Table of contents Foreign Wages Online Desktop Foreign Retirement Income Online Desktop Related Links If you received foreign income that was not reported on Form W-2 or Form 1099-R, complete the FEC (Foreign Employer Compensation) worksheet. The foreign income will be carried to Form 1040, Line 1a or Line 5, depending on the type of […]
When you are a full-year resident of any state, generally you are required to include on that return all income earned regardless of the state you earned it in. If you also have income earned in another state where you did not live (your nonresident state), you are usually allowed a credit on your resident […]
Why am I being prompted to attach an appraisal document? The IRS groups similar donated items together when determining whether the qualified appraisal requirement applies. This applies even if the items were donated to different charities. For example, if your total claimed deduction for clothing donated during the year is $6,000, the clothing is treated […]
What are noncash charitable contributions? A noncash charitable contribution is a donation you give to a qualified charity that is not money. Instead, it is usually an item, property, or another type of asset. Common examples include: Clothing Furniture and household items Electronics and appliances Cars, boats, or other vehicles Stocks, bonds, or other securities […]
Tax Reform Update: Generally, only real property qualifies for like-kind exchange treatment under current tax law. See the IRS instructions for exceptions. Certain exchanges of property are not taxable. This means any gain from the exchange is not recognized, and any loss cannot be deducted. For information on like-kind exchanges, see IRS Publication 544. Additional […]
Orders are billed at the time of purchase. Multiple Charges If you see multiple charges on your credit card, review your TaxAct account to check the status of your filings. The e-filing status will help you understand why you may see multiple charges. If you purchase the federal program, and then later add a state […]
You cannot use the current-year TaxAct program to file a return for a different tax year. Texas labels its franchise tax forms by the year the report is filed, not the year being reported. For example, 2025 taxes are filed in 2026, so Texas labels those forms for 2026. TaxAct programs are labeled differently. The […]
TaxAct automatically transfers information about retirement benefits from the federal return to the Michigan return, however, the program cannot determine if a retirement or pension benefit qualifies to be a subtraction on the Michigan return. You must enter the amount that qualifies for the subtraction, along with any other information that applies. To enter or […]
If this is your first time filing a tax return, there are a few things you should keep in mind: Talk to your parents. Even if you have earned income, your parents may still be able to claim you as a dependent. Depending on your circumstances, you may need to decide whether they will claim […]
TaxAct® provides depreciation reports for federal and state returns. The report includes the current year and next year details. A disposal summary is also available. To review or print the Depreciation Summary in the TaxAct program, follow the steps below. Online From within your TaxAct return, click Review. On smaller devices, click the top-left corner […]
The DC EITC is equal to 100% of the federal EIC (for 2025). See the District of Columbia Earned Income Tax Credit (EITC) webpage for details.
Oregon taxpayers are eligible for a tax credit for contributions made to an Oregon College Savings Plan account and/or to an ABLE account. The credit limit is calculated for each account type and varies depending on the tax year. To qualify for these credits, you must make the contributions by April 15 of the filing […]
You will receive Form 1099-DA when you sell, exchange, or otherwise dispose of a digital asset. There are several options that you can use to enter transactions and information from Form 1099-DA. Once entered, the TaxAct program will complete Form 8949, Schedule D Capital Gains and Losses, and Form 1040, as applicable. Manually Enter Form […]
The Oregon Kids Credit is a refundable credit for eligible Oregon taxpayers with qualifying children. The credit is automatically calculated based on the other entries made in the return. You can review the Oregon Kids Credit calculation by going to State > Oregon > Credits and clicking Review beside Oregon Kids Credit. The Oregon Kids […]
The IRS standard mileage rates for 2025 are: 70 cents per mile driven for business use 21 cents per mile driven for medical or military moving 14 cents per mile driven in service of charitable organizations See the IRS website for more information and prior year amounts. NOTE Taxpayers cannot claim a miscellaneous itemized deduction for […]
The IRS’s standard mileage rate allowed for operating expenses for a car when you use it for medical reasons is 21 cents per mile for 2024 and 2025. Related Links Mileage – Standard Mileage Rates Publication 17
The IRS updates the mileage rates each year. See the Mileage – Standard Mileage Rates for updated information. If your mileage is related to your self-employed business income on Schedule C, you will enter it when entering other expenses on Schedule C (Form 1040). See the Schedule C – Entering Sole Proprietorship in Program FAQ […]
The Earned Income Credit (EIC) is a refundable federal tax credit that may reduce your tax and increase your refund if you qualify. It’s designed to help working individuals and families with low to moderate income amounts. For full details, see IRS Publication 596. Rules for All Taxpayers To qualify for the EIC in 2025, […]
When determining eligibility for the Earned Income Credit (EIC), not all income is treated the same. Only certain types of pay from working are considered “earned income.” Many common payments and benefits are excluded and should not be counted when calculating earned income for the credit. For full details and examples, see IRS Publication 596. […]
TaxAct® has developed a worksheet to assist you with the preparation of the Free Application for Federal Student Aid (FAFSA) online application. Based on the information entered into TaxAct (and the additional information entered in the FAFSA section) the FAFSA Tax Summary Worksheet will provide you with the applicable income tax information needed for you to […]
To allow families in need of financial aid to complete their FAFSA sooner, the financial information from the previous year’s return is used. Students and their families will use their financial information from the prior year tax return to complete the FAFSA. In TaxAct, if you import your prior year return to your current return, […]
If you rent a property for less than fair market value, the IRS generally treats it as not rented for profit. You must still report the rental income that you receive for this activity. According to IRS Publication 527, not-for-profit rental income is reported on Schedule 1, rather than on Schedule E. You cannot deduct […]
The IRS is expecting Form 1095-A and Form 8962 to be included with your return. You would have received Form 1095-A if your health insurance was obtained through a Marketplace. Please visit healthcare.gov to confirm if you or someone on your tax return had Marketplace coverage. Depending on the results of your search, use one […]
When you enter information from a Form 1099-MISC or a Form 1099-NEC you may accidentally create a second Schedule C (Form 1040). If you manually create a Schedule C in addition to the one created while entering Form 1099-NEC or 1099-MISC, you may have two Schedules C that need to be consolidated. Use the FAQ […]
The United States income tax is a pay-as-you-go tax, which means that tax must be paid as you earn or receive your income during the year. You can either do this through withholding or by making estimated tax payments. If you do not pay enough tax, you may have to pay a penalty for underpayment […]
Certain state and local taxes may be deductible if you itemize your deductions on Schedule A (Form 1040). Deductible taxes generally include state and local personal property taxes that are based on the value of the property and charged on a yearly basis, such as some vehicle registration fees. Fees that are not based on […]
If your employer offers a tax-deferred retirement plan, such as a traditional 401(k) or 403(b), contributions you make to the plan are generally pre-tax and are not included in your taxable wages. Because these contributions are already excluded from income, they are not deductible on your tax return. You may still be able to make […]
Generally, you do not report contributions to your 403(b) account (except Roth contributions) on your tax return. Your employer will report contributions on your Form W-2. Elective deferrals are reported in Box 12 and the Retirement plan box will be checked in Box 13. If you are a self-employed minister or chaplain, see below. See […]
Jury duty pay is generally taxable and must be reported on your return. If you were required to remit your jury duty pay to your employer because your employer continued to pay your wages during your jury service, the amount paid to your employer is deductible as an adjustment to income. Jury Duty Pay To […]
If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it; OR if the amount you repaid is more than $3,000, you may be able to take a credit […]
If you had to repay an amount that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Method 1 — Deduction Figure your tax for 20YY claiming a deduction for the repaid amount. If you deduct […]
To report rental income from personal property in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Explore More drop-down. Click Add beside Other Income. Click Continue, then enter […]
To enter the interest income from a seller-financed mortgage in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Explore More drop-down. Click Add beside Seller-Financed Loan Interest. Complete […]
You can enter actual vehicle expense information in the TaxAct program while entering expenses on Schedule C. See the Schedule C – Entering Sole Proprietorship in Program FAQ for details. This will transfer to Schedule C (Form 1040), Profit or Loss From Business, Line 9.
When you enter your state withholdings from Form W-2, Wage and Tax Statement, they automatically transfer to Schedule A (Form 1040), Itemized Deductions, as an itemized deduction and do not need to be entered again in the program. To enter state withholdings from your W-2, go to our Form W-2 – Entering in Program FAQ. To view […]
To report your state and/or local income taxes paid (NOT withholding or estimated tax payments), follow the steps below. The TaxAct program will transfer this information, and state taxes withheld on Form W-2, to Schedule A (Form 1040) Itemized Deductions, Line 5. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller […]
TaxAct does not calculate this allocation for state taxes. If the amounts for Prior Year State Income Tax Refund (to be included in taxable income on the current year’s return) and the deduction for Prior Year State and Local Estimates Paid After 12/31/20YY need to be adjusted, the taxpayer would need to manually perform this […]
If you have a situation where you made a contribution to a Roth IRA and later recharacterized part or all of it to a traditional IRA, review the IRS Instructions for Form 8606. NOTE: A conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a […]
If you have a situation where you made a contribution to a traditional IRA and later recharacterized part or all of it to a Roth IRA, review the IRS Instructions for Form 8606. NOTE: A conversion of a traditional IRA to a Roth IRA, and a rollover from any other eligible retirement plan to a […]
To enter long-term care premiums paid, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Medical drop-down. Click Add beside Medical Expenses. Enter your medical insurance premiums paid (if applicable), […]
You can enter Qualified Business Income (QBI) related to self-employed or sole proprietor income when entering the details about that Sole Proprietorship. See Schedule C – Entering Sole Proprietorship in Program for details. Related Links IRS Publication 535 Qualified Business Income Deduction – General Information Qualified Business Income Deduction – Pass-Through Partnership Income Qualified […]
You can enter Qualified Business Income (QBI) for a rental property when entering the details about that rental property. See Schedule E – Entering Rental Property in Program for details. Related Links IRS Qualified Business Income Deduction Qualified Business Income Deduction – General Information Qualified Business Income Deduction – Pass-Through Partnership Income Qualified Business Income […]
To claim personal property taxes paid in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Estimates & Other Taxes Paid drop-down. Click Add beside Deductible Taxes […]
TaxAct has a tool to compare how Married Filing Jointly vs. Married Filing Separate will benefit you so you can choose how to file (add a state to your return, and the federal information will flow there so you can see how your state tax laws affect your return too). To view the Joint Vs. […]
As a trader (including day traders), you report all of your transactions on Form 8949, Sales and Other Dispositions of Capital Assets. If you are in the business of buying and selling securities for your own account, you may also file a Federal Schedule C (Form 1040) Profit or Loss From Business to report any […]
For futures contracts, the Form 1099-B that you receive needs to be reported on Part I of Form 6781, Gains and Losses From Section 1256 Contracts and Straddles. You cannot import this type of transaction into the TaxAct program; you need to manually enter it. To access Form 6781 in the TaxAct program, follow the […]
Before you enter your foreign currency transactions, you must determine whether the gain or (loss) is subject to IRC (Internal Revenue Code) 1256 or 988. If you are unsure how to classify your trades, it is best to seek professional tax advice from your broker or a qualified tax professional (Enrolled Agent, CPA, or attorney). […]
For steps on reporting excess accumulation or to request a waiver of tax on your excess accumulation, see the Form 5329 – Entering in Program FAQ. IRS Publication 590-B provides more information about the required minimum distribution.
In certain situations (such as recharacterization of an IRA contribution or Roth IRA conversion, return of IRA contributions, or return of excess traditional IRA contributions), a statement must be attached to your return explaining the recharacterization or distribution. IRS Instructions for Form 8606, Nondeductible IRAs, provides the most definitive guidance for reporting recharacterizations. You can […]
Can I import my prior year tax return from a different software? Yes! TaxAct makes it easy to switch, even if you used a different tax software last year. You can upload your prior-year tax return in PDF format, and we’ll pull in the details we need, which you can review for accuracy. It’s quick, seamless, […]
TaxAct customers can enter multiple Form 1099-B Proceeds From Broker and Barter Exchange Transactions quickly and easily by importing a CSV (comma separated values) file. To import transactions, you will need to either: obtain a spreadsheet file from your broker and import it using the steps below, or create your own spreadsheet – see Form […]
Generally, you can recharacterize (correct) an IRA contribution by making a trustee-to-trustee transfer from one IRA to another type of IRA. Trustee-to-trustee transfers are made directly between financial institutions or within the same financial institution. You generally must make the transfer by the due date of your return (including extensions) and reflect it on your […]
Active duty military who are moving due to a military-ordered permanent change of station (PCS) can use Form 3903 to calculate any deductible moving expenses. The expenses are calculated on Form 3903, Moving Expenses, and reported as an adjustment on Schedule 1 (Form 1040), Additional Income and Adjustments to Income, Line 14. See the IRS […]
A valid SSN or ITIN must be obtained by the extended filing deadline in order to receive certain credits on the 20YY return. For most calendar year taxpayers, the extended filing deadline for the 20YY return is October 15 of the following year; however, there may be an exception if you are living outside of […]
You can use the Forms Assistant to search for and add Schedule OI (Form 1040-NR) to your return. In dashboard navigation, go to Resources, scroll to the Assistants section, and select Forms Assistant. In classic navigation, click Tools > Forms Assistant. On desktop, click Forms and locate the federal form in the Forms Explorer. […]
There are two different forms relating to injured/innocent spouses, Form 8379, Injured Spouse Allocation and Form 8857 Request for Innocent Spouse Relief. See Publication 971 for details. The TaxAct program does not support Form 8857, Request for Innocent Spouse Relief. To complete Form 8379, Injured Spouse Allocation, follow the steps below. Online Dashboard From within […]
The Internal Revenue Code only allows income averaging to farmers and fishermen. If you are a farmer or fisherman, you need to complete Schedule J, Income Averaging for Farmers and Fishermen, using the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner […]
The amount you can contribute to a Health Savings Account (HSA) is limited to zero for any month you are enrolled in Medicare. See IRS Publication 969 for details. To enter HSA contribution amounts in the program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, […]
You may or may not receive Form W-2G, Certain Gambling Winnings, but you can report all gambling winnings in the same place in the TaxAct program. Gambling winnings are reported as Other Income on Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 8. If you are able to itemize your deductions, gambling […]
The TaxAct program will automatically create Form 4562 if the date of the improvement entered on Form 8829 is in the current tax year. TaxAct supports only one addition/improvement for Federal Form 8829. If you have more than one addition/improvement, you can still file your return with TaxAct, however you will need to file a […]
Review IRS Publication 946 for details on when you must recapture excess depreciation. To access Form 4797, go to our Form 4797 – Sale of Business Property Sale of Asset Entry into Program FAQ. During the interview, click Yes for Form 4797 – Other Topics, then on the next screen, check the box Check here […]
Review IRS Publication 946 for details on when you must recapture excess depreciation. To access Form 4797, go to our Form 4797 – Sale of Business Property Sale of Asset Entry into Program FAQ. During the interview, click Yes for Form 4797 – Other Topics, then on the next screen, check the box Check here […]
If you have church income (NOT including clergy, minister, or missionary wages), reported on a Form W-2 Wage and Tax Statement that are subject to self-employment taxes, but no FICA (Social Security and Medicare) taxes were withheld, you may need use the steps in the FAQ Schedule SE – Adjustments. Schedule SE (Form 1040) will […]
You are prompted to enter the information for the Business Use of Home when entering Schedule C – Entering Sole Proprietorship in Program.
You are prompted to enter the start-up costs when entering Schedule C – Entering Sole Proprietorship in Program. Note. If you have already made amortization entries, then you will be brought to the screen Business Income – Amortization Review. The current year expense and amortization amount will appear on Form 4562. When you print the […]
There are two main methods of accounting available for a business to use: cash method accrual method To change your method of accounting, you generally must file Form 3115. You can use the Forms Assistant to search for and add Form 3115 to your return. In dashboard navigation, go to Resources, scroll to the Assistants […]
You may or may not have received a Form W-2G, Certain Gambling Winnings, for your gambling winnings. To enter your gambling winnings, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the […]
If you have received a Form W-2C, Corrected Wage and Tax Statement (a corrected W-2 form), you can still electronically file your return. Enter the information from your Form W-2C as a Form W-2, Wage and Tax Statement in the program. See Entering in Program – Form W-2 to access the Form W-2. There is […]
If you received Form(s) W-2, Wage and Tax Statement, and some or all of your wages are exempt by tax treaty, you will need to manually adjust your W-2 entry to reflect only the wages that are not exempt by tax treaty. Wages which are exempt by tax treaty should be reported on Schedule OI. […]
Use Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts, to figure the amount of your Net Investment Income Tax (NIIT). To access Form 8960 in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the menu at the top left corner […]
You must file IRS Form 8938, Statement of Specified Foreign Financial Assets, if you have an interest in specified foreign assets and the value of those assets is more than the applicable reporting threshold. See the IRS Instructions for Form 8938 and Basic Questions and Answers on Form 8938 for more information. To enter the […]
The Form 8910 – Alternative Motor Vehicle Credit expired for vehicles purchased after 2021.
