Posted by Tax Advisor on December 3rd, 2013
Living in a tax-free state doesn’t mean you aren’t responsible for income taxes if you work in a bordering state.
Texas is an income tax-free state. Fantastic, right? It is for residents of Texas who both live and work in the state. For those that live in Texas but work in bordering states such as Louisiana, New Mexico or Oklahoma, there is an income tax to pay.
If you live in Texas but work in a different state, it’s best to learn the income tax details of the state you work in and the importance of filing a non-resident return for that state.
I Live in Texas but Work in Louisiana
If you work in Texas but travel to Louisiana for work, you will need to file a non-resident state return for Louisiana reporting all income earned from Louisiana sources.
Personal Louisiana Income Tax Rate:
Posted by Tax Advisor on November 29th, 2013
If you made a charitable donation over the past year you may be wondering what you can write off on your taxes.
Only if you are itemizing your deductions while filing your taxes, you can write off charitable donations to those falling within “Qualified Organizations” list.
Charitable Contribution Deduction Facts:
- You may deduct charitable contributions of money or property that you made to a qualified organization only if you itemize your deductions on Form 1040 . (Tax payers who have itemized deductions that are more than the standard deduction should itemize their deductions.)
- Generally charitable deduction limits are up to 50% of your adjusted gross income
- Contributions must be paid in cash or other forms of property before the end of the tax year in order to be deductible when itemizing your tax deductions.
- For items of property (items other than cash) donated, the fair market value of the item will be deducted on your tax return.
- When making donations, it’s best to write checks (that way you can easily track your offerings)
- The IRS Publication 526 explains Charitable Contributions
What Organizations are considered “Qualified Organizations” to donate to?
In order to consider a charitable contribution a tax deduction when itemizing your deductions it must be made to certain types of organizations. The list of qualified organizations is as follows: Read the rest of this entry »
Posted by Tax Advisor on November 25th, 2013
California state tax rates stand as one of the highest tax rates in the US.
California is the state that has always ended up on movie screens. The Golden State offers just about everything; beaches, mountains and great weather. Who wouldn’t want to live there? The answer is not rhetorical. Anyone who hates paying high taxes wouldn’t want to live in California. California is in fact known as the third worst state for taxes.
In all of the United States, the west coast state of CA has the highest state sales tax and some of the highest income tax rates. If you live in California, before filing your taxes, it would be helpful to learn about the California tax rates.
California Income Tax Rates
California’s personal income tax system is composed of ten brackets. The state actually ranks as the highest income tax rate among states who levy an individual income tax and seventh highest income taxes among all US states. Read the rest of this entry »
Posted by Tax Advisor on November 21st, 2013
Over the past year, the capital gains tax rate increased for some tax brackets.
Capital gains tax 2013 changes mostly effects individuals earning an income of $450,0001 and over. For this group, long term capital gains tax rate jumped from 15% to 20% while the short term 2013 capital gains tax rates increased by 4.6%. In 2012, the short term capital gains tax rate was 35%. The current year short-term rate is 39.6%.
In part one of this article, long term capital gains were defined along with tips on how to avoid paying large long term capital gain tax rates. Now, it’s time to discuss short term capital gains and how they relate to filing your taxes.
What are short term capital gains?
A Capital gain is a profit made from selling any asset when the sale price exceeds the purchase price.
Capital gains are taxed differently depending on how long they are held. The capital gains clock begins the day after you acquire the asset until the day you sell it (this includes day you sell it). Depending on how long the capital gain is held for will determine if it falls into the short-term category or long-term.
Read the rest of this entry »
Posted by Tax Advisor on November 19th, 2013
Before filing your taxes, learn the recent changes in the capital gains tax rate and strategies to help you save!
Over the past year, the long term capital gains tax rate increased to 20% for those earning over $400,000. Not to mention, high income earners also have an additional 3.8% to the tax rate. Last year, the 2012 capital gains tax rate for most was 15%. That 15% will remain as the current capital gains tax only to those who make $36,250 to $400,000.
In part one, long term capital gains will be defined along with tips on how to avoid paying large long term capital gain tax rates when it’s time to file your taxes. Part two of this article will address the same for short term capital gains.
What are Capital Gains and Capital Losses?
What you use for personal or investment purposes along with just about everything you own is known as a capital asset. They may be short term or long term capital assets. Capital gains and deductible capital losses are reported on Form 1040, Schedule D. According to the IRS in Topic 409;
“When a capital asset is sold, the difference between the basis in the asset and the amount it is sold for is a capital gain or a capital loss…You have a capital gain if you sell the asset for more than your basis. You have a capital loss if you sell the asset for less than your basis. Losses from the sale of personal-use property, such as your home or car, are not deductible.”
Read the rest of this entry »
Posted by Tax Advisor on November 15th, 2013
In The Top Ten States for Military Retirees- Part One, we gave you the top five best picks to spend military retirement in. Five others fall among the best states for military retirees.
