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The Internal Revenue Service has plenty of ways to penalize you for mistakes on your tax return. Some of these potential penalties are so convoluted and complex that there may well be disagreement within the IRS on when they apply. However, most people accrue tax penalties for very simple mistakes. Below are some of the more common yet easily avoidable mistakes. Failing to File – Do you really think the IRS will forget about the fact that you did not file your tax return? It may take some time, but the IRS will eventually catch up with you. Expect little sympathy if you do not file. The ...

Here are a few ways to help yourself at Uncle Sam's expense. 1. Shift Toward Capital Gains – The TCJA narrowed the gap between individual tax rates and capital gains taxes, but it's still preferable from a tax perspective to have investments that rely on price appreciation for returns instead of income generation. Returns on the former are taxed at the capital gains rate (15-20%, with a few exceptions) while returns on the latter are taxed per the standard income brackets. 2. Qualified Pass-Through Income – The TCJA also handed a huge, albeit temporary, gift to many small-business o...

Claiming dependents on your taxes is usually a fairly straightforward procedure, but in some cases, more than one person (or couple filing jointly) will claim someone as a dependent, muddying the process. The most common example is when divorced or separated parents both want to claim their children as dependents for tax purposes. Dependents can have a large impact on taxes — not just from the ability to claim Head of Household filing status, but also through tax credits such as the Child Tax Credit, the Child and Dependent Care Tax Credit, and the Earned Income Tax Credit. Both the qual...

KXLY April 5, 2021 7:00 AM MoneyTips Posted: Updated: Are you tired of working for others? Being your own boss can be very rewarding both financially and spiritually, but there are challenges associated with freelance work. Taxes are one of the most difficult aspects because self-employment brings a special set of tests. Freelancers work as independent contractors and those who employ them are not required to withhold payroll taxes (such as Medicare and Social Security contributions). As both employer and employee (technically, you employ yourself), you must contribute both sets of ...

MoneyTipsNightmare: you've been called to a meeting with an IRS agent to discuss your tax return, and you can't afford professional help. Did you know that you could have someone