If you were a full-time student, and reported that in the TaxAct program, you can’t attach Form 8880 to Schedule 3 (Form 1040) to receive the retirement savings contributions credit on line 4. If you were not a full-time student, and you need to edit that information in the TaxAct program, follow the steps below. Form […]
To view a summary of your QBI deductions, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Under My Return, click Federal Search. Click the Business Income drop-down, then click Qualified business income (QBI) […]
IRS Form 8862, Information To Claim Certain Refundable Credits After Disallowance, is used if your earned income credit (EIC) was reduced or disallowed in a previous year and you would like to claim the EIC on your current return. If you were previously disallowed from taking the EIC, claiming the credit this year will result […]
Form 8862, Information To Claim Certain Credits After Disallowance, is used to claim the Earned Income Credit (EIC) if this credit was previously reduced or disallowed by the IRS, and you now wish to claim the credit on this year’s return. To enter information regarding Form 8862 in the TaxAct program, follow the steps below. […]
Certain food and beverage establishments can use Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips, to claim a credit for social security and Medicare taxes paid on employee’s tips. This credit is part of the general business credit and is reported on Form 3800, General Business Credit. Instructions […]
To access Form 8845 Indian Employment Credit in the TaxAct program, follow the steps below. The credit amount in the TaxAct program will transfer to Form 3800, General Business Credit, which will transfer to Line 6 of Schedule 3 (Form 1040), Additional Credits and Payments. Online Dashboard From within your TaxAct return, click Resources. On […]
If your child has interest, dividends, or other unearned income, you must decide whether to file Form 8814, Parents’ Election To Report Child’s Interest and Dividends, with the parents’ return or Form 8615, Tax for Certain Children Who Have Unearned Income, with the child’s return. See the Instructions for Form 8814 and Instructions for Form […]
The TaxAct program does not support the returns for the U.S. Virgin Islands; however, if you were a U.S. Citizen or Resident Alien and not a Bona Fide resident of the U.S. Virgin Islands, you may only need to file Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands, and send a […]
Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition, is used to exclude days of presence in the U.S. for certain individuals. The form needs to be filed with your Form 1040-NR, and if you don’t need to file a return, send the form to the IRS. Attach Form 8843 to your […]
Form 8840, Closer Connection Exception Statement for Aliens, is used to claim the closer connection to a foreign country exception to the substantial presence test. Note. You must have selected to file Form 1040-NR in order to access Form 8840. For information about the substantial presence test, go to IRS Publication 519. You can use […]
Use Form 8839, Qualified Adoption Expenses to figure the amount of your adoption credit and any employer-provided adoption benefits you can exclude from your income. You can claim both the credit and the exclusion for expenses of adopting an eligible child. To enter information for the adoption credit (Form 8839) in the TaxAct program, follow […]
To enter a description and an amount for Line 8 of Schedule 1 (Form 1040) to reduce the taxable wage amount from Form 1040, U.S. Individual Income Tax Return Line 1, if that is appropriate in your situation, go to our Form 1040 – Other Income FAQ. For details about tax treaties and exemptions for […]
See Form 8801 – Entering Credit for Prior Year Minimum Tax in Program for details on how to access the Form 8801 data entry. To remove your entries, go back through the form entry steps and remove the information that you had provided. Additional Information IRS Form 8801 in certain circumstances when a taxpayer paid […]
Federal Form 8801, Credit for Prior Year Minimum Tax – Individuals, Estates, and Trusts is for the calculation of a credit in certain circumstances when one has had the Alternative Minimum Tax (AMT) in a prior year. Certain numbers are automatically pulled into the form from the current year’s return in anticipation that the form […]
Federal Form 8621 is an Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. You can use the Forms Assistant to search for and add Form 8621 to your return. In dashboard navigation, go to Resources, scroll to the Assistants section, and select Forms Assistant. In classic navigation, […]
What changed in 2025: The cap on the state and local tax (SALT) deduction increases: From $10,000 to $40,000, if you’re filing jointly (MFJ) or as head of household (HOH) From $10,000 to $20,000, if you’re married filing separately (MFS) NOTE The limit increases by 1% each year through 2029 You can claim this higher deduction […]
What’s new in 2025: From 2025 through 2028, there’s a new deduction of $6,000 per person age 65 or older. You can still claim this on top of the regular senior standard deduction. That’s up to $12,000, if both spouses qualify on a joint return. You can claim this deduction whether you take the standard deduction or itemize. You can claim this […]
What’s new in 2025: The maximum Child Tax Credit (CTC) increases from $2,000 to $2,200 per qualifying child. Up to $1,700 of the credit may be refundable as the Additional Child Tax Credit (ACTC). Both the credit amount and refundable portion will be adjusted for inflation, so it may increase over time. The enhanced credit […]
If you have both a distribution from an IRA and contributions to an IRA in the current year, which may not be deductible because of your income level, you will need to use Worksheet 1-1 from IRS Publication 590-B, on page 15 when completing Form 8606, Nondeductible IRAs. This worksheet parallels and replaces the calculations […]
If you did not electronically file 8379 Injured Spouse Allocation when you filed your original tax return, you need to send the form to the Internal Revenue Service Center for the area where you live. Be sure to attach a copy of all Forms W-2, W-2G, or 1099, showing federal income tax withholding, to Form […]
To complete Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, (usually only done by the custodial parent), in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the menu at the top left corner of your […]
To enter information for Form 5695 in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deduction & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Your Home drop-down. Click Add beside Home Energy Credits. Complete the […]
ENERGY STAR is a joint program of the EPA and the DOE that provides information on certified energy-efficient products. For federal tax credit rules, see IRS Form 5695 Information. The Inflation Reduction Act of 2022 updated and extended residential energy credits: Residential Clean Energy Credit (Form 5695, Part I) is available through 2034. Energy Efficient […]
Form 4797, Sales of Business Property, reports the sale of business property. To enter the sale of business property, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Business & Self […]
To enter a loss for the sale of business property that was not previously entered as a depreciable asset, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Business & Self […]
Investment (margin) interest deduction is claimed on Form 4952, Investment Interest Expense Deduction and the allowable deduction will flow to Schedule A (Form 1040) Itemized Deductions, Line 9 to be claimed as an itemized deduction, up to the amount of your investment income. To enter the information for Form 4952 in the TaxAct program, follow […]
To enter a loss from a Ponzi-type investment scheme in TaxAct, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Under My Return, click Federal Search. Click the Itemized or Standard Deductions drop-down, then […]
If you have a casualty and/or theft loss on property used 100% for business, you will report the loss on Form 4684, Casualties and Thefts, in Section B for business property. To report casualty/theft loss on property used 100% for business on Form 4684 in the TaxAct program, follow the steps below. Once this information has […]
To review or modify entries for disasters, theft, & other property loss or damage in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Other Deductions […]
If you enter an amount in Box 8 of Form W-2, Wage and Tax Statement for Allocated Tips, the TaxAct program will transfer the amount to Form 4137, Social Security and Medicare Tax on Unreported Tip Income, for the calculation of social security and Medicare tax on the tips to be reported on Line 5 […]
Active duty military who are moving due to a military-ordered permanent change of station (PCS) can use Form 3903 to calculate any deductible moving expenses. The expenses are calculated on Form 3903, Moving Expenses, and reported as an adjustment on Schedule 1 (Form 1040), Additional Income and Adjustments to Income, Line 14. See the IRS Instructions […]
According to IRS Publication 503, child and dependent care expenses must be work-related to qualify for the Child and Dependent Care Credit. Work-related expenses are those that enable you to work or look for work. If you are married, both spouses generally must be working or seeking employment unless one spouse is a full-time student […]
On your IRS Form 2441: Child and Dependent Care Expenses, the amount listed as “paid to providers” must equal the amount entered as qualified expenses for your dependent(s) plus any dependent care benefits provided by the employer. The amount in the Amount paid in 20YY field must equal your qualified child and dependent care expenses plus […]
If you paid child and dependent care expenses, but the individual care provider has not provided, and will not provide their Social Security Number (SSN) to you, you may still be able to claim the Child and Dependent Care Credit. You must show that you have completed your due diligence to obtain the information. You […]
If filing jointly, figure your and your spouses earned income separately. Your earned income amount will transfer to Line 4 of Form 2441, and your spouse’s earned income will transfer to Line 5 of Form 2441. If your spouse was a student or disabled, see the IRS Instructions for Form 2441. If you reported amounts on […]
To complete Form 2441, follow the steps below. At the end of the entry process: If the credit is not allowed, a reason is shown. If the credit is allowed, the amount will be displayed. The credit carries to Form 2441 and Form 1040, Schedule 3. Online Dashboard From within your TaxAct return, click Deductions […]
The checkbox at the top of Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, must be selected if you would like the IRS to compute any applicable penalty and send you a bill. To check the box Check here if you would like the IRS to compute any applicable penalty and send […]
If the IRS rejects an e-file because of an Employer Identification Number (EIN) mismatch, you will receive rejection code FW2-502, 1099R-502-01, F2439-502, or FW2G-502. Keep in mind this type of rejection does not automatically mean the EIN is wrong, but it doesn’t agree with IRS records. An invalid EIN can result from one of three […]
In order to complete Schedule AI, you first need to complete the Underpayment Penalty section, which transfers automatically to Part II of Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts. This will determine whether you need to attach Schedule AI. To access the Underpayment Penalty entries, follow the steps below. Online Dashboard […]
See Form 2106 – Entering Unreimbursed Employee Expenses in Program.
Per diem for travel and meal expenses related to your business are entered when you are entering your federal Schedule C expenses. You are prompted to enter your business meals expenses when completing the business income interview. See Schedule C – Entering Sole Proprietorship in Program for details on accessing this section of the program. […]
Form 8283, Noncash Charitable Contributions, is used to report information about noncash charitable contributions. To enter this information in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. […]
To enter undistributed capital gain information from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Explore More drop-down. Click Add beside […]
See Form 1045 – Schedule A-NOL (Current Year NOL) (CARRYFORWARD) for information.
If your NOL is more than your taxable income for the year to which you carry it (figured before deducting the NOL), you may have an NOL carryover. You must make certain modifications to your taxable income to determine how much NOL you will use up in that year and how much you can carry […]
Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding, even if no amount is deducted and withheld from the payment because of a treaty or code exception to taxation or if any amount withheld was […]
You can use the Forms Assistant to search for and add Form 1042-S to your return (under Documents Received). In dashboard navigation, go to Resources, scroll to the Assistants section, and select Forms Assistant. In classic navigation, click Tools > Forms Assistant. On desktop, click Forms and locate the federal form in the Forms […]
Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding, even if no amount is deducted and withheld from the payment because of a treaty or exception to taxation, or if any amount withheld […]
Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding, even if no amount is deducted and withheld from the payment because of a treaty or code exception to taxation, or if any amount […]
The IRS Instructions for Form 1040-NR detail who must file Form 1040-NR. You can edit your personal information following the steps in Changing Basic Information (Name, SSN, Birthdate), and check the box Nonresident alien. Related Links Form 1040-NR – Itemized or Standard Deduction
Based on IRS instructions and the information you enter in TaxAct, the TaxAct® program determines what amount (if any) needs to appear on Lines 4a and 4b of Form 1040 U.S. Individual Income Tax Return. Usually, if the amount is fully taxable, Line 4a is left blank and the total distribution is entered on Line […]
If you see “PRI” printed next to Line 1 of Form 1040, it’s because one of the following is true: You entered an amount of wages received for work done as an inmate in a penal institution (i.e. a prison or jail). You may have entered wages (or other earned income), and accidentally indicated that […]
Taxpayers must file Schedule H with their Form 1040 when they have household employees and meet certain IRS wage or withholding thresholds. A household employee is someone you hire to perform work in or around your home and you control what work is done and how it is done. This generally includes workers such as […]
To enter household employee wages not reported on Forms W-2 in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Wages & Salaries drop-down. Click Add beside Household Employee […]
You can report volunteer expenses as cash charitable contributions in the TaxAct program, and the program will transfer the amounts to Schedule A (Form 1040) Itemized Deductions. See IRS Publication 526 for details on what items can be deducted. Go to the FAQ Charitable – Entering Contributions and Donations in Program for details on entering […]
Amounts you receive as workers’ compensation for an occupational sickness or injury are generally excluded from income if they’re paid under a workers’ compensation law or statute. This type of income is not included on your tax return using the TaxAct program. If you have received an IRS Form W-2 Wage and Tax Statement for […]
To enter your capital loss carryover from a prior year in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Investments & Savings drop-down. Click Add beside Capital Loss […]
To enter information for Form W-7 in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Under My Return, click Federal Search. Click the Basic Information drop-down, then click Form […]
An Individual Taxpayer Identification Number (ITIN) is a nine-digit number assigned by the Internal Revenue Service to taxpayers who are not eligible to obtain a Social Security Number (SSN). Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception. It is used […]
IRS Notice CP-48 is sent to inform a taxpayer that their Individual Taxpayer Identification Number (ITIN) must be renewed. ITINs now expire when they have not been used on at least one federal tax return for three consecutive tax years. Once an ITIN expires, it must be renewed before it can be used on a […]
To enter or review health insurance coverage information in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Medical drop-down. Click Add beside Affordable Care Act […]
Generally, the IRS does not require all transactions to be reported on Form 8949, Sales and Other Dispositions of Capital Assets. For transactions with reporting category “A” or “D” (meaning the cost basis was reported to the IRS), if there is no adjustment code/amount they can be reported directly on Schedule D (Form 1040), Capital […]
2024 was the last year to file Form 5405. See First-Time Homebuyer / Home Owner Credit for details about modifying the credit repayment information in prior years. Note: If the credit was originally claimed on a joint return, each spouse was treated as having been allowed half of the credit for purposes of repaying […]
2024 was the last year to file Form 5405. See First-Time Homebuyer / Home Owner Credit for details about prior year data entry. Note: If the credit was originally claimed on a joint return, each spouse was treated as having been allowed half of the credit for purposes of repaying the credit. Thus, two […]
Bona fide residents of Puerto Rico generally don’t have to file a U.S. federal return if all their income is from Puerto Rico. A federal return is required only when they receive income from outside Puerto Rico that exceeds the usual IRS filing thresholds, and Puerto Rico–source income is typically excluded from that return. U.S. […]
TaxAct will automatically use whichever deduction gives you the greater benefit—your New York standard deduction or your New York itemized deduction. Because New York does not follow federal itemized deduction rules, the amount you can itemize on your New York return is different from your federal Schedule A total. Your New York itemized deduction is […]
To enter your qualifying mortgage insurance premiums as an Itemized Deduction, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Your Home drop-down. Click Add beside Mortgage Interest & Refinancing. […]
To enter other itemized deductions in TaxAct, follow the steps below. IRS Instructions for Schedule A only allow certain items to be listed as other itemized deductions on line 16. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, […]
The standard deduction is calculated based on your demographic information and filing status. To claim itemized deductions in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Under My Return, […]
Before you claim a deduction, you can go to IRS Publication 529, Miscellaneous Deductions, to see if you’re eligible to claim it. To claim a deduction in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of […]
You can include in medical expenses wages and other amounts you pay for nursing services. The services need not be performed by a nurse if the services are of a kind generally performed by a nurse. This includes services connected with caring for the patient’s condition, such as giving medication or changing dressings, as well […]
To enter or review information from Form SSA-1099, including Medicare Parts B and D premiums, go to our Form SSA-1099 FAQ. To enter Medicare Parts B and D premiums not reported on Form SSA-1099, follow the steps in Medical and Dental Expenses.
