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Author: Paul Belfiore

Can I Electronically Pay My Estimated Taxes?

Nashua Residents Looks to Simplify the Process

Estimated tax payments are required for those self-employed individuals, with quarterly payments sent in to cover taxes on income earned for that period. While you can mail a check to cover these payments, you can also pay these online to ensure that they are received on time by the IRS. This will keep you from incurring a penalty for a missed or late estimated tax payment. This can easily be done through the IRS’ website or using the mobile app IRS2Go. The IRS will retain records of the payments and you can account for this in your end of the year tax filing.

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What Are Above-the-Line Tax Deductions?

Hudson, NH Resident Seeks Clarification

Above-the-line tax deductions are those qualified items that are deducted from gross income to
calculate adjusted gross income. The most common above-the-line deductions include IRA and other
qualified retirement contributions, healthcare expenses, business expenses, and student loan interest.
Above-the-line deductions can be taken even if you are not itemizing deductions when filing taxes. This
allows those who have more advantage taking the standard deduction versus itemizing to still take
advantage of these above-the-line tax savings. To calculate this, all above-the-line deductions are
combined and are then used to determine your adjusted gross income, reducing overall taxable income.
This is separate from the standard deduction or itemized deductions, which can then be taken from the
adjusted gross income.

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How to Get Copies of Past Tax Returns

Londonderry, NH Taxpayer Seeks Advice

The IRS can provide copies of tax returns for the past seven years. You can request a copy of your tax
return by submitting Form 4506 to the IRS. There is a fee of $43 associated with this request and should
be submitted at the time of sending the form. It may take the IRS up to 60 days to process this request.
Once processed, the tax documents will be mailed to you. If you had a third-party assist in preparing
your tax return, they may have copies and be able to provide you with this information without needing
to wait for the IRS.

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Tax Benefits for Real Estate Investors

Hollis, NH Potential Investor Looks for Tax Advice

Real estate is a great way to diversify your investments, generating a steady flow of passive income.
There are also many tax benefits to real estate investing, including writing off maintenance expenses
done on the property, property taxes, insurance, mortgage interest, and even property management
fees. These deductions can significantly reduce the taxable income generated from rental properties.
You are also able to take advantage of depreciation. This can be deducted each year, taking into
consideration how much the property is worth, the time period, and a designated depreciation method
that will be used.

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How Are Monetary Gifts Taxed?

Amherst, NH Couples Looks to Share Their Wealth with Their Children

Monetary gifts to any one individual that exceed the annual limit of $17,000 will be subjected to the gift
tax. This tax is typically paid by the giver, as opposed to the recipient. This $17,000 amount was set for
2023 but can vary from tax year to tax year. There is also a lifetime exclusion which is set at $12.92
million. Amounts gifted that exceed this amount given to the same person will likely be taxed. The gift
tax is only applicable on monies or assets that exceed the annual exclusion or lifetime exclusion. The tax
rate varies from individual to individual but can be anywhere from 18% to 40%.

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How Many Allowances Should I Claim on My W4?

Londonderry, NH Resident Looks to Start New Job on the Right Foot

When you start a new job, to get paid via the company’s payroll each new employee will need to fill out
a W4 form. One of the most common mistakes on this form is how many allowances to claim. The
more allowances claimed, the fewer taxes will be withheld from your paycheck. However, if this
number is not correct for your tax filing at the end of the year you may be surprised with a hefty bill in
taxes that you owe. If you are single with one job or married filing as the of household you may want to
claim 1. Single individuals with more than one job or those married and dividing total allowances may
choose to claim 2. Those married with minor children living at home, will often choose three
allowances.

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How are Dividends Taxed?

Nashua, NH Resident Wants to Be Prepared for the End of the Year

Dividends are typically considered taxable income for the year that they are received and will be taxed
at the end of the tax year. Even if the money was not received in cash, being reinvested buying more
shares, it will still need to be reported and will most likely be subject to taxes. How this money is taxed
depends on your taxable income and filing status. The dividends will be considered either nonqualified
or qualified. Qualified dividends usually have a lower tax rate, 0% 15%, or 20% depending on your
income level. Nonqualified dividends are taxed at the same rate as your regular income.

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Bedford, NH Resident Seeks Help

Finding out that you owe the IRS a large sum of money in outstanding tax bills can be a very daunting
experience. For many, it can be difficult to come up with this unexpected amount. It is possible to
compromise with the IRS on the amount of outstanding taxes that you owe, finding an amount and
payment schedule that is more manageable. Using Form 433-A, you will provide information about your
finances, including income, assets, and investments. You will also note any outstanding debt and your
household’s monthly expenses. You will need to include supporting documents for this and a copy of
the completed Form 656. This form will outline the compromised resolution for your tax debt, including
whether this will be paid as a lump sum or monthly payments.

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Litchfield, NH Resident Worries About the Implications

If you missed the tax deadline for only the past year’s tax return, you should go ahead and file as soon as
possible. However, if you have missed multiple years of filing taxes the IRS will require you to submit
the past six years of tax returns. Late filers may be hit with failure-to-file penalty from the IRS. The
amount of this fine is based on the amount of unpaid taxes and how late the return is filed. This penalty
is 5% of the unpaid taxes for each month the return is late.

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Parents of Hollis, NH Teen Have Questions

For underaged children, filing a federal tax return is dependent on your income rather than your age. If
a minor child’s income exceeds $12,950 (for tax year 2022) they need to file a tax return. Any income
below this amount does not need to be claimed. If the teen is working for an employer, they will likely
automatically withhold taxes. To have this money refunded, a tax return will need to be filed for the
working minor. For those minors that are self-employed, if their income exceeds $400, they will need to
file a tax return. Self-employment taxes, including Social Security and Medicare contributions, will be
required on this self-employed income.

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