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Category Archives: Tax Central

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Tips for Students Planning to Work During the Summer

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on June 7, 2022 by Lake Wylie Tax Services StaffJune 7, 2022

Tips for Students Working During the SummerAs the summer break from school approaches, many students are looking for part-time summer employment. Both parents and students should be aware of the tax issues that need to be considered when working a summer job. Here is a rundown of some of the more common issues:

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Posted in Tax Central | Tagged Students, taxes

You May Be Able to Donate Your Unused Employee Vacation, Sick, or Personal Leave to Ukrainian Relief

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on May 31, 2022 by Lake Wylie Tax Services StaffMay 31, 2022

Donate to Ukraine Relief FundThere is a little-known disaster provision of the tax code that, where if an employer has adopted a leave-based donation program, the employees can forgo paid vacation, sick, or personal leave in exchange for their employer making equivalent cash payments to qualified charitable organizations. This does not necessarily mean the employee also forfeits the time off; it will not be paid time off to the extent it is converted to leave-based donation payments.

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Posted in Tax Central | Tagged Employee

Happy Birthdays from the IRS

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on May 17, 2022 by Lake Wylie Tax Services StaffMay 17, 2022

Schedule of Taxes depending upon BirthdayWhen Congress enacts tax laws, many times whether the law applies is based on the age of the taxpayer or a taxpayer’s dependent. Reaching a certain age sometimes provides a tax benefit, while in other cases there’s a tax “penalty” – meaning that a specific type of income becomes taxable, or a credit no longer applies. Most of these age-related tax rules concern dependent children or retirement plan contributions or distributions. If you or a member of your tax family is having one of these special birthdays this year, you may be interested in knowing how your taxes will be affected, so here are some birthdays (or half-birthdays in a couple of cases) that have tax significance, listed by the age as of the birthday:

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Posted in Tax Central | Tagged Tax Planning

When Can You Dump Old Tax Records?

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on May 10, 2022 by Lake Wylie Tax Services StaffMay 10, 2022

disposing of old tax recordsTaxpayers often question how long records must be kept and the amount of time IRS has to audit a return after it is filed.

It all depends on the circumstances! In many cases, the federal statute of limitations can be used to help you determine how long to keep records. With certain exceptions, the statute for assessing additional tax is 3 years from the return due date or the date the return was filed, whichever is later. However, the statute of limitations for many states is one year longer than the federal limitation. The reason for this is that the IRS provides state taxing authorities with federal audit results. The extra time on the state statute gives states adequate time to assess tax based on any federal tax adjustments that also apply to the state return.

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Posted in Record Keeping Tips, Tax Central | Tagged taxes

Vacation Home Rentals: How the Income Is Taxed

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on May 3, 2022 by Lake Wylie Tax Services StaffMay 3, 2022

Vacation Home Rentals How is the Income TaxedIf you have a second home in a resort area, or if you have been considering acquiring a second home or vacation home, and with summer just around the corner, you may have questions about how rental income is taxed for a part-time vacation-home rental. The applicable rental rules include some interesting twists that you should know about before you begin renting. Although some individuals prefer to never rent out their homes, others find such rentals to be a helpful way of covering the cost of the home. For a home that is rented out part time, one of three rules must be considered, based on the length of the rental:

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Posted in Tax Central | Tagged Rental Property

Electric Vehicle Credits Phasing Out

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on April 6, 2022 by Lake Wylie Tax Services StaffApril 6, 2022

Buying an Electric Vehicle for Tax CreditIf you are considering purchasing an electric vehicle and expect to receive a federal tax credit along with the purchase, you better do your homework first. There is a phaseout that is based on a manufacturer’s sales of electric vehicles that impacts the credit available to the purchasers of the vehicles.

Many of the more popular manufacturers have been phased out of the credit, including Tesla and General Motors.

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Posted in Tax Central | Tagged Automotives, Tax Credit

You May Need to File Estimated Tax Payments

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 29, 2022 by Lake Wylie Tax Services StaffMarch 29, 2022

You May Need to File Estimated TaxesEstimated tax payments are not just for the self-employed. They are for anyone whose withholding and tax credits are significantly less than their projected tax liability, and if used properly, can protect a taxpayer from underpayment penalties.

Employees who will have income, Social Security, and Medicare taxes withheld from their wages generally do not need to make estimated tax payments. On the other hand, self-employed individuals must prepay their taxes by making quarterly estimated tax payments. These are referred to as estimated tax payments because the self-employed individual must estimate his or her net earnings for the year and pay taxes on a quarterly basis according to that estimate. Failure to do so will result in interest penalties

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Posted in Tax Central | Tagged Tax Planning

Tax Benefits for Child Daycare Providers and Users

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 15, 2022 by Lake Wylie Tax Services StaffMarch 15, 2022

Tax Benefits for Child Daycare ProvidersSpecial tax benefits are available for those providing daycare services for children and the parents who pay for those services. This article looks at the various tax deductions daycare providers may use and the childcare tax credit that the parents may claim.

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Posted in Tax Central | Tagged Tax Planning

Read This First Before Tapping Your Retirement Savings

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 8, 2022 by Lake Wylie Tax Services StaffMarch 8, 2022

Read This First Before Tapping Your Retirement SavingsYour 401(k), IRA or other retirement accounts may be a tempting source for cash if you find yourself short of funds or have a major purchase you are considering. But withdrawing money from a traditional IRA or qualified retirement account before you reach age 59 1/2 may not be the best idea, as you will likely pay both income tax and a 10% early-distribution tax (also referred to as a penalty) on any previously untaxed money that you take out.

Withdrawals you make from a SIMPLE IRA before age 59 1/2, and those you make during the 2-year rollover restriction period after establishing the SIMPLE IRA, may be subject to a 25% additional early-distribution tax instead of the normal 10%. The 2-year period is measured from the first day that contributions are deposited.

These penalties are just what you’d pay on your federal return; your state may also charge an early-withdrawal penalty in addition to the regular state income tax.

Thus, before making any withdrawals from a traditional IRA or other retirement plans, including a 401(k) plan, a 403(b) tax-sheltered annuity plan, or a self-employed retirement plan, there are two things you should carefully consider: (1) you are taking funds, and their future appreciation, from your retirement savings which can impact your future retirement lifestyle. (2) You will be creating unnecessary taxes and penalties which will increase the amount you will need to withdraw to obtain your needed funds.

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Posted in Retirement Planning, Tax Central | Tagged IRA, Retirement, Tax Planning

Charitable Tax Deduction Peculiarities

Lake Wylie Tax Service | Bookkeeping | Payroll Service Posted on March 1, 2022 by Lake Wylie Tax Services StaffMarch 1, 2022

Charitable Giving Deductions changes for 2021 Charitable contributions are deducted as part of a taxpayer’s itemized deductions on IRS Schedule A, except for the special 2020 and 2021 provisions that allow up to $300 ($600 for married taxpayers filing jointly for 2021) of cash donations as a deduction for non-itemizers.

Charitable contributions can take many forms, and some are unusual or misunderstood. The following includes issues that a taxpayer may encounter related to non-cash contributions.

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Posted in Tax Central | Tagged Charitable Giving, Charity

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