In the top ten states for military retirees part one, at the top of the list, in the number one spot was Florida, followed by Texas, Alabama, Tennessee and Mississippi.Wondering what other states made the list? If the top five didn’t catch your attention, maybe one of these will:
#6-Nevada: Are you a military retiree who likes to gamble? In sixth place is Nevada. Nevada has no income tax and no tax on retirement income and social security benefits. Although, there is a 6.5% state sales tax and there are also no property tax breaks for seniors in Nevada (perhaps you’ll win this back on weekend trips to Las Vegas).
#7-Washington: Washington ranks as the seventh best state to live in for military retirees. All retirees don’t pay taxes on their retirement income, social security benefits or pensions. Like Nevada, Washington has a 6.5% state sales tax and this percent can even increase to 9.5%, depending on the local tax. There is a four property-tax relief program for seniors owning homes.
#8-Illinois: Illinois at seventh place, exempts retirement tax for military retirees and does not tax social security benefits. The state sales tax is also 6.25% and can go as high as 10% in some areas. For seniors, there is a homestead exemption which allows $5000 reduction of the property that is paid taxes on. Illinois does not have an inheritance tax.
Read the rest of this entry »
Posted by Tax Advisor on November 14th, 2013
#1 pick for the best tax-free military retirement state goes to the sunshine state of Florida!
Are you thinking about where you want to retire? Maybe you are wondering what state will leave you paying the least amount in taxes when it comes time to file with RapidTax. Fortunately, there’s a list of states that don’t tax US military retirement pay. Among these military tax exempt states, some are more appealing than others (for a variety of reasons), leading us to a top ten list of states for military retirees.
The Top Ten states for military retirees, in order from one to five:
#1-Florida : Florida has no state income tax, no tax on benefits, and no tax on retirement income along with no inheritance or estate taxes. Specific tax breaks for seniors include an extra homestead exemption that can be up to $50,000, offered to those who meet certain income limits. Not to mention, Florida offers a variety of beaches and theme park attractions, meaning the grandchildren will love visiting.
#2-Texas: Following Florida, in close second place, Texas stands as one of the top picks for military retirees. With a tax-free retirement for veterans, the Lone Star State also has no state income tax, does not tax social security benefits, or any retirement income. Tax breaks for seniors in Texas also include exemption from school taxes for homeowners.
Both Florida and Texas not only have tax-free retirement for military retirees, but also both have a variety of Veteran Administration (VA) Medical Facilities. Deciding between the two warm states? The main difference; Florida has a 6% sales tax rate while Texas has a 6.25% sales tax.
Read the rest of this entry »
Posted by Tax Advisor on November 12th, 2013
Upon starting a new job one of the last things you’d want to do is frantically run up to your boss asking “How many allowances do I claim on my W-4?”.
Instead, first learn the number of allowances you should be claiming.
Being aware of the number of allowances you are claiming on a Form W-4 [Employee's Withholding Allowance Certificate] is important for a variety of reasons. The number of allowance you claim on a W-4 will determine how much tax will be taken from your pay (withholding) and ultimately this will affect the size of your tax refund when filing with RapidTax.
The Four Steps to Filing out a W-4:
- Fill out your personal information (Name, Date of Birth, Address, Marital Status)
- Know the number of personal and dependency exemptions you are claiming on your tax return.
- Based on the number from step 2, use that number to help determine your number of allowances.
- Don’t forget to sign the W-4 and turn it into your employer!
The allowances you should claim while filling out a W-4 if you are single will differ from the allowances you claim if you are married, have kids or whatever the case may be. The following will help while filling out a W-4: Read the rest of this entry »
Posted by Tax Advisor on November 8th, 2013
Are you unsure if you need to file a federal tax return or not?
Filing a federal tax return depends on a variety of factors including your age and income.Even if you aren’t required to file, there are reasons why you may still want to. Once you learn if you need to file a tax return, RapidTax is here to help you through the process!
Filing federal taxes depends on:
- Filing Status
- Dependency status
Those Who Must File Taxes:
The chart below will help you learn if you fall into the tax bracket of filing taxes. If you make the minimum income listed you will need to file federal taxes. Read the rest of this entry »
Posted by Tax Advisor on November 5th, 2013
Filing taxes can be stressful. However, if you are organized and prepared,there will be nothing to stress about when it comes time to file your taxes.
There are important things to know along with forms and information to have before you sit down to file your taxes with RapidTax. By being prepared and organized you will save time and money.
What to do:
Get organized: Make a list of everything you believe is tax related in your life. Start out with big things like college loans, mortgages, etc. then move to the smaller details like organizing daycare receipts, health expenses.
Know changes in personal details: Did you retire this year? Did you change jobs this year? Purchased a house? Maybe you got married or divorced? These are all personal details you will need to include on your tax return.
Know updated tax laws: Updated tax laws will indicate if you fit in certain brackets for paying more (or less) in taxes.
Know your state’s tax regulations: Many people forget to focus on the state return. Specific states have specific tax incentives.
For example, in Georgia, if your child goes to private school and you donate to a scholarship fund, you may receive a $2000 tax credit on state taxes.
Donate: Charitable donations will help you save on your taxes if you itemize your return. If you have donated thousands of dollars of clothing to Goodwill, this will definitely benefit you. However, if you have $20 in Goodwill receipts, this probably won’t affect you much! Read the rest of this entry »