To enter your medical and dental expenses in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Medical drop-down. Click Add beside Medical Expenses. Complete the rest […]
If your filing status is Married Filing Separate (MFS), you will need to indicate whether you lived with your spouse during the year. Online Dashboards From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Beside your name, click Edit. […]
If you don’t know whether you need to use the itemized or standard deduction and you are married filing separate, review the information in the Married Filing Separate – Itemized or Standard Deduction FAQ. If you accidentally indicated in the TaxAct program that your spouse itemized deductions, follow the steps in the article listed above, […]
Per IRS Publication 504, if one spouse itemizes deductions on a Married Filing Separately return, the other spouse cannot claim the standard deduction.To indicate that your spouse filed MFS and itemized deductions on their return, follow the steps below. Online Dashboards From within your TaxAct return, click About. On smaller devices, click the menu at […]
Per IRS Publication 504, if one spouse itemizes deductions on a Married Filing Separately return, the other spouse cannot claim the standard deduction.To indicate that your spouse filed MFS and itemized deductions on their return, follow the steps below. Online Dashboards From within your TaxAct return, click About. On smaller devices, click the menu at […]
Under IRS rules, a married couple generally cannot file a joint return if either spouse was a nonresident alien during the tax year. However, when one spouse is a U.S. citizen or resident alien and the other is a nonresident alien, the couple may choose to file jointly by electing to treat the nonresident spouse […]
According to IRS Publication 519, most nonresident aliens cannot claim the standard deduction, however, a special rule applies to students and business apprentices from India who are eligible for the benefits of Article 21(2) of the United States-India Income Tax Treaty. They can claim the standard deduction if they do not claim itemized deductions. Except for […]
TaxAct will use the higher of your itemized deductions or the standard deduction for your filing status to maximize your tax benefit. To manually select a deduction method in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left […]
IRS Publication 555 explains how income and deductions must be reported when individuals live in a community property state. If spouses or registered domestic partners (RDPs) file separate federal returns, they may be required to report: One-half of their combined community income and deductions, and All of their own separate income and deductions. Community property […]
IRS Publication 555 explains how income and deductions must be reported when individuals live in a community property state. If spouses or registered domestic partners (RDPs) file separate federal returns, they may be required to report: One-half of their combined community income and deductions, and All of their own separate income and deductions. Community property […]
Employer contributions to a Health Savings Account (HSA) are reported on Form W-2, Box 12, using Code W. Because California does not follow federal HSA rules, these employer contributions must be added back to your California income. When you enter your W-2 in TaxAct, the amount reported with Code W flows to Schedule CA (540), […]
If a dependent was not claimed on the federal return, but should be shown on the AZ return, you will start by adding the person in the Dependents section of the federal return, however, you will need to mark them as Not a dependent this year when selecting the Dependent Type. See the Dependents – Entering Information […]
As a self-employed individual, if you made contributions to a retirement plan such as a SEP, SIMPLE, or Keogh plan, you may be able to claim a deduction on your tax return for those contributions. The TaxAct program offers the Publication 560 Worksheet for qualified self-employed individuals to calculate their maximum deductible contribution limit. At the […]
You must pay SE tax and file Schedule SE (Form 1040), Self-Employment Tax, if either of the following applies: Your net earnings from self-employment (excluding church employee income) were $400 or more. You had church employee income of $108.28 or more. NOTE: The SE tax rules apply no matter how old you are and even if […]
Self-employed individuals may be able to deduct the cost of their health insurance premiums—including medical, dental, and qualified long-term care coverage—for themselves, their spouse, and dependents. This deduction is taken above the line on Form 1040, which means you can claim it even if you don’t itemize. To qualify, the insurance policy must be established […]
Newspaper Carriers and Distributors typically receive Form 1099-MISC reporting their income. This is entered in TaxAct by following the steps in the Form 1099-MISC – Entering in Program FAQ. After you enter the income, if the income should not be subject to SE Tax, enter an adjustment on Schedule SE (Form 1040). Follow the steps […]
You will receive a Form 1099-Q from each qualified tuition program (529 plan) or Coverdell ESA from which you received a distribution during the tax year. The amount of your gross distribution (Box 1) shown on each form will be divided between your earnings (Box 2) and your basis or return of investment (Box 3). […]
Enter your notary income or expenses on Schedule C (Form 1040). See the Schedule C – Entering Sole Proprietorship in Program FAQ for details. After you enter the income, enter an adjustment on Schedule SE (Form 1040), since notary public income is not subject to self-employment tax. Follow the steps in the Schedule SE – […]
If you are a self-employed nonresident alien living in the United States, the information below will help determine whether you are subject to self-employment tax. If you are not, but the tax is calculating on your return, the navigation steps below will allow you to stop that from calculating. Online Dashboard From within your TaxAct […]
To enter or review an adjustment on Schedule SE (Form 1040) (example: if some of your self-employment income is exempt from self-employment tax), follow the steps below. Online Dashboard From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the menu at the top left corner of your screen, then make your […]
To report that you or your spouse have an IRS approved Form 4361 in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Additional Tax Payments drop-down. […]
The Self-Employment Tax Adjustment Worksheet shows the adjustments used in the calculation of Line 2 on Federal Schedule SE, Self-Employment Tax. To access the Schedule SE – Adjustments – Clergy Worksheets in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the […]
Exempt Wages Clergy, minister, or missionary wages reported on Form W-2 are subject to self-employment taxes, but no Social Security and Medicare taxes are withheld. While entering your Form W-2, you will see a screen that says W2: Tell us if any of these situations apply. Here you can select Income earned as a minister […]
2024 was the last year to file Form 5405 and the lookup tool is no longer available. The following applies to 2024 and prior only. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Under My Return, […]
When you import a prior-year return, all of the applicable information is carried forward to your current year return. If you want to remove certain information, you will have to do it manually. To remove the spouse details, follow the steps below. Online Dashboard From within your TaxAct return, click About. On smaller devices, click […]
To report foreign dividend or interest income, enter the information as though you had received a Form 1099-DIV, Dividends and Distributions, or Form 1099-INT, Interest Income, but leave off the Payer’s Federal Identification Number. This number is not required, and the return will still electronically file without the number. The information required by the IRS […]
IRS Instructions for Form 1116 discuss an election to claim the foreign tax credit without filing Form 1116. See Foreign Earned Income – Exclusion and Foreign Tax Credit (or Deduction) for details on entering foreign income and credit information. Form 1116 will not print with your return if it is not necessary.
Interview questions for Part III of Federal Schedule B (Form 1040) only appear automatically in the TaxAct program if you have: over $1,500 of taxable interest or ordinary dividends, had a foreign account, received a distribution from, or were a grantor of, or a transferor to, a foreign trust. If you want to answer those […]
Interview questions for Part III of Federal Schedule B (Form 1040) only appear automatically in the TaxAct program if you have: over $1,500 of taxable interest or ordinary dividends, had a foreign account, received a distribution from, or were a grantor of, or a transferor to, a foreign trust. If you want to answer those […]
If you received foreign income, you must report it on your individual income tax return. IRS Form 2555 Foreign Earned Income, Form 1116 Foreign Tax Credit, or Schedule A (Form 1040) Itemized Deductions may provide income tax benefits. See the following for entering income or distributions from foreign entities: Foreign Earned Compensation – FEC Foreign […]
Canadian sourced retirement income may be entered in one of two ways. The amounts are then carried to the applicable lines of Form 1040. Social Security Benefits Foreign Employer Compensation (FEC) Worksheet Social Security Benefits Under the income tax treaty between the U.S. and Canada, benefits paid under the Canada Pension Plan (CPP), Quebec […]
To enter Sales Tax in the TaxAct program, follow the steps below. NOTE: You can deduct either the sales tax deduction or the state income tax deduction – if you want to override the system default, see Sales Tax – Elect General Sales Tax Deduction or State Income Tax Deduction. Online Dashboard From within your […]
If you want to elect to take the sales tax deduction or the state income tax deduction (even though one of them is a greater amount), follow the steps below. Online Dashboard From within your TaxAct return, click Resources. On smaller devices, click the menu at the top left corner of your screen, then make […]
You can elect to deduct state and local GENERAL SALES TAXES instead of state and local INCOME TAXES as an itemized deduction on Schedule A (Form 1040) Itemized Deductions. You cannot deduct both. To figure your state and local general sales tax deduction, you can use either your actual expenses or the state sales tax […]
To enter a foreign address in TaxAct, follow the steps below. Online Dashboard From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Locate the Address line and click Start or Edit. Below the City/State, click Enter a foreign address. […]
De Minimis Safe Harbor If you bought property or an asset for your business this tax year, this election lets you deduct the full cost of that property or asset now (expense), instead of getting a partial deduction each year for the remaining life of the property or asset (depreciation). This may help you get […]
The taxability of any settlement or judgment depends on what the payment is intended to replace; its character mirrors the nature of the underlying claim. Items treated as ordinary income generally include: Interest paid on an award or settlement. Payments for lost wages or lost business income, in most situations. Punitive damages, even when connected […]
TaxAct supports Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations. Currently, we only support the creation and electronic filing of five copies of Form 5471. If the return requires more than five copies of the form, the only option is to manually complete the additional copies and attach them to […]
To enter or review the taxpayer’s or spouse’s Social Security Number in the return, follow the steps below. Online Dashboards From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Review the information listed for You, your Spouse, and your […]
Social Security benefits include monthly retirement, survivor, and disability payments, and they are reported to you on Form SSA-1099. A portion of these benefits may be taxable depending on your income level. TaxAct will calculate this using the Taxable Social Security Benefits Worksheet. Note: Supplemental Security Income (SSI) is not taxable and should not be […]
The TaxAct program supports the following worksheets for Social Security Benefits. These worksheets are used to calculate your taxable social security benefits. Worksheet 1 – Figuring Your Taxable Benefits from IRS Publication 915 Worksheet 2 – Figure Your Additional Taxable Benefits (From a Lump-Sum Payment for a Year After 1993) Worksheet 4 – Figure Your […]
An amount appearing in Box 3 of IRS Form SSA-1099, Social Security Benefit Statement, would not be entered in the TaxAct program in Box 5. Box 5 on the form is the Net Benefits for the current year and has already taken the amount from Box 3 into account. For steps on how to enter […]
To report Form SSA-1099 in TaxAct, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Retirement & Social Security drop-down. Click Add beside Social Security Benefits (From SSA-1099 or RRB-1099). Complete the […]
Retired railroad workers can receive two different forms for reporting retirement benefits. The forms have similar names, so make sure to pay attention so you can properly report them in the TaxAct program. Form RRB-1099 reports Social Security Equivalent payments. See Forms SSA-1099 and RRB-1099 – Entering Social Security or Railroad Retirement in Program for […]
To enter or review information from Form SSA-1099, Social Security Benefit Statement, or Form RRB-1099, Railroad Retirement Board Social Security, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Retirement & […]
Form 5498-SA HSA, Archer MSA, or Medicare Advantage MSA Information, reports contributions to one of the following: Archer MSA Generally, contributions you make to your Archer MSA are deductible. Employer contributions are excluded from your income and are not deductible by you. If your employer contributes to one of your Archer MSAs, you cannot contribute […]
Health Savings Account (HSA) distributions are reported on Form 1099-SA, Distributions from an HSA, Archer MSA, or Medicare Advantage MSA, and the information transfers to Form 8889 Health Savings Accounts (HSAs). To enter distribution information in the program, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click […]
An HSA or Archer MSA distribution isn’t taxable if you used it to pay qualified medical expenses of the account holder or eligible family member or you rolled it over. An HSA may be rolled over to another HSA; an Archer MSA may be rolled over to another Archer MSA or an HSA. An MA […]
Medicare Part C (Medicare Advantage Plans) is another way to get your Medicare benefits. It combines Part A, Part B, and sometimes Part D (prescription drug) coverage. Medicare Advantage Plans are managed by private insurance companies approved by Medicare. These plans must cover medically necessary services. Medicare C is reported on Form 1099-SA, Distributions from […]
Use Form 1099-S, Proceeds From Real Estate Transactions, to report proceeds from real estate transactions. You will report the information on a specific part of the form, depending on how you use the property: main home, timeshare/vacation home, investment property, business, or rental. To report your real estate proceeds in the TaxAct program, follow the steps below. […]
To report Form 1099-OID, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Explore More drop-down. Click Add beside Original Issue Discount. Complete the rest of the interview process. Classic From within […]
A cooperative files Form 1099-PATR, Taxable Distributions Received From Cooperatives, for each person paid at least $10 in dividends and other distributions. If you received a Form 1099-PATR, you will need to determine if the amount needs to be entered on your return. If the purchases you made from the cooperative were only for personal […]
To enter the data on Form 4835 for farm rental in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Business & Self Employed drop-down. Click Add beside Farm […]
When you enter federal and/or state withholding amounts reported to you on Form 1099-MISC, the TaxAct program transfers the information to the appropriate line(s) of the other forms. If you have multiple amounts to enter you would combine them into one entry (one entry for the federal withheld amounts and one for the state withheld […]
To review Form 1099-MISC Miscellaneous Income that you have already entered, access the topic and go back through the interview process using the steps detailed in Form 1099-MISC – Entering in Program.
To enter Form 1099-MISC, follow the steps below. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. If the 1099-MISC is related to your business or rental, click the Business & Self Employed drop-down and click Add beside the […]
If you received a Form 1099-MISC, Miscellaneous Income, instead of a Form W-2, Wage and Tax Statement, the income you received is considered non-employee compensation or self-employment income. You need to complete Schedule C or Schedule F in the TaxAct program and then enter your Form 1099-MISC information. You may also need to complete Schedule […]
In most circumstances, when a Federal Government agency, financial institution, or credit union cancels or forgives a debt of $600 or more, you will receive Form 1099-C, Cancellation of Debt. The amount of canceled debt appears in Box 2. Other important information may appear in additional boxes, such as: Box 1 – Date of identifiable […]
If you received a Form 1099-A, Acquisition or Abandonment of Secured Property, you need to determine if there has been a cancellation of debt. The lender should have sent you a Form 1099-C Cancellation of Debt if any debt was canceled. If you have not received a Form 1099-C, you may want to contact your […]
According to the IRS, you may not need to report the sale of your main home. Reporting is required only if either of the following is true: You cannot exclude all the gain. You received Form 1099-S for the sale. If you are required to report the sale, follow the steps below. Excluding Gain on […]
When there is an amount in Box 4 and/or Box 6 of the Form 1098-T, Tuition Statement, and you claimed an education credit in a prior tax year (i.e., American Opportunity Credit or Lifetime Learning Credit), you need to recalculate that credit, taking into account the adjustment, and then enter the decrease in credit on the […]
Student loan interest will be reported to you on Form 1098-E, Student Loan Interest Statement. When you report this in the TaxAct program, the information is transferred to Schedule 1 (Form 1040). Follow the steps below to enter information from Form 1098-E. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller […]
Use the steps below to enter mortgage interest that you paid if the amounts were not reported on Form 1098. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Your Home drop-down. Click Add […]
Follow the steps below to enter information from Form 1098-C in TaxAct. See the IRS Instructions for Form 1098-C for details about claiming the contribution deduction. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. […]
To enter the information in your TaxAct return when another individual (other than your spouse if filing a joint return) received a Form 1098, Mortgage Interest Statement, for interest you also were liable for, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu […]
You may need to enter points not reported to you on Form 1098, Mortgage Interest Statement, to determine if they are fully deductible in the current year or if you must deduct them over the life of the loan. See IRS Publication 936 and IRS Topic No. 504 Home Mortgage Points for details. To enter points […]
When you enter Form 1098 (Mortgage Interest Statement) in TaxAct, the information flows to the Itemized Deductions section and, if you itemize, appears on Schedule A of your federal return. TaxAct compares your itemized deductions to the standard deduction and uses whichever provides the greater benefit. Mortgage interest is deductible only when the loan is […]
Whether your child was born alive depends on state or local law. There must be proof of a live birth shown by an official document, such as a birth certificate. If the child died before they were issued a social security number (SSN), enter “DIED” in the Social Security Number field (see Dependents – Entering Information […]
Entries on Form 1099-G Certain Government Payments, Box 6 (this covers certain government payments) are generally reported on IRS Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 8. If the item relates to an activity for which you are required to file Schedule C, Schedule E, Schedule F, or Form 4835, you need […]
See below for the detailed steps on how to enter or review your unemployment compensation information in the TaxAct program. It is reported on Schedule 1 (Form 1040). For more information, review Publication 525. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of […]
If you are an eligible educator, you can deduct up to $300 ($600 if married filing joint and both spouses are educators, but not more than $300 each) of any unreimbursed expenses that you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use […]
If you are an eligible educator, you can deduct up to $300 ($600 if married filing joint and both spouses are educators, but not more than $300 each) of any unreimbursed expenses that you paid or incurred for books, supplies, computer equipment (including related software and services), other equipment, and supplementary materials that you use […]
To access the student worksheet, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Education drop-down. Click Add beside Expenses & Scholarships. Complete the rest of the interview process. Classic […]
