If a taxpayer’s capital losses are more than their capital gains, they can deduct the difference as a loss on their tax return. This loss is limited to $3,000 per year, or $1,500 if married and filing a separate return. If a taxpayer’s total net capital loss is more than the limit they can deduct,…
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Falsifying Income Tax Tip:
Falsely increasing income to secure larger refundable credits such as the Earned Income Tax Credit can have serious repercussions. This scam involves inflating or including income on a tax return that was never earned, either as wages or self-employment income. Taxpayers can face a large bill to repay the erroneous refunds, including interest and penalties. In…
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Education Tax Credits Tax Tip:
An education credit can help with the cost of higher education. Two credits are available: the American Opportunity Tax Credit and the Lifetime Learning Credit. These credits may reduce the amount of tax owed. If the credit cuts a taxpayer’s tax to less than zero, it could mean a refund. If you need assistance preparing…
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Self-Employment Taxes Tax Tip
Self employment taxes are comprised of two parts: Social Security and Medicare taxes. If you are self-employed, your Social Security tax rate is 12.4 percent and your Medicare tax is 2.9 percent on those same amounts of earnings but you are able to deduct the employer portion. You will pay an additional 0.9% Medicare tax on…
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Tax Preparer Fees
Avoid preparers who base fees on a percentage of the refund or who boast bigger refunds than their competition. When inquiring about a preparer's services and fees, don't give them tax documents, social security numbers, and other information. Some preparers have improperly used this information to file returns without the taxpayer's permission. If you need…
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