Tax Planning And Your Financial Plan
- Income taxes are just one aspect of tax planning. If you want to preserve what youve earned and grow it in the most tax-efficient way, a financial advisor can help. Finding a qualified financial advisor doesnt have to be hard. SmartAssets free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If youre ready to find an advisor who can help you achieve your financial goals, get started now.
- Starting a new job? Even before you fill out your W-4, you can get an estimate for how much your take-home pay will be. Just use our paycheck calculator.
Taylor The Hobby Streamer
Taylor is a college student who plays CS:GO on the weekends. His friends have complimented his skill often and suggested he stream. He agreed. While he only started streaming for fun, a few fans have donated to his stream or have given him bits. In 2019, he made $1,235.
Twitch sent him a 1099 for the $630 he made through bits and subscriptions. Streamlabs sent his a 1099 for the donations made through them. Taylor is required to claim the taxes as part of his income and will do so on Form 1040.
States With Reciprocity Agreements
Sixteen states and the District of Columbia have reciprocity with one or more other states as of 2022. These are work states, not residence states:
New Jersey had an agreement with Pennsylvania for nearly 40 years before it ended on Dec. 31, 2016. But the agreement between these states has since been reinstated. It’s in place as of tax year 2021, the return you’ll file in 2022.
These agreements can and do change from year to year, so check with the state tax authority in your nonresident state to be sure of your filing obligations there. Your employer’s human resources department should be able help you as well.
Recommended Reading: Efstatus Taxact 2015
Free Tax Help Is Available
The IRS Volunteer Income Tax Assistance Program generally offers free tax help to people who make $57,000 or less. The IRS also offers tax help for seniors through its Tax Counseling for the Elderly program . There are VITA and TCE sites across the state where trained volunteers can answer your questions, file your taxes and help you take advantage of any tax credits for which you are eligible.
How To Fill Out A Sales Tax Form For The State
Unless you operate a business in one of the six states that dont collect sales tax Alaska, Hawaii, Delaware, New Hampshire, Montana and Oregon youll need to collect sales tax for certain sales and services. At regular intervals monthly, quarterly or annually, depending on the rules for your state youll need to pay the sales tax you collected to the state, and fill out sales tax forms to accompany your payment. Each state has its own rules for sales tax. In some states, such as Texas, youll remit all sales tax in a single payment to the state. In other states, such as Colorado, youll make a combination of payments to both states and counties or cities, depending on where you do business. Though tax forms collect the same basic information, the actual forms themselves vary from one state to the next and from one county to the next, so follow the specific directions for the form used in your area.
Fill in your total sales for the taxing period on which youre reporting. This includes taxable sales and services as well as non-taxable sales and services.
List all non-taxable sales and services. This includes items your state does not tax, such as certain types of merchandise or certain services. This also includes sales to tax-exempt organizations such as schools, governments and charitable organizations.
Don’t Miss: 1040paytax
Penalty For Failure To Pay Or Underpayment Of Estimated Tax
Revised Statute 47:118authorizes a penalty for failure to pay or underpayment of estimated income tax. The penalty is 12 percent annually of the underpayment amount for the period of the underpayment.
Determination of the Underpayment Amount
Determination of the Underpayment PeriodThe underpayment period is from the date the installment was required to be paid to whichever of the following dates is earlier:
Notification of Underpayment of Estimated Tax Penalty
New Mexico Imposes A Tax On The Net Income Of Every Resident And On The Net Income Of Every Nonresident Employed Or Engaged In Business In Into Or From This State Or Deriving Any Income From Any Property Or Employment Within This State
If you are a New Mexico resident, you must file if you meet any of the following conditions:
- You file a federal return
- You want to claim a refund of any New Mexico state income tax withheld from your pay, or
- You want to claim any New Mexico rebates or credits.
Nonresidents, including foreign nationals and persons who reside in states that do not have income taxes, must file here when they have a federal filing requirement and have income from any New Mexico source whatsoever. You must file Form PIT-1 to report and pay personal income tax.
