TaxCure Blog

Once you reach age 73, the law requires you to take distributions from your traditional IRAs, 401(k)’s, defined benefit plans, and most other types of retirement accounts, except for Roth accounts. If you don’t take out the required minimum distribution (RMD), you will incur an excise tax of 25% of the amount you were supposed to withdraw. The penalty drops to 10% if you correct the mistake within two years or before having the tax assessed by the IRS if sooner. 

The IRS will waive penalties in some situations – namely, if you have reasonable cause or a history of compliance over the last three years. However, the agency will only waive certain penalties. Generally, you can get failure to file, failure to pay, and failure to deposit penalties waived, and sometimes even accuracy or civil fraud penalties. But, the IRS is typically not willing to waive other penalties. 

If you bounce a check to the IRS, the agency will assess a penalty, and depending on the nature of your payment, you may face other consequences as well. The penalty is 2% of the face value of the check or $25, whichever is higher – if the payment was for less than $25, the penalty is for the face value of the check. 

Losing a home or any other property through foreclosure can be personally and financially devastating, and to rub salt into the wound, it can also lead to a tax liability. If your property is foreclosed on, you may face: 

Your filing status has a significant impact on the taxes you owe. It determines your standard deduction, your eligibility for certain credits, and if you’re married, your liability for your spouse’s taxes. The options are single, head of household married filing jointly, married filing separately, and qualifying widow(er) – To optimize your tax situation, you need to choose carefully and ensure you’re following the rules. 

Married couples can choose to file their taxes jointly or separately. The married-filing-jointly (MFJ) filing status is the most common for couples, as it offers the most tax advantages. Couples tend to choose the married filing separately (MFS) status when they don’t want to be liable for their spouse’s taxes or in the rare situations where it’s advantageous from a tax perspective. 

Now that you’ve filed your taxes, you might be wondering how long to keep a copy of your return. The IRS has guidelines for keeping track of your past returns and your time to hold on to your information may vary based on your tax situation.

The IRS accepts credit card payments for taxes, but is that a smart move? Before putting your tax debt on plastic, consider the overall cost, the effect on your credit, and whether or not, there are better options. To help you decide, this post looks at these three factors:

FICA taxes are based on your earnings, and they fund Social Security and Medicare. If you are employed, your employer pays half of your FICA taxes, and you pay the other half. If you are self-employed or a small business owner, you pay all of your FICA taxes. 

The Child Tax Credit can lower your tax bill and put money in your pocket. To qualify, you must have children under age 17 by the end of the tax year and meet income guidelines. Let’s check out the details.