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Video instructions and help with filling out and completing 1040 line 10
Hey everyone its John your personal tax consultant with a degree in accounting so you've got your gross income figured out and now we move on to adjusted gross income there are a certain number of deductions that you may be able to take to reduce your taxable income which will then in turn reduce your tax obligation for the year some good examples of this include a health savings account deduction if you made a contribution to a health savings account that amount might be deductible there's also a possible deduction for moving expenses if you're required to move houses whether it be out of state or to a new city for a job some of those moving expenses might be deductible another potential helpful deduction is self-employed health insurance deduction you may be able to deduct the entire amount that you pay for yourself and 35 percent of the premiums you pay for your employees for you students out there there's a potential deduction for tuition and fees now for more information on this deduction as well as a potential tax credit for students click on the link above and watch the video once you've determined all the deductions you qualify for add them all up subtract that number from your gross income and you come up with a number we like to call your adjusted gross income otherwise known as your AGI thanks for watching for other tax related videos feel free to follow the link below or any of the links above and be sure to rate comment and subscribe to our channel if you have any requests or suggestions send us an email to request at Mahalo com thanks you.
FAQ
How does a 1099 differ from a W-2 when filing taxes?
Specifically, those are the forms used by employers to report payroll to the the Internal Revenue Service.The difference is that a W2 form is used to report the amount paid to an employee of the company. Employees get numerous benefits, but also the employer is required to withhold estimated income taxes. (These can be adjusted by the employee using a W4 form.) Thus, a W2 employee is likely to get paid less because of the other benefits he receives, and less again because the paycheck he receives will already have estimated taxes taken out.A “1099” worker is not an employee. Rather, they are a contractor. A contractor gets no benefits - no vacation, no sick leave, no holidays, no retirement, no health plan, no saving plan, etc., etc., etc. As a result, a 1099 contractor usually gets much higher pay, since they are typically paid by the hour and only for the hours they actually work. Moreover, the employer does NOT withhold estimated taxes, so the paycheck will appear to be even higher.Another difference is that 1099 workers are required to pay a “self-employment tax”. This corresponds to the amount that the employer would normally pay in taxes towards an employee’s social security account. Since the 1099 worker is “self-employed”, he must pay that tax himself. This tax is 6.2% of the pay up to $128,000. As with other taxes, this will not be withheld by the employer, but must be estimated and paid each quarter by the worker or they will be fined for underpayment of estimated taxes.Finally, only employees get “Unemployment Insurance”. If an employee loses his job, the state will pay him weekly benefit until he finds a new job - up to 26 weeks, but sometimes longer. 1099 workers get no such benefit.As a result, the 1099 worker’s equivalent pay rate should be approximately 33% higher than that of the employee doing the same work. The exact figure depends on the benefits.
When deducting real estate taxes, do I enter the amount of the actual tax for the property or the amount I paid after credits, which is lower?
The other answers here are essentially correct. Just wanted to add that if the credits are paid to you in a different tax year than your payment, then you would deduct the entire payment in when it was paid, then include the credits as income in the year you receive them (e.g.: on 2021 Form 1040, Line 10).If you use the standard deduction, then you do not need to report the credits as income.
If I return an item I previously took as a business expense, the following tax year, how do I report that? Is it considered income for the new year?
The answer may be in IRS Publication 525, see pages 23- (it’s a general rule - it may not apply to your specific situation)RecoveriesA recovery is a return of an amount you deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates of itemized deductions. You also may have recoveries of non-itemized deductions (such as payments on previously deducted bad debts) and recoveries of items for which you previously claimed a tax credit.Tax benefit rule. You must include a recovery in your income in the year you receive it up to the amount by which the deduction or credit you took for the recovered amount reduced your tax in the earlier year. For this purpose, any increase to an amount carried over to the current year that resulted from the deduction or credit is considered to have reduced your tax in the earlier year.Where to report. Enter your state or local income tax refund on Form 1040, line 10, and the total of all other recoveries as other income on Form 1040, line 21. You cannot use Form 1040A or Form 1040EZFor business income you may have to report the income on a Schedule C - for sole proprietorships.
How does one dispose fixed assets on 1120-S before these assets are fully depreciated?
For an 1120S, you need to fill out forms:4562 Depreciation and Amortization - Where you will depreciate the property through the date is was destroyed. Any current year depreciation will flow onto line 14 on page one of the return. 4684 page 2 Casualty Theft and Losses - Where you will detail your loss. Make sure to recapture all depreciation. This amount will carry onto Schedule K1, (or divided on multiple K1s per shareholder percentages) line 10, with Code B to be reported on the shareholder's 1040. Note - there should be nothing from this transaction entered on form 4797 and nothing from this transaction should be entered on line 4 on page one of the return. Your software may have to be overridden to make this happen. Hope that helps!
For my 2021 return, do I qualify for tax deductions of $5,000 from medical bills (after insurance) that I paid with an AGI of 47,560 and should I amend the return?
You generally can deduct only the part of your medical and dental expenses that exceeds 10% of the amount on Form 1040, line 38. However, if either you or your spouse was born before January 2, 1951, you can deduct the part of your medical and dental expenses that exceeds 7.5% of the amount on Form 1040, line 38. [1]That depends on several things.If you took a standard deduction and your itemized deductions including this adjustment was less than the standard deduction, you will not benefit from an amendment.If you itemized your deductions in 2021. your amended Schedule A will show an increase of either $244 or $1,433, depending on if you were born before or after January 2, 1951.It is up to you if you wish go through the time, trouble and cost involved in filing an amendment that will result in a $37 [1]to $358[2] refund, depending upon your tax bracket and age.Your accountant may charge you more for preparing the amendment than you’ll be getting back. On the other hand, if you do your own taxes and know where the numbers go, it may be worth your while.[1] worst case scenario: $244 x 15% tax bracket[2] best case scenario: $1433 x 25% tax bracketFootnotes[1] https://www.irs.gov/pub/irs-prio...