The American Opportunity Tax Credit can be claimed for expenses for the first four years of post-secondary education. It is a tax credit of up to $2,500 of the cost of qualified tuition and related expenses paid during the taxable year. Of the total credit amount, 40%, a maximum of $1000, is refundable. The remaining […]
The IRS allows qualifying education expenses to be applied to one of the following education benefits: American Opportunity Credit Lifetime Learning Credit Tuition and Fees Deduction (Tax Years 2020 and earlier only) See IRS Publication 970 for more information about education credits. To enter your education expenses and qualifications, follow the steps below. Online Dashboard […]
The Earned Income Credit (EIC) is calculated by the program automatically if the return qualifies for the credit. To remove the credit from a return that qualifies for it, you need to select the item that disqualifies your return or check the box I don’t want to or cannot claim the earned income credit this […]
The Federal Government offers relief to those in areas who were impacted by certain Presidentially declared disasters. Federal casualty losses, disaster losses and qualified disaster losses are three categories of casualty losses that refer to federally declared disasters. The requirements for each loss vary. For more information, see Publication 547 or the Instructions for Form 4684. […]
If your return was rejected by the IRS because a child claimed on your return was already claimed as a dependent AND for the Earned Income Credit (EIC) on someone else’s return, you will need to delete this child as a dependent and delete the child from Schedule EIC. To remove a child as a […]
TaxAct supports two Social Security Number (SSN) entries for alimony paid from both the taxpayer and spouse. To report alimony paid for both spouses in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of […]
The following information is adapted from the IRS Form 1040 Instructions: If a taxpayer died before filing their return and has a filing requirement, the surviving spouse or personal representative must file the final return. If taxes were withheld, a return must be filed to claim a refund. If your spouse died and you didn’t […]
When filing a return, the first year after the taxpayer or spouse has died, you can either import the prior year information into the return, and then make changes, or skip the import process and enter return details manually. If you choose to import the prior year’s information, if the spouse was the deceased you […]
The TaxAct® program will automatically determine if the credit from Schedule R is applicable on the return based on the information entered (e.g. date of birth). If you are expecting this credit to calculate on your return, and the credit is not appearing on Schedule 3 (Form 1040), make sure that you have made the […]
If there was a name entered on the prior year return that was allowed the taxpayer to qualify for the Head of Household filing status, this information will be imported into the current year’s return. If it is no longer needed/accurate, there are two ways to update the information: Change the Filing Status selection. Once […]
To select or change your filing status in the TaxAct program, follow the steps below. Online Dashboard From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Edit beside your name. Continue with the interview until you reach […]
To change your filing status from “Married Filing Joint” to “Head of Household” after importing, you will need to remove any spousal information from your return. To remove the spouse details, follow the steps below. Online Dashboard From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner […]
The disability status information is transferred to other parts of your TaxAct return: on Schedule R, Credit for the Elderly or the Disabled, to identify if an individual may be classified as disabled, in the Earned Income Credit (EIC) calculation to help determine if an individual can be claimed on another return and for the […]
If you have an inherited IRA, there are various possible scenarios that determine how you will complete your return using the TaxAct® program. These scenarios are listed below, along with instructions for entering the information in the TaxAct program. Inherited IRAs If you inherited an individual retirement account (IRA), you may have to include part […]
If you are claiming any of the following nonrefundable credits or excluding income from Puerto Rico, American Samoa, or other foreign earned income on Form 2555 Foreign Earned Income, you will need to use the various worksheets on pages 6-9 of IRS Publication 972 Child Tax Credit and Credit for Other Dependents to calculate the Child Tax Credit. Form 8396 Mortgage […]
You can locate the question regarding whether you can be claimed on someone else’s tax return using the steps below. Online Dashboard From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Edit beside your name. As you […]
There are several options that you can use to enter or import your stock transactions and information from Form 1099-B. Once entered, the TaxAct program will complete Form 8949 Sales and Other Dispositions of Capital Assets, Schedule D Capital Gains and Losses, and Form 1040 U.S. Individual Income Tax Return, Line 7, as applicable. If […]
Generally, the IRS requires all sales and exchanges of capital assets, including stocks, bonds, etc., to be entered on separate lines on Form 8949, however, the Form 8949 Instructions provide two exceptions to this requirement. Exception 1: When basis was reported to the IRS and no adjustments are needed, totals may be reported directly on […]
Capital gains and losses are reported on Form 1099-B and are automatically carried to Schedule D and/or Form 8949, as applicable. The 1099-B form you received might not report the date acquired or the cost basis, but you are responsible for acquiring and entering that information to properly report the transactions. Sale Dates – If […]
Capital gains and losses are reported on Form 1099-B and are automatically carried to Schedule D and/or Form 8949, as applicable. The 1099-B form you received might not report the date acquired or the cost basis, but you are responsible for acquiring and entering that information to properly report the transactions. Sale Dates – If […]
When stocks, stock rights, or bonds (not held by a securities dealer) become completely worthless during the tax year, they are treated as if sold on the last day of that year. The resulting capital loss is short-term or long-term depending on the holding period. See IRS Publication 550 for details. In TaxAct, follow the steps […]
If, while holding a short sale, a dividend was issued which ultimately came from your brokerage account, the amount may be able to be deductible as an investment expense on Federal Schedule A (Form 1040). If the payment you had to make to the lender, in lieu of dividends distributed on stock borrowed for a […]
Section 1202 is an exclusion of gain on Qualified Small Business (QSB) Stock. To enter the information for your QSB gain and exclusion, follow the steps below. The TaxAct program will automatically transfer this amount and enter it as a positive number per the previous instructions on the 28% Rate Gain Worksheet. You are responsible […]
See below for steps on entering the Alaska Permanent Fund Dividends (PFD). Per IRS Publication 550, “Alaska Permanent Fund dividends. Do not report these amounts as dividends. Instead, include these amounts on Schedule 1 (Form 1040), line 8g.” Online Dashboard From within your TaxAct return, click Income. On smaller devices, click in the upper left-hand […]
To enter or review short-term and long-term capital losses carried over from a prior year, follow the steps below. This allows the TaxAct program to transfer the info to Schedule D Capital Gains and Losses. If you import your prior year return in TaxAct, these amounts will be transferred automatically from your prior year TaxAct […]
Restricted stock is stock that you get from your employer for services you perform. It is non-transferable and subject to a substantial risk of forfeiture. You do not have to include the value of the stock in your income when you receive it. If you get dividends on restricted stock, however, you must include them […]
Follow the steps below to enter Form 1099-DIV Dividends and Distributions in the TaxAct program. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the Investments & Savings drop-down. Click Add beside Dividends. Complete the rest […]
Collectibles include works of art, rugs, antiques, metals (such as gold, silver, and platinum bullion), gems, stamps, coins, alcoholic beverages, and certain other tangible properties. If you have a gain or loss on the sale of a collectible, you must create a Form 1099-B Proceeds From Broker and Barter Exchange Transactions in the TaxAct program […]
To get Line 19 of IRS
You may need to allocate amounts of the Form 1095-A to another individual at zero percent. For more information, see IRS Instructions for Form 8962. To indicate zero allocation in the TaxAct program, follow the instructions in FAQ Form 1095-A – Entering Health Insurance Marketplace Statement in Program. During the interview, when entering the recipient’s […]
Per the Form 8962 Instructions: “If an individual in your tax family was enrolled in a policy with an individual in another tax family and you are not taking the PTC, the taxpayer who is claiming the individual not in your tax family may agree to reconcile all APTC paid for the policy.” For more […]
Per the Form 8962 Instructions: “You need to allocate policy amounts (enrollment premiums, SLCSP premiums, and/or APTC) on a Form 1095-A between your tax family and another tax family if: The policy covered at least one individual in your tax family and at least one individual in another tax family; and Either: a. You received a […]
To enter or review Form 1095-A Health Insurance Marketplace Statement in TaxAct, follow the steps below. Access your HealthCare.gov account to review your uploaded Form 1095-A. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. […]
See IRS Publication 504 for more information about alimony. NOTE: Amounts paid as alimony or separate maintenance payments under a divorce or separation agreement executed after 2018 are not deductible by the payer and are not included in the income of the recipient. Alimony Received To enter alimony received in the TaxAct program, follow the […]
Use Form 8606 to report the following: Nondeductible contributions you made to traditional IRAs; Distributions from traditional, SEP, or SIMPLE IRAs, if you have a basis in these IRAs; Conversions from traditional, SEP, or SIMPLE IRAs to Roth IRAs; and Distributions from Roth IRAs. For info on entering Form 1099-R in the TaxAct program, go […]
If the contributions made to your traditional IRA, Roth IRA, Coverdell ESA, Archer MSA, or HSA exceed your maximum contribution limit for the year, you can review the additional tax entries on Form 5329. If you need help accessing Form 5329, go to our Form 5329 – Entering in Program FAQ. Related Links Instructions for […]
If you qualify for a hardship exemption related to additional tax on your retirement income, you will need to enter Form 1099-R and Form 5329. See the FAQs Form 1099-R – Entering Distributions from Retirement Plans and Form 5329 – Entering in Program for details. You can find additional information in the IRS Topic No. […]
Use Form 5329 to report additional taxes on: IRAs Other qualified retirement plans Modified endowment contracts Coverdell ESAs QTPs Archer MSAs HSAs ABLE accounts To enter, review, or delete information for Form 5329, follow the steps below. Online Dashboard From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the menu at […]
Generally, if you are under age 59 1/2, you must pay a 10% additional tax on the distribution of any assets (money or other property) from your traditional IRA. Distributions before you are age 59 1/2 are called “Early Distributions.” The 10% additional tax applies to the part of the distribution that you must include […]
Changing any of the key entries listed below will affect the outcome on your tax return. The important entries on Form 1099-R include Boxes 1, 2a, 2b, 7 (numeric and alpha), and the IRA/SEP/SIMPLE checkbox. Additionally, if you need to use the Simplified Method, have converted a traditional IRA to a Roth IRA, or have […]
Form 1099-K is required to be issued by payment card companies, payment apps and online marketplaces to report payments made in settlement of reportable payment transactions. Like Form W-2 or 1099-NEC, this form will be issued to the taxpayer and the IRS by the issuer. See the FAQ Form 1099-K – Entering in Program for […]
State or local governments or a tax-exempt organization under IRC 501(c) are eligible to establish a 457(b) plan for its employees. These plans can either be eligible plans under IRC 457(b) or ineligible plans under IRC 457(f). Plans eligible under 457(b) allow employees of sponsoring organizations to defer income taxation on retirement savings into future […]
To enter or review information for Schedule E (Form 1040), follow the steps below. You may receive Form 1099-MISC or Form 1099-K reporting income or transactions related to your rental or royalty income. You will be able to enter information for those income forms during the Schedule E interview process. Online Dashboard From within your […]
If you own a business, freelance, or earn money through gig work, you are generally considered self-employed. Enter the income and expenses related to your business on Schedule C, following the steps below. You may receive Form 1099-NEC or Form 1099-K reporting income or transactions related to your self-employment. You will select all applicable income […]
To add information about your farm, filed on Federal Schedule F, follow these steps. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Expand the Business & Self Employed section. Click Add beside Farm Income (Schedule F). […]
If you are not engaged in the activity for profit, then the activity may be considered a hobby. You are still required to report hobby income on your tax return. See IRS Publication 17 for details. NOTE: You may not claim hobby expenses (at least through 2025, pending further legislation). Online Dashboard From within […]
Form 1099-K is required to be issued by payment card companies, payment apps and online marketplaces to report payments made in settlement of reportable payment transactions. Like Form W-2 or 1099-NEC, this form will be issued to the taxpayer and the IRS by the issuer. See the FAQ Form 1099-K – Entering in Program for […]
Form 1099-K is required to be issued by payment card companies, payment apps and online marketplaces to report payments made in settlement of reportable payment transactions. Like Form W-2 or 1099-NEC, this form will be issued to the taxpayer and the IRS by the issuer. See the IRS Instructions for Form 1099-K for a list […]
To report a Roth IRA distribution, begin by entering the data from your Form 1099-R (gross amount, taxable amount, Box 7 code). Then follow the instructions for Form 8606 to compute how much (if any) is taxable or subject to penalty. Finally, if the distribution incurs the 10% early-distribution penalty (or a recapture) and no […]
To enter Form 1099-R. Distributions from pensions, annuities, retirement or profit-sharing plans, IRAs, insurance contracts, etc., follow the steps below. Online Dashboards From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Expand the Retirement & Social Security section. Click […]
TaxAct uses the entries made for all Forms 1099-R to calculate the amounts that appear on Lines 4a, 4b, 5a, or 5b of Form 1040. If you think an amount regarding your retirement plan income is incorrect on Form 1040, review your Form 1099-R entries by following the steps below. If you change any of […]
You’ll receive a Form 1099-R from the payer of your 401(k) distribution. A copy of that form is also sent to the IRS. To report the 401(k) distribution in your TaxAct return, follow these steps. Online Dashboards From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner […]
To enter a description and an amount for “Other Income” that needs to be reported on Form 1040, follow the steps below. This would be any income that is not reported elsewhere on another form or schedule. In 2024, the amount flows to Schedule 1, line 8z with “Worksheet attached” on the description line. The […]
To enter a description and an amount for “Other Income” that needs to be reported on Form 1040, follow the steps below. This would be any income that is not reported elsewhere on another form or schedule. The amount flows to Schedule 1, line 8z with “Worksheet attached” on the description line. The worksheet “Other […]
If you were not an employee of the company or person who paid you, your payment (compensation) is reported on Form 1099-NEC instead of Form W-2. To enter the applicable Schedule C information, and Form 1099-NEC, follow the steps below. Refer to IRS Publication 334 for additional information regarding self-employment tax, what it is, who […]
To indicate that a Form 1099-INT is foreign Interest for a mutual fund or a regulated investment company, follow these steps. Online Dashboards From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Expand Investment and Savings. Click Add beside […]
To report Form 1099-INT, Interest Income, in the TaxAct program, follow the steps below. Online Dashboards From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Expand Investment and Savings. Click Add beside Interest to add a new Form 1099-INT. […]
Personal exemption deductions for yourself, your spouse, or your dependents were eliminated as of tax year 2018. Refer to the links below for more information about dependents: Publication 501 Dependents, Standard Deduction, and Filing Information Whom May I Claim as a Dependent? IRS Interactive Tax Assistant Dependents – Entering Information in Program Note that any […]
If you believe you may be at risk for tax-related identity theft, fill out IRS Form 14039 and either fax or mail it to the IRS so they can mark your account to identify any questionable activity (the fax number and mailing address are provided below the signature section on the second page of the form). […]
If you were a victim of identity theft, you may receive IRS Notice CP01A containing a single-use 6-digit Identity Protection (IP) PIN. For information on IP PINs, follow this link to the IRS FAQs about the Identity Protection Personal Identification Number (IP PIN). If you have misplaced the IRS letter containing your IP PIN, you […]
If your dependent received an Identity Protection PIN (IP PIN), you will need to enter this PIN on your tax return. To enter your dependent’s IP PIN, follow the steps below. Online Dashboards From within your TaxAct return, click Taxes & Miscellaneous. On smaller devices, click the menu at the top left corner of your […]
Charitable contributions are entered on Schedule A (Form 1040), Lines 11-12. To be deductible, a contribution must be made to a qualified organization. See the IRS Tax Exempt Organization Search tool for a searchable list of qualified organizations. Donation Assistant TaxAct Deluxe, Premier and Self-Employed users can quickly and easily enter information for donated items […]
TaxAct® automatically calculates the Earned Income Credit (EIC) based on the information in your return. If you have a dependent that is a qualifying child, enter your dependent information (including name, SSN, relationship to you, year of birth, number of months lived with you, and student status). TaxAct will then use dependent information in the […]
If a taxpayer or taxpayer’s spouse is claimed as a dependent on someone else’s return, the standard deduction on the taxpayer’s return is generally reduced and calculated according to the Standard Deduction Worksheet for Dependents of IRS Publication 501. The TaxAct program calculates the standard deduction for you when you indicate that either you or […]
Stock Assistant is a valuable tool to provide a quick entry (spreadsheet style) mechanism for capital gain transactions reported on Form 1099-B. You may quickly add new stock transactions by selecting the bottom table row. A new entry will be automatically created, and you may enter all the necessary details. Follow the steps below to […]
There are many variables to consider when determining if an individual qualifies as a dependent for tax purposes. As each situation can be different, TaxAct does not make the determination of which dependents qualify; this must be determined by the user. TaxAct calculations are based on the user entering eligible dependents into the program. If […]
Your filing status and eligibility for certain credits is determined, in part, by whether you have a qualifying dependent. The software will automatically calculate any eligible credits as you enter your information. Tips are provided during the interview process, but you can also use the guidelines below to help determine if someone qualifies as your […]
If you are claimed as a dependent on another person’s tax return, you must indicate this when filing your own return. Selecting this checkbox: Limits your standard deduction amount. Prevents you from claiming dependents of your own. May make you ineligible for certain tax credits and deductions (though you may still qualify for others depending […]
If you are claimed as a dependent on another person’s tax return, you must indicate this when filing your own return. For detailed steps on making this selection, see the Dependent of Another Taxpayer Filing Their Own Return FAQ.
For information on how to enter or edit a dependent in the TaxAct program, go to the Dependents – Entering Information in Program FAQ. Note: A child born on any date in a given year – even on December 31 – is considered a dependent for the entire year.
For information on how to enter or edit a dependent in the TaxAct program, go to the Dependents – Entering Information in Program FAQ. For information on how to review your calculated Child Tax Credit (CTC) or Other Dependent Credit (ODC), go to the Dependents – Entering and Reviewing FAQ.
