourself through Schedule SE. 📊 Self-Employment Tax 📌 Rate: 15.3% of your net earnings (12.4% Social Security + 2.9% Medicare) 📌…
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…
US Federal income tax is applied on income of salaried individuals based on gross income less allowable deductions. The tax is initially collected as withholding from employees and deposited with the IRS by the employers each month. In computing the taxable income there are 2 types of deductions that are allowed to the employees. “Above…
𝐐𝐮𝐞𝐬𝐭𝐢𝐨𝐧:”𝐖𝐡𝐲 𝐝𝐨𝐞𝐬 𝐭𝐡𝐞 𝐈𝐑𝐒 𝐨𝐧𝐥𝐲 𝐭𝐚𝐱 𝟗𝟐.𝟑𝟓% 𝐨𝐟 𝐦𝐲 𝐬𝐞𝐥𝐟-𝐞𝐦𝐩𝐥𝐨𝐲𝐦𝐞𝐧𝐭 𝐞𝐚𝐫𝐧𝐢𝐧𝐠𝐬? 𝐃𝐢𝐝 𝐭𝐡𝐞𝐲 𝐣𝐮𝐬𝐭 𝐩𝐢𝐜𝐤 𝐚 𝐫𝐚𝐧𝐝𝐨𝐦 𝐧𝐮𝐦𝐛𝐞𝐫?” 𝐀𝐧𝐬𝐰𝐞𝐫 (𝐰𝐢𝐭𝐡 𝐚 𝐭𝐰𝐢𝐬𝐭): Nope, it’s not random, and the IRS isn’t rolling dice to mess with us (this time). It’s actually a 𝐥𝐢𝐭𝐭𝐥𝐞 𝐛𝐮𝐢𝐥𝐭-𝐢𝐧 𝐭𝐚𝐱 𝐛𝐫𝐞𝐚𝐤. Think of it as their way of saying, “𝐇𝐞𝐲, 𝐛𝐞𝐢𝐧𝐠…
Business meals can be a great way to connect and build relationships, but they’re also an opportunity to save on your taxes. For 2024, here’s a more detailed look at how the IRS treats business meal deductions: 🍽 What Qualifies as a Business Meal?A business meal is any meal directly tied to a business purpose—whether…
What Are Tax Deductions?A tax deduction reduces your taxable income, which in turn lowers the amount of tax you owe. Think of it as a way to shrink the portion of your income that is subject to taxation. For example: If you earn $50,000 a year and claim a $5,000 deduction, your taxable income becomes…
