The Child Tax Credit (CTC) is a tax credit that provides financial assistance to families with children. In 2021, the CTC underwent significant changes, including an increase in the credit amount and the introduction of monthly payments. These payments were deposited into eligible families’ bank accounts and labeled as “CHILDCTC.” TREAS 310: Understanding the Source … Read more
National Insurance (NI) is a tax levied on earnings and profits in the United Kingdom. It contributes to funding essential public services such as the National Health Service (NHS), state pensions, and unemployment benefits. While NI contributions are generally proportional to income, there is a threshold above which the contribution rate decreases. This article explores … Read more
Yes, you can pay off someone else’s mortgage tax-free, but there are some important things to keep in mind. Gift Tax Implications Under current tax laws, you can give up to $17,000 to an individual each year without incurring any gift tax. This means that you could make a one-time payment of up to $17,000 … Read more
Understanding Capital Gains Tax (CGT) on Property Capital Gains Tax (CGT) is a tax levied on the profit you make when you sell an asset that has increased in value. In the context of property, CGT applies to the gain you make when you sell a property that is not your primary residence. Exemption: Private … Read more
The Cohan rule is a legal doctrine that allows taxpayers to estimate certain tax deductions when they lack precise records of actual expenses. Named after the taxpayer in the landmark case Cohan v. Commissioner, this rule provides taxpayers with a degree of flexibility in substantiating their deductions, particularly when faced with incomplete or missing documentation. … Read more
Life insurance proceeds, typically paid directly to a beneficiary, are generally not subject to income tax as they’re seen as reimbursement for a loss. However, exceptions do exist. For instance, if the beneficiary owes back taxes, the IRS may place a lien on their assets, including the insurance proceeds. Understanding the Exceptions 1. Beneficiary’s Outstanding … Read more
The Internal Revenue Service (IRS) is the federal agency responsible for collecting taxes and administering the Internal Revenue Code. The IRS may contact taxpayers for a variety of reasons, including to collect overdue taxes, to request additional information, or to conduct an audit. There are several ways that the IRS may contact taxpayers, including: By … Read more
Maintaining accurate and organized records is crucial for various aspects of life, including managing finances and navigating legal matters. Social Security statements are particularly important documents that provide a detailed history of your earnings and contributions to the Social Security system. Understanding how long to keep these statements is essential for ensuring their availability when … Read more
Establishing proof of income is crucial for self-employed individuals, whether for tax filing, securing loans, or renting an apartment. This guide provides a detailed overview of the various methods and documents you can use to demonstrate your self-employment income. Methods for Proving Self-Employment Income 1. Annual Tax Return (Form 1040) Official IRS document that verifies … Read more
Navigating IRS Audit Time Frames and Exceptions The Internal Revenue Service (IRS) plays a crucial role in ensuring compliance with tax laws and regulations. As part of its responsibilities, the IRS conducts audits to verify the accuracy of tax returns and assess potential discrepancies. Understanding the time frames and exceptions associated with IRS audits is … Read more