To enter or edit a dependent in the TaxAct program, follow the steps below. Online Dashboards From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Select Add Dependent. If a dependent was updated from the prior year, you can […]
When you enter the dependent information, it flows to Form 1040. The dependent’s data (social security number, year of birth, relationship, number of months lived with you, etc.) is also used to calculate credits such as the Child Tax Credit (CTC) or Other Dependent Credit (ODC). For information on how to enter or edit a […]
For information on how to enter or edit a dependent in the TaxAct program, go to the Dependents – Entering Information in Program FAQ. When entering your dependent, select the Dependent Citizenship type by selecting it in the drop-down Dependent Citizenship. Options include: None selected U.S. citizen, U.S. national, or U.S. resident alien Resident of […]
For information on how to enter or edit a dependent in the TaxAct program, go to the Dependents – Entering Information in Program FAQ. When entering your dependent, select the type of dependent by selecting it in the drop-down Relationship to you. Options include: None selected Son Daughter Stepchild Grandchild Foster child Parent Grandparent Brother […]
If the Box 13 Statutory employee is checked on your Form W-2, the income needs to be reported on Schedule C. To enter statutory employee income, Add or edit Form W-2 (see the Form W-2 – Entering in Program FAQ for details). During the interview process, on the screen titled W-2: Enter Your information, below Box […]
You can report more than one Form W-2 in the TaxAct program. You might receive more than one Form W-2 if you changed jobs or worked for more than one employer during a tax year. To report more than one Form W-2, follow the steps below. Online Dashboards From within your TaxAct return, click Income. […]
The number reported in Box 12 of Form W-2 – Wage and Tax Statement (code “W”) is the amount your employer contributed to your health savings account (including cafeteria plan contributions). You’ll need to enter this figure in your tax return when adding Form W-2 – see Entering in Program – Form W-2 for details. […]
Substantiated employee business expense reimbursements are reported on Box 12 of Form W-2. If you don’t use this expense, the unused amount would be taxed as wages. Excess reimbursements. If you are not a member of the Armed Forces reserves, a qualified performing artist, a fee-basis state or local government official, or an employee with […]
In the TaxAct program, you can add, review/edit, delete, and add multiple copies of Form W-2. If you need to add Form W-2, read the instructions in the article Form W-2 – Entering in Program. To add multiple copies of Form W-2, read the instructions in the article Form W-2 – Filing Multiple Copies. Review […]
Box 14 of Form W-2 allows your employer to enter a variety of information. Employers might use abbreviations and codes in Box 14, and you may need to ask your employer to interpret those abbreviations or codes. Reporting Box 14 information in your W-2 in TaxAct is only for your benefit and tax records. The […]
Reporting your income from Form W-2 is simple in TaxAct. The steps vary depending on which version of TaxAct you are using. Online If it’s your first time through the Q&A, just follow the interview process. On the screen titled What kind of income did you have in 20XX?, click the checkbox next to Worked […]
You can save time by importing last year’s return into this year’s return. You can import TaxAct Online returns, TaxAct Desktop returns, and PDF files created in another tax program. When you import a prior year return, anything previously entered in the current return will be overwritten. You need to import the prior year return, […]
To enter or modify the taxpayer’s (or spouse’s) name, Social Security Number (SSN), or date of birth in the TaxAct return, follow these steps. Online Dashboards From within your TaxAct return, click About. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Review the information […]
You may be able to exclude some of the gain on the sale of your home used for business purposes if you meet the ownership and use tests, and if the part of your property used for business is within your home (in other words, not a separate part of your property). Per IRS Publication […]
Refer to IRS Publication 225 Farmer’s Tax Guide for complete instructions. Most government program payments are reported on Schedule F, Part I. This includes government payments, conservation program payments, indemnity payments for livestock killed by a natural disaster, cost-sharing payments, and forage disaster payments (cash, materials, services, etc.). If a government payment is paid and […]
Form 6251 is used to calculate the Alternative Minimum Tax (AMT), a separate tax that limits how much certain deductions and tax benefits can reduce a taxpayer’s total tax. It applies to taxpayers with income or deductions that receive favorable treatment under regular tax rules. The form also helps determine the tentative minimum tax, which […]
With the stock data import feature, you can import information from certain brokerages and financial institutions. Supported brokerages/institutions and steps vary depending on whether you are working in the online or desktop program. Online To access the stock data import feature, follow the steps below. Open the return. Go to Federal > Investment Income > […]
Create Spreadsheet When creating a spreadsheet to import information into your tax return, the following columns are required to report Form 1099-B: Description Date Sold Sales Proceeds Date Acquired Cost or Other Basis Some additional fields may also be needed: Additional Description: You may have a column in your file reflecting information such as the quantity […]
The Import feature is included in all the TaxAct programs at no extra charge. This feature allows you to import key information from last year’s return, saving you valuable time. There is no need to enter information such as your name, Social Security Number (SSN), address, etc. You will be given the option to choose […]
The Electronic Federal Tax Payment System (EFTPS) is a free tax payment system for all taxpayers. The EFTPS system is an easy way to pay your federal taxes for individuals as well as businesses. You can make ALL of your federal tax payments including federal tax deposits (FTDs), installment agreement, and estimated tax payments using […]
An independent contractor or self-employed individual should report income on Schedule C (Form 1040). You may need to file other schedules and forms, including Schedule SE (Form 1040) on income from a trade or business. You must report all income, even if you did not receive a Form 1099-NEC. See IRS Instructions for Schedule C […]
Filing Taxes for Children and Dependents A child’s earned income (such as from a W-2) should not be reported on a parent or guardian’s tax return. Does Your Dependent Need to File a Return? Whether a child or dependent is required to file depends on: The amount of earned and/or unearned income Marital status Age (65 or older) Whether they are blind Even if not […]
Understanding the Affordable Care Act (ACA) and Your Federal Tax Return To help you better understand how the Affordable Care Act of 2010 (also known as ACA, the Health Care Law, or Obamacare) may affect your federal tax return, TaxAct has compiled key information regarding related forms and terminology. Not all items listed below will […]
If you receive a Form 1099-NEC Nonemployee Compensation with an amount in Box 1, the IRS position is that you have your own business. Your “business” is whatever you do to earn the income that is reported to you on the Form 1099-NEC, Box 1. When you complete the Schedule C (Form 1040) section of the […]
Income and Filing Status As a dependent, you have a filing requirement if you had income (earned or unearned) above the threshold amount for your filing status. For details on each threshold, see Publication 501. Unearned income includes taxable interest, ordinary dividends, and capital gain distributions. It also includes unemployment compensation, taxable social security benefits, […]
During enrollment through the Marketplace, the Marketplace will determine if you are eligible for advance payments of the premium tax credit, also called “advance credit payments.” If you enrolled in Marketplace coverage last year, you will receive Form 1095-A detailing the coverage. You must enter the details of Form 1095-A on your tax return. To […]
The Child Tax Credit (CTC) amount is affected by your income amount. This nonrefundable credit begins to phase out at the following Adjusted Gross Income (AGI) levels: $400,000 MFJ $200,000 MFS/S/HOH/QW Notes: […]
Due to the complexity involved, the TaxAct program does not offer an automated way to split a joint tax return into two separate returns for Married Filing Separately status. However, the Joint vs. Separate Analysis report can provide a reasonably accurate estimate of potential tax savings between filing jointly and separately. To view actual results, you will need to manually create a […]
“Not for Filing” Watermark on TaxAct Return A “Not for Filing” watermark will appear on your return if you choose to pay your TaxAct® program fees using your refund. This is because TaxAct does not allow customers to print their final return before the fees are paid. When Does the Watermark Go Away? If your e-filed return is […]
With the TaxAct® Desktop programs, you can e-file up to five (5) returns. You can create an unlimited number of returns for paper-filing. Federal e-file (for up to five (5) returns) is free. You can purchase the Basic, Deluxe, Premier, or Self Employed package. The Deluxe, Premier, and Self Employed packages include one state module. […]
To view and print the receipt for your payment of your TaxAct return: Sign in to your TaxAct Online account. If the navigation menu, choose Tax Returns, and open your return. On the left, click My Return, then My Return Details. Under Payment Information, click My Return Fees. A detailed break-down of the charges will […]
If you have not have filed your federal income tax return for this year, or previous years, and you are required to file, you need to file your tax return as soon as possible. Go to the IRS Topic No. 153 What to Do if You Haven’t Filed Your Tax Return webpage for more information. […]
Per IRS Instructions for Form 1098-T: Instructions for Student You, or the person who can claim you as a dependent, may be able to claim an education credit on Form 1040 or 1040-SR. This statement has been furnished to you by an eligible educational institution in which you are enrolled, or by an insurer who […]
See IRS Publication 503 for details about who is considered to be a qualifying person for Form 2441 purposes.
When you enter the applicable basic information in TaxAct, the software will automatically calculate if a taxpayer is eligible for the additional standard deduction amount. TaxAct® will use the higher of your itemized deductions or the standard deduction for your filing status to maximize your tax benefit. The total of your itemized deductions is reported […]
When you enter the applicable basic information in TaxAct, the software will automatically calculate if a taxpayer is eligible for the additional standard deduction amount. TaxAct® will use the higher of your itemized deductions or the standard deduction for your filing status to maximize your tax benefit. The total of your itemized deductions is reported […]
Per IRS Publication 501: Higher Standard Deduction for Age (65 or Older) If you are age 65 or older on the last day of the year and don’t itemize deductions, you are entitled to a higher standard deduction. You are considered 65 on the day before your 65th birthday. Therefore, you can take a higher […]
To enter your scholarship or fellowship income (if scholarship or fellowship income was reported on Form 1098-T), go to the Form 1098-T – Entering in Program FAQ. From within your student worksheet (if you need help accessing your student worksheet in the TaxAct program, go to our Student Worksheet Entries FAQ), continue with the interview […]
To report or edit Form 1099-MISC Miscellaneous Income Box 7 (if you need help accessing Form 1099-MISC in the TaxAct program, go to our Form 1099-MISC – Entering in Program FAQ): From within your Form 1099-MISC, continue with the interview process until you reach the screen titled 1099-MISC: Enter information on form. Click the checkbox next to Box 7 – […]
For information about whether you can claim the mortgage interest paid on a foreign loan for a foreign home, go to the IRS website. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the […]
Points are certain charges paid, or treated as paid, by a borrower to obtain a home mortgage. Points may be called loan origination fees, maximum loan charges, loan discount, or discount points. See IRS Publication 527 for details. You must review IRS Publication 527 to determine if you can deduct points on your Schedule E […]
Starting with 2024, the Minnesota Renter’s Credit is claimed by filing Schedule M1RENT with Form M1 (instead of on Form M1PR). If you are eligible to claim the Minnesota Renter’s Credit, you must attach a copy of the Certificate of Rent Paid (CRP) provided by your landlord. Your landlord is required to provide you with […]
Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit is a non-refundable credit. For more information about how this affects your tax return, go to our Nonrefundable Credit vs Refundable Credit FAQ. To access Form 8936 in the TaxAct program: From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in […]
Taxable scholarship income impacts your total income amount as it is included on Schedule 1, line 8r and then flows to Form 1040, line 8. See IRS Publication 970 for details. If the student is being claimed as a dependent, and their educational expenses exceed the scholarship, grant, or fellowship amount, the education credit or deduction […]
To be eligible for the American Opportunity Credit, a student must not have completed the first four years of post-secondary education as of the beginning of the taxable year. The “first four years” refers to the amount of academic credit that has been awarded. Generally, it’s what schools use to classify students (junior, senior, etc.). […]
If you receive a Form 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. with a code “6” in Box 7, it is indicating a tax-free exchange of life insurance, annuity, or endowment contracts under Section 1035. Generally, this form has no impact on your Federal tax return; however, it may […]
Schedule C Loss: At-Risk Rules If you have a loss on Schedule C, the interview screen to indicate that All investment is at risk, or that Some investment is not at risk, is at the end of the Q&A for Schedule C or in the Business Income section of the program. If everything that has […]
In order to determine how and where to report stipend income, you must first determine the nature of the stipend income. The IRS explains that your stipend may be reported on Form W-2 or Form 1099-MISC. You are responsible for determining whether you were paid as an employee or independent contractor and whether or not the […]
Box 15 on Form W-2 Wage and Tax Statement must list the state for which the employer withheld the taxes and, more importantly, to which the employer remitted the taxes. If it doesn’t, the state claimed will reject the withholdings, as they never received them from the employer. You must always contact the employer for […]
If the taxpayer was under age 24 at the end of the year and certain conditions apply, they may only qualify to receive the non-refundable portion of the American Opportunity Credit, and not the refundable portion. In the TaxAct program, if the information for the student (who is also the taxpayer on the return) is […]
Employers are required to report the cost of an employee’s health care benefits in Box 12 of Form W-2 Wage and Tax Statement, using code “DD” to identify the amount. This amount is reported for informational purposes only and is NOT taxable. It is included in Box 12 in order to provide comparable consumer information […]
Restricted Stock Units (RSUs) are a form of compensation offered by some employers. These are generally taxed at the time of vesting, whereas employee stock options are usually taxed at the time of option exercise. The employer is required to withhold taxes as soon as the RSUs become vested. The employer will issue Form W-2 […]
To enter or review business expenses on your Schedule C in the TaxAct program (if you need help accessing Schedule C, go to our Schedule C – Entering Sole Proprietorship in Program FAQ): From within your Schedule C, continue with the interview process until you reach the screen titled Great! Let’s get started on expenses for this […]
The TaxAct® program automatically doesn’t print a copy of Schedule A (Form 1040) Itemized Deductions if you choose to take the standard deduction, but you can choose to print Schedule A anyway. Temporarily change your return to use itemized deductions in the TaxAct program. If you need help, go to our Force Standard or Itemized Deductions […]
Business income is income from your trade or business transactions and activities. Some income from tangible and intangible property is also included as business income if the acquisition, use, management, or disposition of the property makes up an integral part of your business operations. Any other income is nonbusiness income, and you’ll need evidence showing […]
Are you an employee or independent contractor? The answer is important for tax purposes because it shapes how you report your income. When you are an employee, your employer must withhold income tax and your portion of Social Security and Medicare taxes (unless exempt). You’ll receive a Form W-2 Wage and Tax Statement that shows […]
Per IRS Publication 970, page 5: Tax-Free Scholarships and Fellowship Grants A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. A scholarship or fellowship grant is tax free only to the extent: It doesn’t exceed your qualified education […]
The definition of “qualifying education expense” differs depending on the educational benefit being claimed on your return. Room and board are NOT considered a qualifying education expense in the following situations: If you are claiming the American Opportunity Tax Credit or Lifetime Learning Credit. For purposes of determining how much of your scholarship and fellowship income is tax-free. […]
If a child is entitled to Social Security benefits, such as after the death of a parent, the benefit is considered to be the child’s regardless of who actually receives the payment. Per IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits, page 3: Children’s benefits. The rules in this publication apply to benefits […]
Per IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits, page 6: Canadian or German social security benefits paid to U.S. residents. . Under income tax treaties with Canada and Germany, social security benefits paid by those countries to U.S. residents are treated for U.S. income tax purposes as if they were paid under […]
The buying and selling of property may be considered self-employment/business income or investment income if it does not fit under the category of rental income. Ultimately, the taxpayer must determine the true nature of his or her operations and how it should be classified: Rental income reported on Schedule E (Form 1040) Supplemental Income and […]
Per IRS Publication 501 Dependents, Standard Deduction, and Filing Information, page 10: Dependents The term “dependent” means: A qualifying child, or A qualifying relative. Page 11: Tests to be a Qualifying Relative The person can’t be your qualifying child or the qualifying child of any other taxpayer. The person either (a) must be related to you in […]
Indiana’s Economic Development for a Growing Economy Credit (EDGE Credit) is calculated on Schedule IN-EDGE and carries to Form IT-40, Schedule F. You would receive a credit agreement letter along with your Indiana K-1 from the preparer of your business return. To enter the credit in the TaxAct® program: From within your TaxAct return (Online […]
If your income is modest, it is likely that none of your Social Security benefits are taxable. As your gross income increases, a higher percentage of your Social Security benefits become taxable, up to a maximum of 85% of your total benefits. The TaxAct® program will automatically calculate the taxable amount of your Social Security […]
If you use your dwelling unit for both rental and personal purposes, divide your expenses between the rental use and the personal use based on the number of days used for each purpose. You will allocate your expenses based on the number of personal days as compared to the number of rental days. The personal […]
Although you cannot enter information from Form 1099-B Proceeds From Broker and Barter Exchange Transactions directly onto Schedule D (Form 1040) Capital Gains and Losses, the following steps may help to streamline the entry process for TaxAct Desktop (download) customers. The information to be entered on Form 8949 Sales and Other Dispositions of Capital Assets […]
TaxAct® will calculate the general sales tax for your state for Schedule A (Form 1040) Itemized Deductions, Line 5. In the Itemized Deductions section of TaxAct, you can enter the state and the number of days you lived in that state. TaxAct will then calculate the state general sales tax based on the optional state […]
Depending on where you live, the TaxAct program might ask what your locality is when you claim your State and Local General Sales Tax Deduction (if you need help accessing the sales tax section of the TaxAct program, go to our Sales Tax – Entering in the Program FAQ): From within the sales tax deduction […]
The TaxAct® program does not support the entry of more than five states on Schedule A (Form 1040) Itemized Deductions. If you have more than five states to enter, you will need to manually calculate each state, then enter one total. To manually calculate the tax, use the calculator on the IRS website, or use the […]
Before claiming a deduction for sales tax on your home, check your real estate bill to make sure you paid sales tax. Per IRS Instructions for Schedule A, page 6: Line 7. Enter on line 7 any state and local general sales taxes paid on the following specified items. If you are completing more than […]
If your locality imposes a general sales tax, you can claim this for your State and Local General Sales Tax Deduction. To claim your State and Local General Sales Tax Deduction in the TaxAct program (if you need help accessing the sales tax section of the TaxAct program, go to our Sales Tax – Entering […]
Per IRS Publication 936 Home Mortgage Interest Deduction, page 4: Mortgage prepayment penalty. If you pay off your home mortgage early, you may have to pay a penalty. You can deduct that penalty as home mortgage interest provided the penalty isn’t for a specific service performed or cost incurred in connection with your mortgage loan. […]
