Certified Public Accountants (CPAs) probably see it and hear it all. A good one can be the difference between a high tax bill and a manageable one. You should be able to ask any tax question to a CPA.
Are My Home Improvements Tax Deductible?
Home improvements are considered personal expenses and are usually not deductible. But with the tax code, nothing is simple. Some home improvements will give you a tax break.Which Is Better, a Tax Credit or a Tax Deduction?
A tax credit is often preferable to a tax deduction. That’s because a tax credit lowers tax liability dollar for dollar. A tax deduction lowers your taxable income.For example, if you had a tax bill of $10,000 and a tax credit of $1,000 your tax bill will now be $9,000. That’s how a tax credit works. But a deduction doesn’t come off the tax bill it comes off your income.
Which Is Better, Itemizing or Claiming the Standard Deduction?
Before the Tax Cuts and Jobs Act (TCJA) in 2017, this was a harder question to answer. But the TCAJ nearly doubled the standard deduction.For 2024, the standard deduction is $14,600 for an individual filer and $29,200 for married couples filing jointly. This deduction sunsets at the end of 2024 and reverts to its 2017 amount of $6,350 for singles and $9,350 for married couples filing jointly. Although the new amount will be adjusted for inflation, there’s a significant difference.
Do I Have to Pay Taxes If I Receive Over $600 From Venmo?
Payments made through either Venmo or PayPal for goods or services are taxable.As of 2024, these third-party platforms are required to report any amount of $600 or more to the Internal Revenue Service (IRS) with Form 1099-K. They also must send you a copy to file with your tax return.
All dollar amounts over the $600 that you receive a 1099-K form for, must be declared as business income. The IRS will expect to see this since it has had it reported.
Are Cryptocurrency Transactions Taxed?
Cryptocurrency has the potential to be taxed. The IRS treats it as property.So, you’ll pay taxes if you sell or use cryptocurrency in a transaction when it is worth more than what you bought it for. This comes under the capital gains tax.
It also could be a loss if its market value has changed.
If you are paid cryptocurrency for business purposes, it is considered business income and therefore taxed.
What Is the Tax Impact of This Transaction?
This is a question that should be asked before you do the transaction.The tax effect depends on the type of transaction and could be positive or negative, depending on your tax bracket.
The timing of the transaction is also a factor and can impact taxes.
Do I Need to File Taxes If I Don’t Make a Lot of Money?
You still should file taxes even if you’re below the threshold of needing to file. Many Generation Z and millennials would argue this point, but in reality, they could be missing out on refund checks.If they work for an employer and have taxes withheld, they may be due for a refund: not filing means no refund.
Others won’t file because they don’t want to pay taxes. This, too, is a major mistake. By avoiding this, they risk having their wages garnished or other consequences.
Ask Your CPA Questions
Write down your questions and open up a discussion with your CPA. The tax law changes yearly. Your circumstances could be changing as well.Let your CPA know if you’ve changed your finances in any way. From a newborn baby to starting a business, ask your CPA how it will affect your tax bill.