Is dental insurance tax deductible?
[US tax perspective]Yes and no.Yes = you may deduct dental insurance premiumsNo = you may not deduct all of itYou generally can deduct only the part of your medical and dental expenses that exceeds 10% of the amount on Form 1040, line 38 (Adjusted Gross Income). However, if either you or your spouse was born before January 2, 1952, you can deduct the part of your medical and dental expenses that exceeds 7.5% of the amount on Form 1040, line 38.Let’s take an example.Line 38 reads $50,000. 7.5% of $50,000 is $3,750, and 10% of $50,000 is $5,000.During the tax year, your medical and dental premiums paid were $6,000.Assuming you were born on or after January 2, 1952, you would be entitled to a $1,000 tax deduction on Schedule A.$6,000 minus $5,000 = $1,000.See also Publication 502 (2021), Medical and Dental Expenses (for a list of non-deductible medical related expenses)
Can I pre-pay my California state taxes for 2021 in 2021 in order to take the state income tax deduction?
I don’t believe you can. In order for you to get a state income tax deduction on your itemized deductions (Schedule A), it needs to be paid in 2021 for the tax years 2021 or 2017.However, for your own peace of mind, please read what the instructions for Schedule A says:Line 5: State and Local Income TaxesIf you elect to deduct state and local income taxes, you must check box a on line 5. Include on this line the state and local income taxes listed next.State and local income taxes withheld from your salary during 2021. Your Form(s) W-2 will show these amounts. Forms W-2G, 1099-G, 1099-R, and 1099-MISC may also show state and local income taxes withheld.State and local income taxes paid in 2021 for a prior year, such as taxes paid with your 2021 state or local income tax return. Don't include penalties or interest.State and local estimated tax payments made during 2021. including any part of a prior year refund that you chose to have credited to your 2021 state or local income taxes.Mandatory contributions you made to the California, New Jersey, or New York Nonoccupational Disability Benefit Fund, Rhode Island Temporary Disability Benefit Fund, or Washington State Supplemental Workmen's Compensation Fund.Mandatory contributions to the Alaska, California, New Jersey, or Pennsylvania state unemployment fund.Mandatory contributions to state family leave programs, such as the New Jersey Family Leave Insurance (FLI) program and the California Paid Family Leave program.Don't reduce your deduction by any:State or local income tax refund or credit you expect to receive for 2021. orRefund of, or credit for, prior year state and local income taxes you actually received in 2021. Instead, see the instructions for Form 1040, line 10.source: https://www.irs.gov/pub/irs-dft/... (see page A-3)
In a Facebook discussion a person claimed that immigrants in the US military don't have to pay the same taxes on their income that citizens in the US military do. Is this correct? I was hoping for information from someone with experience.
Even by internet standards that’s….a curious notion.In order to enlist, one must be a citizen (natural born or naturalized, doesn’t matter) or a legal permanent resident (green card holder). Officers must be citizens. It doesn’t make the slightest difference in your pay or taxes.Unless you’re in a Congressionally designated tax-free Combat zone (Combat Zones | Internal Revenue Service) service members pay Federal taxes like everyone else. They pay state taxes of their legal Home of Residence (HOR). That can be the state where they resided when they first joined the military, or any state where they’ve been stationed, even if they later move elsewhere. So, once you’re stationed somewhere with no state income taxes, like Florida, you can still be a “Florida resident” for tax purposes even if you’re later stationed in Maryland or California or wherever.
Is a mortgage interest tax deductible?
Under the new tax law, mortgage interest on one’s personal residence and on a second home is deductible, but with limitations.Where previously a married couple filing jointly could deduct interest on up to $1 million of “acquisition indebtedness,” they can now deduct interest on $750,000. They could also deduct interest on up to $100,000 of an equity loan, such as a HELOC, but that provision no longer exists—that interest is no longer deductible.I have used numbers for a married couple filing jointly. For single taxpayers or married people filing separately, the deductibility of acquisition indebtedness for has been reduced to $375,000 from $500,000. People who bought their homes prior to 12/31/17 will still be able to claim interest on acquisition indebtedness up to $1 million ($500,000 single taxpayer).A homeowner will be able to refinance a loan placed before 12/31/17 and still deduct interest on up to $1 million ($500,000 single) provided that they do not increase the loan amount over the acquisition indebtedness. In other words, if the loan balance is $950,000 today and they refinance to $1 million, they will only be able to deduct interest on $950,000. Furthermore, if they happen to pay the loan down, then refinance up to the original acquisition indebtedness amount, they will only be able to deduct interest on the amount refinanced. They may be able to deduct more if the cash proceeds are used to “substantially improve” the property. In any case, they will not be able to deduct interest on any amount above the acquisition indebtedness.I hope this is helpful.Joe’s standard disclaimer: While I do my best to write accurate, factual answers on tax matters, the reader should be aware that I am not a CPA or tax lawyer. You should consult a licensed tax professional for tax advice. This is only an academic discussion, even though there may be some specific examples.
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