If you paid mortgage interest to more than one person and the amounts weren’t reported on Form 1098 Mortgage Interest Statement, you will need to enter additional mortgage interest information (if you need help accessing the mortgage interest section of the TaxAct program, go to our Mortgage Interest – Not on Form 1098 FAQ): From […]
Per IRS Instructions for Form 2106, page 1: Purpose of Form Use Form 2106 if you were an Armed Forces reservist, qualified performing artist, fee-basis state or local government official, or employee with impairment-related work expenses. Due to the suspension of miscellaneous itemized deductions subject to the 2% floor under section 67(a), employees who do […]
Use Form 1099-S Proceeds From Real Estate Transactions to report proceeds from real estate transactions. How the property is used (personal, investment, business) will determine where the information is reported. For more information, go to IRS Instructions for Form 1099-S. Reporting real estate for personal use: If the 1099-S was for the sale of your […]
If you receive a Form 1099-MISC with an entry in Box 6 for medical and health care payments, you need to report it in the TaxAct program and have the TaxAct program transfer the information to Schedule C. You need to create a Schedule C before you report Form 1099-MISC and assign it to Schedule […]
If you need help reporting Form 1099-MISC in the TaxAct program, go to our Form 1099-MISC – Entering in Program FAQ. Generally, report this amount from Form 1099-MISC Miscellaneous Income, Box 3 on the Other Income line of Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 8. The amount reported in Box 3 […]
To enter royalty income in the TaxAct program: First, follow the steps in our article Schedule E – Entering Rental Property in Program to add Schedule E (Form 1040) to your tax return. Within your Schedule E, continue with the interview process until you reach the screen titled Rental and Royalty Income – Property Type. Click the Property type dropdown, then click 6 […]
Enter or review the information for Form 1099-MISC Box 1 – Rents If you need help accessing Form 1099-MISC in the TacAct program, go to our Form 1099-MISC – Entering in Program FAQ): From within your Form 1099-MISC, continue with the interview process until you reach the screen titled 1099-MISC: Enter information on form. Click the data […]
If you used your car while volunteering, you can report the mileage or actual expenses in your TaxAct return. The TaxAct program then transfers the information to Schedule A (Form 1040) Itemized Deductions, line 11. The TaxAct® program computes the charitable mileage deduction for you, per the IRS Standard Mileage Rates webpage. To report the cost for […]
A number of prominent charitable organizations state that gifts of frequent flyer miles are generally not tax-deductible, because they are given to you by the airline and therefore have no monetary value in the eyes of the Internal Revenue Service. You can contact the IRS at (800)829-1040 for a decision as to whether your gift […]
Depreciation on your home is deductible only if you use your home for business. Per IRS Publication 587 Business Use of Your Home (Including Use by Daycare Providers), page 8: Figuring the depreciation deduction for the current year. If you began using your home for business before 2023, continue to use the same depreciation method […]
Form 8829 Expenses for Business Use of Your Home is used to figure the allowable expenses for business use of your home on Schedule C (Form 1040) Profit or Loss From Business. Do not use Form 8829 if you are claiming expenses as an employee or partner, or if you are claiming expenses on Schedule […]
If you received RTAA payments and are required to report them as income, they must be reported as “Other income” on Schedule 1 of Form 1040. Online Dashboard From within your TaxAct return, click Income. On smaller devices, click the menu at the top left corner of your screen, then make your selection. Click the […]
Members of the clergy who need to reduce expenses on Schedule C (Form 1040) Profit or Loss From Business and/or Form 2106 Employee Business Expenses (due to a certain percentage of tax-free income received), will need to adjust their allowable expenses in the appropriate section of the Federal Quick Q&A Topics menu after calculating the […]
Per IRS Instructions for Forms 1099-INT and 1099-OID, page 3: Box 8. Tax-Exempt Interest Enter tax-exempt interest that is not OID of $10 or more that is credited or paid to the person’s account if that interest is paid on obligations issued by a state, the District of Columbia, a U.S. possession, an Indian tribal […]
The Joint vs. Separate Analysis will separate the net capital gains or losses by taxpayer and spouse, up to the amounts allowed. You may deduct capital losses up to the amount of your capital gains plus $3,000 ($1,500 if married filing separately). There is no report in the program that shows separate capital gain transactions […]
Per IRS Publication 970: “Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that dependent, are considered paid by you.” The educational institution sends a Form 1098-T Tuition Statement to the student to report the expenses. For more details about what is reported on Form […]
You may claim only the following as a dependent: A person who qualifies as your dependent on your federal return (see instructions regarding an exception). A person who is age 65 or over (related to you or not) who does not qualify as your dependent on your federal return, but for whom one of the […]
Follow the steps for your return type to enter forgiven PPP loans For 1065 returns through Q&A: Generally, the tax-exempt income resulting from the forgiveness of a PPP loan is reported on Schedule K, line 18b. To enter the tax-exempt income from the PPP loan: 1. From within your TaxAct return (Online or Desktop), click […]
Income Ratio This ratio is calculated by using the income earned or received while a resident of Georgia divided by your total income earned or received. Time Ratio This ratio is calculated by using the number of days in the state of Georgia divided by the number of days in the year. Time Ratio This […]
Below is the link to the Arizona Department of Revenue’s code lists for Qualifying Charitable Organizations and Qualifying Foster Care Charitable Organizations: Contributions to QCOs and QFCOs | Arizona Department of Revenue (azdor.gov) To find your code, scroll down to the heading List of Qualifying Charities, and click QCO (Qualifying Charitable Organizations) or QFCO (Qualifying […]
> Car Four-wheeled vehicle made for use on public roads and rated at 6,000 pounds or less of unloaded gross vehicle weight. > Light Truck/SUV Truck or SUV rated at 6,000 pounds or less of unloaded gross vehicle weight. > Heavy Truck Vehicles used mainly for business because they are designed for business purposes; for […]
TaxAct does not support Form 8834. However, you can still file with TaxAct by printing and mailing your return to the IRS and including Form 8834 separately. See our How to Mail a Paper Return (Paper File) FAQ for help. Important Information The Qualified Electric Vehicle Credit only applies to vehicles placed in service before […]
Per IRS Publication 535, Business Expenses, page 5: Capital Versus Deductible Expenses Deduction for qualified business income. For tax years beginning after 2017, you may be entitled to take a deduction of up to 20% of your qualified business income from your qualified trade or business, plus 20% of the aggregate amount of qualified real […]
The amount of excess premium tax credit repayment, calculated on Line 29 of Federal Form 8962 Premium Tax Credit (PTC), has a different calculation if there was a self-employed health insurance deduction claimed on Line 16 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income. Per IRS Instructions for Form 8962, page 15: […]
Virtual currencies such as Bitcoin or other “cryptocurrencies” are taxed differently from cash or coin currency. The IRS generally recognizes virtual currency as property, not legal tender. As such, virtual currency received as payment by an individual or business must be included as miscellaneous income as an exchange of property or service. The value of […]
To assign Form(s) 1099-MISC Miscellaneous Income to Schedule C (Form 1040) Profit or Loss From Business or Schedule(s) E Supplemental Income and Loss (if you need help accessing Form 1099-MISC in the TaxAct program, go to our Form 1099-MISC – Entering in Program FAQ): From within your Form 1099-MISC, continue with the interview process until you […]
IRS business activity codes are for your principal business or professional activity. For a list of business activity codes, see Instructions for Schedule C Profit or Loss From Business. Choose the category that best describes your sole proprietorship’s primary business activity (for example, real estate) and select the activity that best identifies the source of […]
As a sales representative for a direct sales company, you have an obligation to report income earned through that business for tax purposes. At tax time, the direct sales company will send Form 1099-NEC Nonemployee Compensation (if value is above $5,000) or Form 1099-MISC Miscellaneous Compensation and would report any prizes/incentives as Box 3 income. A copy of […]
If your Schedule K-1 is showing unallowed prior year losses and current year unallowed losses in Box 2, but prior year unallowed losses are not showing on Form 8582 Passive Activity Loss Limitations, you have most likely indicated an amount in Box 1 as nonpassive and an amount in Box 2 as passive on the […]
There are limits on the amounts of depreciation you can take per year for Passenger Automobiles. Per the IRS, the limits you can deduct are based on the date you placed the automobile in service. For example, a $100,000 vehicle placed in service in 2019, you are allowed to deduct $18,000 for the first year, […]
If you disposed of both depreciable property and other property (for example, a building and land) in the same transaction and realized a gain, you must allocate the amount realized between the two types of property based on their respective Fair Market Values (FMVs) to figure the part of the gain to be recaptured as […]
Per IRS Publication 530 Tax Information for Homeowners, page 2: Nondeductible payments. You can’t deduct any of the following items. Insurance (other than mortgage insurance premiums), including fire and comprehensive coverage, and title insurance. Wages you pay for domestic help. Depreciation. The cost of utilities, such as gas, electricity, or water. Most settlement costs. See […]
Since 2016, the IRS has allowed Form 1040-NR U.S. Nonresident Alien Income Tax Return to be e-filed. Form 1040-NR-EZ is no longer available. TaxAct supports e-filing for Form 1040-NR. For more information, go to the IRS Instructions for Form 1040-NR. Note that any link in the information above is updated each year automatically and will […]
People who perform services for companies such as Uber, Task Rabbit, Airbnb, DogVacay, and similar companies are generally considered independent contractors. If you are considered an independent contractor, you will report your income and expenses on Schedule C (Form 1040) Profit or Loss From Business. Per the IRS Gig Economy Tax Center webpage: What is […]
While there is no official IRS guidance in the forms (or instructions and publications) that addresses IRA contributions made on behalf of a decedent after their death, there was a Private Letter Ruling (8439066) that ruled contributions made after the date of death were classified as excess contributions. Due to this, the TaxAct program is […]
Based on the Modified Adjusted Gross Income (MAGI) on a return, the student loan interest deduction allowed on the return may be phased out or eliminated. The TaxAct program automatically calculates the eligible amount of student loan interest deduction for the return, based on the student loan interest expense entered in the program (in conjunction […]
Per IRS Publication 5187 Affordable Care Act: What You and Your Family Need to Know, page 3: What’s New? Under the Tax Cuts and Jobs Act, passed December 22, 2017, the amount of the individual shared responsibility payment is reduced to zero for months beginning after December 31, 2018. Beginning in tax year 2019 and […]
Per IRS Instructions for Forms 1099-QA and 5498-QA, page 1: Qualified ABLE program A qualified ABLE program is a program established and maintained by a state, or agency, or instrumentality of a state: Under which an ABLE account may be established for a blind or disabled individual whose blindness or disability occurred before age 26 (an “eligible […]
To enter or review information from Form 1099-DIV, go to our Form 1099-DIV – Entering Dividend Income in Program FAQ. The following will assist with the entry of Form 1099-DIV Dividends and Distributions when the income belongs to either another person or multiple taxpayers.
Form 1095-B, Health Coverage provides coverage information you, your spouse (if you file a joint return), and individuals you claim as dependents had qualifying health coverage (referred to as “minimum essential coverage”) for some or all months during the year. Note. Providers of minimum essential coverage are required to furnish only one Form 1095-B for […]
If you imported your prior year TaxAct return and there are description fields which repopulate when using the Delete or Backspace keys, you can remove this imported field by highlighting the text and pressing the Spacebar on your keyboard. This can be used on any form.
While there does not appear to be any reference on Form 1040 U.S. Individual Income Tax Return nor in the IRS instructions requiring a Social Security Number (SSN) be entered for the qualifying child when a return’s filing status is Head of Household (HoH), the IRS does have a rejection code that will reject any […]
Pennsylvania Schedule B provides a specific line for state tax-exempt dividends, but those dividends must qualify based upon the PA instructions. When you enter an ordinary dividend amount in Box 1 or exempt-interest dividend amount in Box 10 of Form 1099-DIV Dividends and Distributions and indicate it is tax-exempt, the TaxAct program cannot determine if […]
Per the Massachusetts Form 1 Instructions on page 9: Line 4. Taxable Pensions and Annuities Income from most private pensions or annuity plans is taxable in Massachusetts. Certain government pensions, however, are exempt under Massachusetts law. In general, exempt pensions include contributory pensions from the U.S. Government or the Commonwealth of Massachusetts and its political […]
Taxpayers with Canadian registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs) automatically qualify for tax deferral treatment. Prior to 2014, you had to make this election by filing Form 8891 and reporting details such as contributions, income earned, and distributions. Form 8891 has been eliminated and you are no longer required to […]
The Taxpayer Advocate Service (TAS) has developed several tools for individuals and employers to assist in estimating ACA related credits and payments. Since these tools only provide an estimate, you should not rely upon them as an accurate calculation of the information you will report on your tax return. You should use these estimators only […]
Partnerships (Form 1065 U.S. Return of Partnership Income) are able to e-file their business tax return with nonresident partners who do not have an Individual Taxpayer Identification Number (ITIN) or Social Security Number (SSN), provided they have made an application to obtain one of these. Per the IRS, the entry FOREIGNUS is no longer valid […]
If you see duplicate income listed in Part I of Form 1116 Foreign Tax Credit, it may mean a country has not been selected on one or more of the supporting documents. Use the steps below to review your Forms 1099-INT Interest Income, Form(s) 1099-DIV Dividends and Distributions, and/or manual input worksheets. Form 1099-INT To […]
Taxpayers should enter all Forms 1095-A Health Insurance Marketplace Statement for their tax family; however, as the ownership of each individual Form 1095-A does not affect the calculations in the return, the TaxAct® program does not request ownership information on the Q&A interview screens. The one exception is if you are using the alternative calculation. […]
The policy number reported to you by the Marketplace may be longer than the 15 characters allowed in the TaxAct® program entry field. However, only the last 15 characters are needed when filing your return. Per IRS Instructions for Form 1095-A Health Insurance Marketplace Statement: Enter the number the Marketplace assigned to the policy. If […]
Health Reimbursement Arrangements (HRAs), are employer-sponsored plans that reimburse you for health care costs. Your employer is the only one who can contribute to your HRA. There is nothing to report on your tax return for an HRA. Per IRS Publication 969 Health Savings Accounts and Other Tax-Favored Health Plans, page 18: Health Reimbursement Arrangements […]
TaxAct supports the entry of up to four Forms 1095-A Health Insurance Marketplace Statement. Form 1095-A is not e-filed with the return; however, the information is transferred to Form 8962 Premium Tax Credit (PTC) for purposes of the Premium Tax Credit. If you have more than four Forms 1095-A, the information can be combined. For […]
Based on your entries in a return, you may be prompted to enter an amount for a self-employed health insurance deduction adjustment. This entry is necessary due to the calculations detailed on pages 56-72 of IRS Publication 974 Premium Tax Credit (PTC). The actual calculation for the self-employed health insurance deduction adjustment is automatically done […]
The foreign tax credit cannot be more than the foreign tax credit limit. The limit is calculated by multiplying your U.S. tax by a fraction. To calculate the fraction, divide your foreign income by your total taxable income (U.S. and foreign). When the fraction is multiplied by your U.S. tax, the result represents the amount […]
Cash For Keys Program: Financial institutions initiating a foreclosure process on a home indicates that it is willing to pay the homeowner a set amount of cash in exchange for the keys to the home. The cash may be based on a percentage of the appraised value of the home or it may simply be […]
If dividend income on Federal Schedule B (Form 1040) Interest and Ordinary Dividends (or Form 1040 U.S. Individual Income Tax Return ) is larger than you expect (and Federal Form 8621 Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund is a part of your return and includes dividend […]
There are many differences between amortization and depreciation. Below is a definition of each to assist you in determining whether amortization or depreciation applies to the asset in question. Per IRS Instructions for Form 4562 Depreciation and Amortization (Including Information on Listed Property): Depreciation Depreciation is the annual deduction that allows you to recover the […]
The IRS currently offers two special depreciation methods: Section 179 expense deduction and bonus depreciation. Each method is described below. Section 179 Expense Corporation and partnerships are eligible to take Section 179 expense on qualifying MACRS Section 1245 property when used more than 50 percent for business use and placed in service during the current […]
The standard mileage deduction is not allowed for business-owned vehicles. Businesses are required to use depreciation and actual expenses when reporting vehicle expense on the business return. Businesses are allowed to use the standard mileage rate when reimbursing employees for business use of their personal vehicle. Partnerships Instead of reporting vehicle expenses on the business […]
You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses. Generally, you can only deduct taxes in the year you pay them. This applies whether you use the cash method or an accrual method of accounting. Per IRS Publication 535 Business Expenses: Real Estate Taxes […]
You can attach a PDF copy of the other state(s) return to your tax return in order to claim a credit for taxes paid to another state or jurisdiction. If this applies to you, the TaxAct program will prompt you to do this during the interview process. For information about converting a document to a […]
When you file Form 1040-NR U.S. Nonresident Alien Income Tax Return, you cannot file jointly with your spouse. There is only one exception to this rule outlined as follows: Per IRS Publication 519 U.S. Tax Guide for Aliens, page 54: I am a nonresident alien. Can I file a joint return with my spouse? Generally, […]
The TaxAct® programs select country codes according to the IRS Foreign Country Code Listing for Modernized e-File (MeF) webpage which is what software developers must follow. As the IRS references that list for returns they process, only if they correct their listing for software developers can we change a code in our programs. A current […]
You are unable to file a return (when utilizing the bona fide residence test on Federal Form 2555 Foreign Earned Income) until a full year has passed that you met the qualifications. Per IRS Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad, page 4: Extension of time to meet residency tests. You […]
When converting a spreadsheet to import your company accounting records, be sure to include a column for the following as they are required to complete your trial balance import: Account name or description Debit Credit These items are required to complete the trial balance import. Adjust all accounts for tax purposes and ensure debit and credits […]
Export or download a CSV file from QuickBooks, Sage One, Wave, or Xero by following these steps. Before importing, confirm your account balances. QuickBooks Click Reports. From the drop-down, select Trial Balance report. Select the period covered by the tax return. Click Export. Select the radio button in front of a comma separated value (CSV) […]
Not all Forms W-2 are eligible for importing into the TaxAct program. Whether a W-2 is eligible for importing into the TaxAct program is based on the Employer Identification Number (EIN) on your W-2. To enter the EIN on your Form W-2, and import the Form W-2 you received into the TaxAct program (if you […]
The IRS has a Business Rule (or rejection code) that will reject a return with state winnings in Box 14 of the Form W-2G Certain Gambling Winnings, if either the state abbreviation or state ID field is missing. The alert is looking for “valid” data. You can enter any of the following in the State […]
The Additional Medicare Tax is an additional (0.9%) tax to wages, compensation, and self-employment income, if an individual’s income exceeds the threshold amount for their individual filing status. This is a new tax added by the creation of the Affordable Care Act (ACA). For more information, please use the IRS Questions and Answers for the […]
As the calculation of adjusted cost basis of the new shares resulting from a merger or acquisition varies for each situation, TaxAct® is unable to assist with the specifics of this calculation. Please consult your brokerage firm or the company(ies) involved for assistance in calculating the new cost basis of your shares.