The rates vary depending upon your filing status and income. Current and Historic personal income tax rates can be located here.
The Department offers taxpayers the ability to file their tax return online. Online filing provides a faster turnaround time than filing a paper return. For example, if you are due a refund, it could reach you within two weeks.
The Department allows taxpayers to check the status of their refunds online through the Taxpayer Access Point . The taxpayer must establish an online account to check the refund status.
Also Check: How Much Does Doordash Take In Taxes
Filing Taxes After Moving To Another State
Moving from one state to another can mean more than a new address and a new drivers license. It also might impact your federal or state return. How youll file taxes after moving to another state depends on several factors, including:
- Which state is considered the source of the income
- The specific states involved
- If you changed jobs or kept the same one
- If theres a state income tax reciprocity agreement between the states involved
Youll likely file a part-year resident return in both states. Usually, youll have to file a state return in any states where you:
- Have earned income from wages or self-employment
- Have property that creates income
Before you begin, check the residency rules for each state. Some states consider you a full-year resident if youre present in the state for at least 183 days.
Filing taxes after moving to a neighboring state might include a special situation if you keep your job in your original state. First, youll want to find out if theres a reciprocity agreement between those states. Usually, only your state of residence will tax you if:
- You work in the other state.
- Your wages are your only income from the other state.
If youre filing two part-year resident returns, check the rules for each state on what income to report. Income from interest, dividends, and pensions is usually considered to be from your state of residence. When reporting your income, keep in mind:
Filing An Amended Return
If you file your income tax return and later become aware of any changes you must make to income, deductions, or credits, you must file an amended Louisiana return. To file a paper amended return:
- Mail an amended return that includes a payment to the following address:Louisiana Department of Revenue
Read Also: Does Doordash Take Taxes Out Of Your Check
Note If You Are Exempt From Withholding Taxes
Being exempt means your employer wont withhold federal income tax from your pay. Generally, the only way you can be exempt from withholding is if two things are true:
You got a refund of all your federal income tax withheld last year because you had no tax liability, and
You expect the same thing to happen this year.
If you are exempt from withholding, write exempt in the space below step 4. You still need to complete steps 1 and 5. Also, youll need to submit a new W-4 every year if you plan to keep claiming exemption from withholding.
How Much Do You Have To Pay
Not every person pays the same amount of taxes on Social Security benefits because it depends on a person’s income.
If your total income is more than $25,000 for an individual or $32,000 for a married couple filing jointly, you must pay federal income taxes on your Social Security benefits.
The portion of your benefits subject to taxation varies with income level, which we explain:
File a federal tax return as an “individual” and your income is:
- Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your benefits.
- More than $34,000, up to 85% of your benefits may be taxable.
File a joint return, and you and your spouse have a combined income that is:
- Between $32,000 and $44,000, you may have to pay income tax on up to 50% of your benefits.
- More than $44,000, up to 85% of your benefits may be taxable.
Read Also: Www Aztaxes Net
You May Have To File More Than One State Tax Return
If youve moved during the year or have worked in two or more different states, you may need to file an income tax return in each state where youve lived and worked.
If both states collect income taxes, then the employers will withhold state income taxes for their respective states, says Lydia Desnoyers, owner of Desnoyers CPA LLC. Come time to file your state income tax returns, you would be taxed on a prorated basis.
Note, however, that this may not apply if you live in one state and work remotely for a company in another state.
If you live in one state and commute to another where you work, things can get trickier. If the two states have a reciprocal tax agreement, filing state income taxes may be required only in the state where you live.
Whats more, some states even have special tax forms just for their full-year residents who work in a reciprocal state. Indiana, for example, has a form called IT40-RNR to address situations like this. Check your state requirements for an additional tax forms you may need to file if you earned income other than wages, salaries, tips or commissions in your resident state.
States With No Income Tax
Eight states don’t impose any income tax on earned income at all as of tax year 2022. An employer located in one of them would not withhold taxes for that state if you work there. These states are:
New Hampshire taxes only investment income, not earned income. Tennessee did the same, but even that tax was repealed effective 2021.
