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What to do if I never filled out Form 8606 for past nondeductible IRA contributions
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro and KristineS, FreeTaxUSA Agent, Tax Pro After-tax (nondeductible) contributions to your traditional IRAs are tracked and reported on Form 8606. These contributions give you basis in your IRAs. Keeping accurate records of your basis is important because when you take…
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What is the pro rata rule and why do I need to know it?
Contributed by: CoryF, FreeTaxUSA Agent, Tax Pro Wait a second, I have taxable income on my conversion to a Roth IRA. I thought if I put in enough nondeductible IRA contributions there would be no taxable income, but I am still seeing taxable income on my Roth IRA conversion. What is happening here? Congratulations, you…
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Why would I fill out the injured spouse allocation form?
Contributed by PhillipB, FreeTaxUSA Agent, Tax Pro There are certain government and legal debts that can be garnished from a federal income tax refund. These debts include: Past due federal or state income tax Student loans in default Unpaid back child support State unemployment compensation Other federal non-tax debt…
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What can I do if I have unreimbursed employee business expenses?
Contributed by: PhillipB, FreeTaxUSA Agent, Tax Pro Since the Tax Cuts and Jobs Act (TCJA) went into effect in 2018, employees can no longer deduct unreimbursed work expenses as miscellaneous itemized deductions on their federal income tax return. Currently, there are four professions that are eligible for deducting their…
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Paying back the premium tax credit due to increase in income
Contributed by: Henry, FreeTaxUSA Agent, Tax Pro Many Americans who obtain health insurance through the federal or state exchanges may be eligible for a government subsidy known as the Premium Tax Credit (PTC). This subsidy is designed to assist with premium payments. If you qualify, you can choose to have all or part of…
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Which parent can claim the child and dependent care credit?
Contributed by PhillipB, TaxPro Agent, FreeTaxUSA As with other child-related tax benefits, the child and dependent care credit aims to ease the financial cost of raising children or caring for disabled dependents. However, determining which parent can claim the child and dependent care credit can be challenging.…
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What is the difference between the child tax credit and the additional child tax credit?
Contributed by KristineS, FreeTaxUSA Agent, Tax Pro Congress is very aware raising children costs a lot of money. Over the years, they've passed various tax laws to benefit families with children. One of the most beneficial of these laws is the Child Tax Credit. Child Tax Credit is split into two parts The non-refundable…
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What is an IRA Recharacterization
Contributed by: CoryF FreeTaxUSA Agent, Tax Pro Did you ever contribute to an individual retirement account (IRA) and later realize it might have been better to choose a different type of IRA? Or perhaps your Roth IRA contribution is facing penalties due to high income? If either situation applies to you, recharacterizing…
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What is a Claim of Right Repayment Credit?
There are a few rare situations where you may be forced to repay income from a prior year. Some examples of this may include Social Security benefits repayments, overpaid vacation or sick pay from an employer, overpaid unemployment benefits, and potentially many other situations could apply. The IRS and many states allow…
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Can I Deduct My Motor Vehicle Fees as Personal Property Tax?
Contributed by: PhillipB TaxPro FreeTaxUSA Team Personal property tax on any of your vehicles is deductible if the tax is based on the value only, and the tax is imposed on a yearly basis. In some cases, the state may collect personal property tax with your motor vehicle registration fee, so you may need to determine what…