To view the Schedule D Home Sale Worksheet which shows the calculation of the gain/loss, exclusion and/or taxable gain of the entries made in the return: Online Navigation Instructions You need to view the worksheet as a print PDF; if you need help, go to our Printing Your Return and Individual Forms FAQ. Desktop Navigation […]
Generally, when you live in a community property state and you and your spouse file separate returns, you must split any community income and deductions evenly between the spouses. However, different rules apply for the assessment of self-employment tax. Per IRS Publication 555 Community Property, page 7: Sole proprietorship. With regard to net income from […]
Per the IRS Simplified Option for Home Office Deduction webpage: Beginning in tax year 2013 (returns filed in 2014), taxpayers may use a simplified option when figuring the deduction for business use of their home. Note: This simplified option does not change the criteria for who may claim a home office deduction. It merely simplifies […]
In the TaxAct program, the Worksheet To Figure the Deduction for Business Use of Your Home shows the expenses used to calculate the total amount on Form 2106 Employee Business Expenses, Line 4 or Schedule F (Form 1040) Profit or Loss From Farming, Line 32. To view this worksheet in the TaxAct program: Online Navigation […]
The income amount(s) used on Publication 517 Worksheets 1-4 (Clergy worksheets) to calculate the percentage of tax-free income (Worksheet 1) and the net self-employment income for Schedule SE (Form 1040) (Worksheet 4), are not transferred automatically from the Form W-2 Wage and Tax Statement. These are manual entries made in the Self-employment Tax Adjustments section; […]
If you received both a Form 1099-A Acquisition or Abandonment of Secured Property and a Form 1099-C Cancellation of Debt for a rental property, enter the Form 1099-C first to determine if the canceled debt is taxable. If it is, you must decide whether or not to file Form 982 Reduction of Tax Attributes Due […]
Any rental loss carried forward from a year in which the Vacation Home Limitation was applicable to Federal Schedule E (Form 1040) Supplemental Income and Loss can only be used if there is sufficient rental income in that year to allow those losses. Per IRS Publication 527 Residential Rental Property (Including Rental of Vacation Homes), […]
Social security withholding is not refundable even if you are currently receiving social security benefits. Any social security withholding from employment is applied to your social security account and is used in determining your historical annual income and if applicable, can cause your social security income to be adjusted. You may want to contact the […]
Massachusetts taxpayers are able to claim a credit for taxes paid to other jurisdictions. Mandatory payments made by a Massachusetts taxpayer into a Temporary Disability Insurance (TDI) program for another state, are classified as income taxes paid to another jurisdiction. Enter the amount contributed to the TDI program as part of total income taxes for […]
Generally, scholarships are tax-free and reduce the amount of education expenses available to claim an education credit. However, a scholarship is not treated as tax free when: The scholarship may be used to pay unqualified education expenses, and The student includes the scholarship in income (if a return is required to be filed). It may […]
Per the IRS Fulbright Grants webpage: Fulbright grants received by a U.S. citizen from an agency which dispenses and administers Fulbright grants (domestic or foreign) fall into two types of income for tax purposes. If you are a U.S. citizen recipient of a Fulbright grant, you must determine which category of income your grant falls into in […]
Line 18 of Federal Form 1116 Foreign Tax Credit instructs that if you figured your tax using the lower rates on qualified dividends or capital gains to see the instructions. This is because instead of entering the amount from Form 1040 U.S. Individual Income Tax Return, Line 10a, you would need to make adjustments to […]
Schedule NEC (Form 1040-NR) is used to report income not effectively connected with a U.S. trade or business. This may include, but is not limited to, dividends, royalties, and gambling winnings. Tax must be withheld at the source, and is generally withheld at a rate of 30%. The tax must be withheld by the person […]
As a nonresident alien, your income is either effectively connected to a U.S. business or is not effectively connected to a U.S. business. Effectively Connected Income (ECI) is taxed at the regular graduated rate. If your income is Not Effectively Connected (NEC), it is generally taxed at a 30% rate. However, if your resident country […]
Per IRS Instructions for Schedule 8812 Additional Child Tax Credit: Taxpayer Identification Number Requirements Each qualifying child must have the required social security number (SSN). If you have a qualifying child who does not have the required SSN, you cannot use the child to claim the ACTC on either your original or an amended 2024 return. The required […]
How the information from Form W-2VI U.S. Virgin Islands Wage and Tax Statement is reported on your return depends on whether you were considered a BONA FIDE resident of the U.S. Virgin Islands. Per the IRS Individuals Living or Working in U.S. Territories/Possessions webpage: IRC 937 establishes the criteria for determining the residency of an […]
The additional 3.8% Medicare contribution tax on investment income is for taxpayers whose adjusted gross income (AGI) exceeds $200,000 (or $250,000 if married filing jointly). Investment income is defined as interest, dividends, annuities, royalties, rents, passive business income, and gains from dispositions of property (other than property used in a trade or business, excluding passive […]
According to the IRS: Question: If you have run a small business in the past, but this year there is no income or expenses, is it necessary to file a Schedule C? Answer: If your sole proprietorship business is inactive during the full year, it is not necessary to file a Schedule C (Form 1040) […]
Per IRS General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G), page 3: A. Who Must File See the separate specific instructions for each form. Nominee/middleman returns. Generally, if you receive a Form 1099 for amounts that actually belong to another person, you are considered a nominee recipient. […]
If you converted your primary residence into a rental property during the tax year, you will need to manually allocate the home expenses between Schedule A (Form 1040) Itemized Deductions (personal) and Schedule E (Form 1040) Supplemental Income and Loss (rental) based on the portion of the year you used the home as a primary […]
There are some instances in which Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts is not required to be included with your return, even if an amount is appearing on Form 1040 U.S. Individual Income Tax Return, Line 6 for Additional tax on IRAs, other qualified retirement plans, etc. Per […]
Generally speaking, workers’ compensation benefits are not taxable; however, Social Security benefits, including Social Security Disability Insurance (SSDI), can be taxable to the taxpayer (and spouse) depending on their overall financial situation and other circumstances. When a taxpayer qualifies to receive both workers’ compensation and Social Security benefits (or SSDI), then the Social Security Administration […]
The IRS First-Time Abate program provides certain penalty relief to taxpayers who have been tax compliant for the previous three years or have not previously been required to file a return. If you have a clean compliance history for the last three years, you may be eligible for first-time relief from the following penalties: Failure […]
Interest and/or penalties paid to the IRS are not deductible on your tax return. Per IRS Publication 529 Miscellaneous Deductions, page 7: Fines or Penalties No deduction is allowed for fines and penalties paid to a government or specified nongovernmental entity for the violation of any law except in the following situations. Certain amounts that […]
If your employer provided dependent care benefits under a qualified plan, but there is no amount in Box 10 of Form W-2 Wage and Tax Statement, you should contact your employer to determine if they need to issue you a Form W-2-C Corrected Wage and Tax Statement. The IRS will receive a copy of the […]
The Child and Dependent Care Credit is a nonrefundable credit. A nonrefundable credit can reduce your tax liability to 0 (zero), however it cannot result in a refund, which means if your tax liability is $0, you will not receive this credit because there is no tax to reduce. For more information, go to IRS […]
Although the IRS Instructions for Form 8938 Statement of Specified Foreign Financial Assets specifically outline the identifying information to list at the top of the form, there is no additional guidance relating to the names that should be listed on the attached additional sheets. The reason TaxAct® lists both names at the top of the […]
Per IRS Instructions for Schedule SE, page SE-2: U.S. Citizens Employed by Foreign Governments or International Organizations You must pay SE tax on income you earned as a U.S. citizen employed by a foreign government (or, in certain cases, by a wholly owned instrumentality of a foreign government or an international organization under the International […]
When you enter a Form 1099-INT Interest Income and/or Form 1099-DIV Dividends and Distributions with an amount in the Foreign Tax Paid box, you will need to determine how much of the total interest, ordinary dividends, qualified dividends, and/or capital gain distributions are from foreign sources. You may have received a supplemental statement outlining these […]
If your interest is exempt from New York only: From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal. Click Investment Income in the Federal Quick Q&A Topics menu to expand, then click Interest income (Form 1099-INT). Click + Add Form 1099-INT to […]
If your interest is exempt from New Jersey only: From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal). Click the Investment Income dropdown, then click Interest income (Form 1099-INT). Click + Add Form 1099-INT to create a new copy […]
The “NPA” text (to indicate “Not a passive activity”) and an amount will appear below Line 26 on Schedule E (Form 1040) Supplemental Income and Loss if the selection is made in the TaxAct® program to indicate this is a nonpassive activity. To make this selection (if you need help accessing Schedule E, go to […]
You can exclude up to $5,250 of educational assistance benefits you received from your employer. To qualify for the exclusion, the benefits must be part of a written educational assistance program. Your employer can tell you whether your benefits are part of a qualified program. These excluded benefits are not included in wages in Box […]
Per IRS Publication 17 Your Federal Income Tax For Individuals, page 68: Recoveries A recovery is a return of an amount you deducted or took a credit for in an earlier year. The most common recoveries are refunds, reimbursements, and rebates of deductions itemized on Schedule A (Form 1040). You may also have recoveries of […]
If you need to submit supporting documentation (i.e. a statement or qualified appraisal) for Form 8283 Noncash Charitable Contributions, you are still able to e-file your return; however, you will need to complete and mail Form 8453 U.S. Individual Income Tax Transmittal for an IRS e-file Return, along with the supporting documentation, to the IRS. […]
The child and dependent care credit is a percentage of your qualified expenses. Your expenses are subject to both the earned income limit and the dollar limit. The credit percentage is based on your Adjusted Gross Income (AGI). Finally, the credit is limited to the amount of your tax liability. Earned income limit. The amount […]
Either you or your dependent (but not both) can claim the American Opportunity Credit or the Lifetime Learning Credit. If you claim the student as a dependent, only you can claim the credit. Treat any expenses paid by your dependent as paid by you. If you do not claim the student as a dependent, the […]
A dependent is considered permanently and totally disabled if both of the following apply: They cannot engage in any substantial gainful activity because of a physical or mental condition, and A doctor determines the condition has lasted or can be expected to last continuously for at least a year or can lead to death.
One of the requirements for the Child and Dependent Care Credit is that you and your spouse must have earned income during the year. You may wish to review your Form W-2 Wage and Tax Statement entries. If you have entered one or more Forms W-2 but mislabeled them for the same spouse, this could […]
The payment or receipt of child support does not affect your taxable income. You should not report child support payments in your income. If you make child support payments, you cannot deduct the amount you paid. If you receive child support payments, the amount you receive is not taxed. Do not report this amount on […]
To enter the amount of state exempt dividend income (i.e. due to your mutual fund investing in U.S. government obligations), follow the steps below. If your state allows this deduction, it will flow to the appropriate section of the state return. If you need help accessing Form 1099-DIV in the TaxAct program, go to our […]
With the IRS reporting requirements surrounding securities, brokers are generally required to report certain information to you about your stocks. However, when the stocks have been transferred to your current broker from a previous broker, the current broker can treat the stocks as non-covered securities. When this is the case, your current broker may not […]
Computing a property’s adjusted basis is not limited to decreases due to depreciation, amortization, and depletion. A property’s basis may also have to be increased or decreased by certain items depending on the type of property and its history. Below is a list of possible increases and decreases that affect a property’s basis, per IRS […]
A single-member LLC is not considered a separate entity for federal tax purposes. An LLC with only one member is treated as an entity disregarded as separate from its owner for income tax purposes (but as a separate entity for purposes of employment tax and certain excise taxes). This taxpayer is by default required to […]
Even if you converted your main home into a rental property (or vice versa), you may be able to exclude some of the gain on the sale of your home if you meet the ownership and use tests. This means that during the 5-year period ending on the date of the sale, you must have: […]
During the Retirement Plan Income section of the Federal Q&A, you may come across a screen titled Special Distributions. On this screen, you may see a Military Pension checkbox which can be checked if the distribution you received is from a military pension. Generally, this checkbox does not influence how the distribution is treated or […]
You may see the Special Distributions From Retirement Plans worksheet print with your return if you have entries from an inherited IRA or rollovers from qualified retirement plans to Roth IRAs or in-plan rollovers to designated Roth accounts. This worksheet is not electronically filed with your return, but is only to show the calculation of […]
A mortgage secured by your main home to purchase land would be deductible as long as it meets the same requirements any other mortgage must meet. However, if the mortgage is secured by the land and potential construction of your main or second home, then it must follow the rules outlined below. Per IRS Publication […]
Per CT Form CT-1040 Connecticut Resident Income Tax Instruction Booklet, page 27: Am I Eligible for the Credit for Income Taxes Paid to Qualifying Jurisdictions? If you are a resident of Connecticut and if any part of your income was taxed by a qualifying jurisdiction, you may be able to claim a credit against your […]
If you received a Form 1098-MA Mortgage Assistance Payments in addition to the Form 1098 Mortgage Interest Statement, you may use a special method to compute your deduction for mortgage interest, real estate taxes, and mortgage insurance premiums on your main home (certain conditions apply, see the following). You are NOT required to use this […]
The state sales tax worksheet in the TaxAct program calculates the General Sales Tax deduction on Line 5 of Federal Schedule A (Form 1040) Itemized Deductions (if you see this box checked on your Schedule A that indicates you are taking that deduction on your return) To view the worksheet in the TaxAct program: Online […]
For purposes of the education credits and tuition deduction, the cost of a computer qualifies as an education expense if it is needed as a condition of enrollment. For more information on qualified education expenses, go to IRS Instructions for Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits) or Form 8917 Tuition and […]
IRS Publication 525 Taxable and Nontaxable Income, page 33: Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheritance isn’t included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given […]
Per IRS Publication 946 How to Depreciate Property, page 23: Claiming the Special Depreciation Allowance You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. The allowance applies only for the first year you place the property in service. The […]
To enter royalty income in the TaxAct program, go to our Form 1099-MISC – Royalties FAQ. Per IRS Publication 525 Taxable and Nontaxable Income, page 17: Royalties Royalties from copyrights; patents; and oil, gas, and mineral properties are taxable as ordinary income. In most cases, you report royalties on Schedule E (Form 1040). However, if […]
Tuition paid with student loan proceeds is a qualified education expense for purposes of the education credits. For more information on qualified education expenses, see IRS Instructions for Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits). Related Links 8863 Education Credits American Opportunity Credit Lifetime Learning Credit Publication 970 Tax Benefits for Education […]
IRS Publication 555 Community Property outlines the requirements for filing with a status of Married Filing Separate when you are domiciled in a community property state. TaxAct supports the completion of these returns so they can be electronically filed. There are two sections in the publication, “Community Property Laws Disregarded” starting on page 8 and […]
As a general rule, if you only occasionally sell timber (one or two sales every three or four years), you are not in the timber business and not required to file Form T Forest Activities Schedule (the TaxAct program does not support IRS Form T; you will need to go to the IRS website to […]
You can use the Tax Calculator to answer a few simple questions about your life, income, and expenses, and get an idea of whether you should expect a refund and how much, or if you’ll owe the IRS when you file taxes in the future. To use the Tax Calculator in your TaxAct return: Online […]
**The information below has not been verified for the 2021 tax year as the IRS Pub. 550 has not yet been released by the IRS.** To enter or review information from Form 1099-INT, go to our Form 1099-INT – Entering in Program FAQ. The following information will assist with the entry of Form 1099-INT Interest Income when the […]
To enter an exempt amount for your Form 1099-OID Original Issue Discount (if you need help accessing Form 1099-OID in the TaxAct program, go to our Form 1099-OID – Entering in Program FAQ): From within your Form 1099-OID, continue with the interview process until you reach the screen titled OID Interest – Original Issue Discount. Enter the […]
**The information below has not been verified for the 2023 tax year as the IRS Pub. 550 has not yet been released by the IRS.** Per IRS Publication 550 Investment Income and Expenses (Including Capital Gains and Losses), page 20: Dividends Used To Buy More Stock The corporation in which you own stock may have […]
If you are completing Federal Schedule C (Form 1040) Profit or Loss From Business, you will enter the income and expenses which will then calculate the net profit (or loss) of the business. That net profit (or loss) amount then flows to Line 3 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income. […]