You do have to report this income on your home state return and your federal tax return.
Recommended Reading: Does Doordash Send 1099
What Happens When Independent Contractors Don’t Pay Taxes In Full Or On Time
Big bucks or pocket change — coming in from full-time work or a side hustle: the IRS wants you to pay a percentage in taxes on everything you earn from everything you do. If you under-report, misreport, or altogether fail to report how much money you made each year — and the IRS catches on — there will be penalties.
Not only that, they expect you to:
- overpay your estimated taxes — and will penalize you for underpaying quarterly taxes
- send in your tax payments in accordance with a schedule they set each year — and will penalize you if your quarterly tax payments are late or if you skip payments
File Electronically In Just Minutes And Save Time
We know that filing your taxes can sometimes be unpleasant. That is why our helpful online tax preparation program works with you to make the filling process as pain-free as possible. Many filers can use our online tax software to electronically file their taxes in less than 15 minutes.
To use the E-file software, a visitor simply needs to create a free account , enter their taxpayer information, income figures, then any deductions they may have, and our software will calculate and prepare the return. Once a user has completed preparing their return they will be provided the option of either e-filing or printing and mailing. It’s as simple as that.
Recommended Reading: Philadelphia Pa Sales Tax
Do I Claim An Exemption For Myself
You can claim a personal exemption for yourself unless someone else can claim you as a dependent. Note thats if they can claim you, not whether they actually do. If you qualify as someone elses dependent, you can t claim the personal exemption even if they dont actually claim you on their return.
Watch For Your Income Documents To Arrive
You should receive forms about how much income youve earned from your employers and other income sources in January or February. If you are a full-time employee, you will receive a Form W-2 detailing your earnings, as well as which taxes were withheld. If you work freelance or on a contract, you may receive a Form 1099-NEC detailing what you earned. You may also receive documents showing dividends or interest earned on investments , or student loan interest youve paid . If youre a college student , youll receive a Form 1098-T that shows how much you paid in tuition, as well as any amounts you received from grants or fellowships, to help you figure out deductions and credits related to education expenses.
You May Like: How To File Taxes As A Doordash Driver
When To Check Withholding:
- If the tax law changes
- When life changes occur:
- Lifestyle Marriage, divorce, birth or adoption of a child, home purchase, retirement, filing chapter 11 bankruptcy
- Wage income The taxpayer or their spouse starts or stops working or starts or stops a second job
- Taxable income not subject to withholding Interest, dividends, capital gains, self-employment and gig economy income and IRA distributions
- Itemized deductions or tax credits – Medical expenses, taxes, interest expense, gifts to charity, dependent care expenses, education credit, Child Tax Credit, Earned Income Tax Credit
How Does Federal Tax For Streamers Work
Two notes of importance. Firstly, all of your deductions and such come out of your total earnings before you can determine the taxable earnings. You will fill out the Schedule SE to determine your taxable earnings. You will need Schedule C to fill it out.
Secondly, this is a stair-step method. Just because you may have taxable earnings of say $100,000 does not mean that your tax rate on all of it would be the 24% . The first $9,875 is still at 10%, the profits between $9875 and $40125 are taxed at 12%, and so on. The only amount taxed at 24% is any profit you receive over $85,526.
The income tax brackets change yearly, so dont rely on this years numbers for next year. . Here is the table you will use in 2022 to file your taxes for 2021:
2021 Federal Income Tax Table
The amount of tax you pay will be adjusted depending on how much you earn and how you file your taxes. To see the current income taxes, check out the following page on NerdWallet.
Recommended Reading: How To Find Your Employer’s Ein
Everyone Should Check Withholding
The IRS recommends that everyone do a Paycheck Checkup in 2019. Though especially important for anyone with a 2018 tax bill, its also important for anyone whose refund is larger or smaller than expected. By changing withholding now, taxpayers can get the refund they want next year. For those who owe, boosting tax withholding in 2019 is the best way to head off a tax bill next year. In addition, taxpayers should always check their withholding when a major life event occurs or when their income changes.