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Tag: taxes

Here’s guidance for handling taxes on Covid-related withdrawals from retirement accounts

Finance
MoMo Productions | DigitalVision | Getty ImagesThat early withdrawal from your retirement account last year may have been a life saver. Now, it's time to start paying the taxman.Most retirement savers did not take a distribution under legislation that authorized penalty-free early withdrawals amid the pandemic.However, for those who did, the majority (69%) say they either don't plan to replace any of the money they withdrew or are unable to do so, according to recent research from Principal Financial Group. Another 18% intend to repay part of their withdrawal, and 13% say they'll replace the full amount.Be aware that you're required to include at least a portion of any taxes owed on your 2020 return — which is due May 17. And depending on the tax form you received, extra steps may be requi...

Broke? Need an extension? Amending a return? No matter your situation, you need to file your taxes

Finance
Constantine Johnny | Moment | Getty ImagesThe IRS may be extending the deadline to file your annual taxes for 2020 to May 17, but there's no time like now to get started on them — no matter your circumstances.Perhaps you owe money that you don't currently have. Maybe your life has been turned upside down and doing your taxes is the last thing you want to do. But don't even think about not filing a tax return."It's a terrible idea," said Nayo Carter-Gray, founder of 1st Step Accounting, of not filing. "It's one of the worst things you can do."Lisa Greene-Lewis, a tax expert at TurboTax, concurs."It is definitely a bad idea," she said. "File the return even if you can't pay what you owe."Let's start with the penalties. If you don't file your return, you'll be assessed a penalty of 5% of the ...

Congress wants to waive taxes on unemployment. Some states may not

Finance
Daniel Acker/Bloomberg via Getty ImagesCongress may soon offer a tax break to unemployed Americans. States may not be so generous.The Senate passed a $ 1.9 trillion Covid relief bill on Saturday that waives tax on up to $ 10,200 of unemployment benefits per person received in 2020.President Joe Biden is expected to sign the legislation this week after it's passed by the Democrat-led House of Representatives.But the tax policy, which applies to households that made less than $ 150,000, is only a break on workers' federal income taxes.More from Personal Finance:American Rescue Plan creates a tax headache for the joblessHere's how a $ 300 and $ 400 unemployment boost compareSmallest businesses can still apply for a PPP loanMore than half of states levy an income tax on unemployment benef...

Here’s how wealthy families will save on estate taxes in the Biden presidency

Finance
Democratic candidates for Senate Jon Ossoff (L), Raphael Warnock (C) and US President-elect Joe Biden (R) bump elbows on stage during a rally outside Center Parc Stadium in Atlanta, Georgia, on January 4, 2021.Jim Watson | AFP | Getty ImagesWealthy Americans worried about the prospect of higher estate and gift taxes might have more time to come up with a strategy.With Jon Ossoff and Raphael Warnock both winning their Senate runoff elections in Georgia, the Democrats now have control — albeit precarious — of the Senate.That will help President-elect Joe Biden push his legislative agenda, and higher taxes are expected to be a major part of his plansThe estate tax could be a prime target for Democrats.Biden has repeatedly suggested that wealthy Americans are not paying their "fair share" of t...

Cryptocurrency’s value plummets. Here’s what it means for your taxes

Finance
StefaNikolic | E+ | Getty ImagesHolders of cryptocurrency have more than price volatility to worry about this year. The taxman wants to know about your trading activity.Bitcoin hit fresh highs during the weekend, creeping toward $ 42,000 on Jan. 8. However, its value tanked on Monday amid a sell-off in cryptocurrencies, and bitcoin's value is now hovering around $ 33,000.Regardless of whether you interpret the decline in price as a buying opportunity or an alarm to get out, you'll need to share the information with the IRS.More from Smart Tax Planning:Why small businesses face a nightmare tax situationSome newlyweds face marriage tax penalty for 2020 vowsRemote workers could face surprise state taxes for 2020Transactions you partake in this year will be reportable when you submit your 20...