TaxAct® does not support Form 8849 Claim for Refund of Excise Taxes. This is a separate return from the individual tax return on Federal Form 1040 U.S. Individual Income Tax Return. Below are the links to these forms if you wish to complete and paper file them. For electronic filing of the form, according to […]
An IRC Section 469(c)(7)(A) Election to Aggregate Rental Real Estate Activities, is a statement written down on a piece of paper (there is not a special form to fill out) and sent with your return for the tax year of the election. You can do this in the TaxAct program and still e-file the return. […]
There is a worksheet in the TaxAct® program, Vacation Home Limitation Worksheet, which shows the calculation for rental expenses allowed on Schedule E (Form 1040) Supplemental Income and Loss when the rental property is used for both rental and personal purposes. The worksheet also calculates and tracks the amount of Operating Expenses and Depreciation allowed […]
The qualified education expenses must not include amounts paid using grants, scholarships, or other tax-free benefits. Per IRS Publication 970 Tax Benefits for Education, page 54: Education Exception to Additional Tax on Early IRA Distributions Who Is Eligible? You can take a distribution from your IRA before you reach age 59 1/2 and not have […]
Per IRS Instruction 1040 1040 and 1040-SR Instructions, page 104: Line 11 Excess Social Security and Tier 1 RRTA Tax Withheld If you, or your spouse if filing a joint return, had more than one employer for 2022 and total wages of more than $147,000, too much social security or tier 1 railroad retirement (RRTA) tax may […]
If you had to repay an amount of Social Security Benefits that you included in your income in an earlier year, you may be able to deduct the amount repaid from your income for the year in which you repaid it. Per IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits, page 5: Repayment of benefits. Any […]
Tax Reform Update: Most of the miscellaneous itemized deductions you may have claimed in the past have been suspended under the new law. These deductions include: Unreimbursed employee expenses (travel expenses, dues/licenses, tools/supplies, education, etc.) Expenses related to the collection of income (investment fees, safe deposit box rental, tax advice, etc.) Tax preparation fees
There are three worksheets in the TaxAct® program that provide information and show calculations regarding IRA contributions. These worksheets are: The IRA Contribution Summary – for entering amounts you have or will contribute The Traditional IRA – Deductible Contributions Worksheet – for the calculation of the allowable deductible traditional IRA The Roth IRA Contribution Worksheet […]
Per IRS Instructions for Form 8880 page 2: Who Can Take This Credit You may be able to take this credit if you, or your spouse if filing jointly, made (a) contributions (other than rollover contributions) to a traditional or Roth IRA; (b) elective deferrals to a 401(k), 403(b), governmental 457(b), SEP, SIMPLE, or to […]
Expenses for medical care (including transportation) you receive because you are a donor or a possible donor of a kidney or other organ can be entered on Schedule A (Form 1040) Itemized Deductions or in the Itemized Deduction section of the TaxAct program. Unreimbursed medical expenses need to be more than 7.5% of Adjusted Gross […]
The creditor information from Form 1099-C Cancellation of Debt does not need to be entered into the TaxAct® program since the actual Form 1099-C is not transmitted with the return. Completing this form in TaxAct transfers the information to the appropriate sections of the return. The IRS will already have a copy of the form […]
To complete and paper file your Wisconsin Schedule H rather than electronically file it with the rest of your Wisconsin return: From within your TaxAct return (Online or Desktop), click State, then click Wisconsin (or WI). On smaller devices, click in the upper left-hand corner, then click State. Click Refundable Credits in the Wisconsin Quick […]
Per IRS Publication 970, Tax Benefits for Education, page 11: American Opportunity Credit Who Can Claim the Credit? Generally, you can claim the American opportunity credit if all three of the following requirements are met. You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student […]
Per IRS Instructions for Schedule SE (Form 1040) Self-Employment Tax, page SE-2: U.S. Citizens or Resident Aliens Living Outside the United States If you are a self-employed U.S. citizen or resident alien living outside the United States, in most cases you must pay SE tax. You can’t reduce your foreign earnings from self-employment by your […]
Per IRS Instructions for Form 8839 Qualified Adoption Expenses, page 3: Foreign child. If the eligible child is a foreign child, you can’t take the adoption credit or exclusion unless the adoption becomes final. A child is a foreign child if he or she wasn’t a citizen or resident of the United States (including U.S. […]
Per IRS Publication 17 Your Federal Income Tax For Individuals, page 28: Qualifying Child Five tests must be met for a child to be your qualifying child. The five tests are: Relationship, Age, Residency, Support, and Joint return. CAUTION! If a child meets the five tests to be the qualifying child of more than one […]
All unemployment compensation you receive is taxable and included in your gross income. If you received unemployment compensation during the year, you should receive a Form 1099-G Certain Government Payments showing the amount you were paid. This amount must be included in your income. To enter or review your unemployment compensation information from Form 1099-G […]
If you received interest income, but do not have the ID number of the payer, enter the information as though you had received a Form 1099-INT Interest Income, but leave off the Payer’s Federal Identification Number (FEIN). This number is not required and the return will e-file without the number. The information required by the […]
As an independent contractor or self-employed individual, you should report your income on Schedule C (Form 1040) Profit or Loss From Business. Per IRS Instructions for Schedule C: Use Schedule C (Form 1040) to report income or (loss) from a business you operated or a profession you practiced as a sole proprietor. An activity qualifies […]
If you are a sole proprietorship, you would enter your cost of goods sold and other business expenses on Federal Schedule C (Form 1040) Profit or Loss From Business. Self-employment income is reported on Schedule C, and the net profit or loss is reported on Line 11 of Schedule 1 (Form 1040) Additional Income and […]
The following expenses are not deductible as an itemized deduction on Schedule A (Form 1040) Itemized Deductions. Per IRS Publication 529 Miscellaneous Deductions, page 6: Nondeductible Expenses In addition to the miscellaneous itemized deductions discussed earlier, you can’t deduct the following expenses. List of Nondeductible Expenses Adoption expenses. Broker’s commissions. Burial or funeral expenses, including […]
Burial or funeral expenses, including the cost of the cemetery lot, are not deductible as an itemized deduction on Schedule A (Form 1040) Itemized Deductions. They are, however, deductible on Schedule J of Form 706 United States Estate (and Generation-Skipping Transfer) Tax Return. See Instructions for Form 706 https://www.irs.gov/pub/irs-pdf/i706.pdf For a complete list of nondeductible expenses, go to IRS […]
If your filing status was Married Filing Joint when you claimed the First-Time Homebuyer Credit, but you are now divorced or separated, please review the information below. The Line 3e instructions pertain to you if you are the spouse who transferred the home to your spouse or ex-spouse. The Line 4 instructions pertain to you […]
If you claimed the First-Time Homebuyer Credit for a home purchased in 2008, and you determine you are only responsible for half of the credit repayment this year (i.e. filed jointly the year the credit was claimed, but are now filing separately or your spouse is now deceased), you will need to modify the credit […]
Tax Reform Update: Legal fees can no longer be deducted as a miscellaneous deduction. Per IRS Publication 529 Miscellaneous Deductions, page 2: Unreimbursed Employee Expenses You can no longer claim a deduction for unreimbursed employee expenses unless you fall into one of the following categories of employment, or have certain qualified educator expenses. Armed Forces […]
Per IRS Instruction 1040, page 19: Step 3: Does Your Qualifying Child Qualify You for the Child Tax Credit or Credit for Other Dependents? 3. Was the child under age 17 at the end of the tax year? No. You can claim the credit for other dependents for this child. Check the “credit for other […]
If you are a divorced or a separated parent, your child may still be a qualifying person for the Child and Dependent Care Credit even if you cannot claim your child as a dependent. Per IRS Publication 503 Child and Dependent Care Expenses, page 4: Child of divorced or separated parents or parents living apart. […]
Per IRS Publication 970 Tax Benefits for Education, page 11: Who Can Claim the Credit? Generally, you can claim the American opportunity credit if all three of the following requirements are met. You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student is either yourself, […]
The TaxAct® program does not support IRS Form 2350 Application for Extension of Time to File U.S. Income Tax Return. This form is filed separately from your tax return and mailed to the address listed below. Per IRS Instructions for Form 2350, page 3: Purpose of Form Use Form 2350 to ask for an extension […]
For information regarding foreign currency transactions, go to the IRS Foreign Currency and Currency Exchange Rates webpage. There are links to Governmental Resources and External Resources where you may find exchange rates. Note that any link in the information above is updated each year automatically and will take you to the most recent version of […]
The TaxAct® program supports the entry of up to ten (10) Forms 1099-C Cancellation of Debt. If you have more than ten to enter, you will need to group your forms according to the nature of the canceled debt. Once the forms are grouped, you can enter the combined amounts on one or more Forms […]
Per the IRS Topic No. 431 Canceled Debt – Is It Taxable or Not? webpage: If you borrow money and are legally obligated to repay a fixed or determinable amount at a future date, you have a debt. You may be personally liable for a debt or may own a property that’s subject to a debt. […]
There are two types of Tax Rates related to your tax return: the “Marginal Tax Rate” and the “Effective Tax Rate” Marginal Tax RateThe marginal tax rate (aka Marginal Tax Bracket) is the federal income tax rate that will be applied to any additional income that you might receive. For example, if your marginal tax […]
The worksheet in the TaxAct® program titled “Federal Form 1040 Other Income – Supporting Details for Federal Schedule 1 (Form 1040) Line 8” is a TaxAct worksheet and not an IRS form. There are two lines to enter descriptions for miscellaneous income and the amount for each item. If you have more than two income […]
**The information below has not been verified for the 2021 tax year as the IRS Pub. 550 has not yet been released by the IRS.** You may deduct capital losses up to the amount of your capital gains, plus $3,000 ($1,500 if married filing separately). If part of the loss is still unused, you can […]
Per IRS Instructions for Form 2441 Child and Dependent Care Expenses, page 3: Who Can Take the Credit or Exclude Dependent Care Benefits? You can take the credit or the exclusion if all five of the following apply. Your filing status may be single, head of household, qualifying widow(er) with dependent child, or married filing […]
When completing Form 8829 Expenses for Business Use of Your Home, direct expenses are those you can specifically identify as being derived from or of benefit to the business part of your home. Direct expenses would include painting or repairs to a specific area of your home used for business. Enter 100% of your direct […]
How to properly depreciate a home that was used as a rental property for part of the tax year, and then converted into a primary residence the other part of the tax year (or sold/disposed of the home). When going through the Schedule E Supplemental Income and Loss section of the TaxAct® program, you will […]
Per IRS Publication 575 Pension and Annuity Income, page 6: Insurance Premiums for Retired Public Safety Officers If you are an eligible retired public safety officer (law enforcement officer, firefighter, chaplain, or member of a rescue squad or ambulance crew), you can elect to exclude from income distributions made from your eligible retirement plan that […]
If you had a child born during the tax year and are filing a joint Minnesota income tax return, you may be eligible to claim a Newborn Child Care Credit even if you did not pay any child care expenses. You do not need to qualify for the Federal Child & Dependent Care Credit to […]
When you print a copy of your Wisconsin return, the printout will contain a sheet titled “Homestead Credit Notes and Attachments Checklist.” This checklist will help determine exactly what supporting documents you need to send with your I-016 Schedule H Wisconsin homestead credit claim. In addition, as noted on page 2 of Schedule H, you […]
Beginning in 2018, the moving expense deduction is temporarily suspended, unless you are a member of the Armed Forces on active duty, and due to a military order, you move because of a permanent change of station. Per Instructions for Form 3903 Moving Expenses, page 2: Line 5 If line 3 is more than line […]
If you have a Net Operating Loss (NOL) amount on Line 8 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income, this amount is automatically entered as a positive number on Line 2e of Form 6251 Alternative Minimum Tax – Individuals. If the tax liability on the return did not decrease as much […]
TaxAct® supports the entry of up to twelve (12) Care Providers on Federal Form 2441 Child and Dependent Care Expenses. The IRS Form 2441 that prints with the return only allows two providers to be listed and then there is an overflow sheet that prints to list the remaining providers. If you need to enter […]
To view the EIC calculation worksheet in the TaxAct program: Online Navigation Instructions You need to view the worksheet as a print PDF; if you need help, go to our Printing Your Return and Individual Forms FAQ. Desktop Navigation Instructions From within your TaxAct return (Desktop), click Forms in the options bar to view Forms […]
To easily see the rules regarding the Earned Income Credit (EIC), you can refer to Table 1 “Earned Income Credit In a Nutshell” on page 2 of IRS Publication 596 Earned Income Credit. Note that any link in the information above is updated each year automatically and will take you to the most recent version […]
Valid Ranges for Social Security Number (SSN): 001-01-0001 through 665-99-9999 667-01-0001 through 899-99-9999 750-01-0001 through 763-99-9999 764-01-0001 through 899-99-9999 When the SSN “Group” contains zeros, the SSN is a test number and the return will be rejected. When the SSN “Serial” contains all zeros, the return will be rejected. Social Security/Taxpayer Identification Numbers are broken […]
Multiple Forms 4684 Casualties and Thefts can be used for a single casualty incident. TaxAct allows up to 20 copies of the Section A portion of the Form 4684 with four properties each, a total of 80 entries. TaxAct allows up to five copies of the Section B portion of the Form 4684 with four […]
TaxAct supports the individual tax return on Form 1040 U.S. Individual Income Tax Return, but does not support Form 3520 Annual Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts or Form 3520-A Annual Information Return of Foreign Trust With a U.S. Owner. These forms are separate returns from the individual […]
TaxAct® supports Form 5472 Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business within the corporate Form 1120 U.S. Corporation Income Tax Return return. There is a maximum of five copies that can be added to the return. If you need more than five copies, you must complete the additional Forms 5472 […]
The TaxAct® program supports the entry of fifty (50) Forms 8621 Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund per return. If you need to file more than 50 Forms 8621 through TaxAct, you must paper file your return, but you can still enter the 50+ Forms 8621 […]
Military and civilian pay from the U.S. government is not eligible for exclusion on Form 2555 Foreign Earned Income. Per IRS Publication 3 Armed Forces’ Tax Guide, page 9: Foreign earned income exclusion. Certain taxpayers can exclude income earned in foreign countries. For 2023, this exclusion amount can be as much as $120,000. However, the […]
For the TaxAct® programs, the income amount can be between $-999,999,999.99 and $999,999,999.99.
Payments received for being an executor of an estate are considered taxable income. The information below will help to determine if this income is subject to self-employment tax or not and where to enter it in your TaxAct® return. Per IRS Publication 559 Survivors, Executors, and Administrators, page 5: Fees Received by Personal Representatives All personal representatives must […]
Payments you receive for providing care to foster individuals generally are not included in your income. However, you must include payments received for the care of more than five individuals age 19 or older and certain difficulty-of-care payments. Per IRS Publication 525 Taxable and Nontaxable Income, page 34: Foster care providers. Generally, payment you receive […]
The IRS may apply special per diem rates for Meals and Incidental Expenses (M&IE) to workers in the Transportation Industry if, during any single trip away from home, they travel to localities with differing federal M&IE rates. A Transportation Industry worker is defined as an employee or self-employed individual whose work is of the type […]
Taxes for Excess Golden Parachute Payments are reported to the IRS on Schedule 2 (Form 1040) Additional Taxes, Line 17k. TaxAct supports the entry of excise tax on excess golden parachute payments reported on Form W-2 Wage and Tax Statement, Box 12, Code K, and excess golden parachute payments reported on Form 1099-MISC Miscellaneous Income, […]
If you need to determine the adjusted basis of transferred property in a foreclosure or repossession (or the basis of any asset): Per IRS Publication 551 Basis of Assets, page 2: Basis is the amount of your investment in property for tax purposes. Use the basis of property to figure depreciation, amortization, depletion, and casualty […]
Per IRS Publication 925 Passive Activity and At-Risk Rules, page 3: Passive Activities There are two kinds of passive activities. Trade or business activities in which you don’t materially participate during the year. Rental activities, even if you do materially participate in them, unless you’re a real estate professional. Rental Activities A rental activity is […]
A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. You generally recognize gain or loss on the disposition of an asset by sale. However, nonrecognition rules can allow you to postpone […]
Per IRS Publication 907 Tax Highlights for Persons with Disabilities, page 3: Disability Pensions If you retired on disability, you must include in income any disability pension you receive under a plan that is paid for by your employer. You must report your taxable disability payments as wages on line 1 of Form 1040 or […]
If you made an IRA contribution in excess of the limit, you will be assessed an additional tax on that excess. The excess amount will flow to Line 15 of Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts for the penalty to be calculated. There will be a Yellow Alert […]
You can deduct your home mortgage interest only if your mortgage is a secured debt. A secured debt is one in which you sign an instrument (such as a mortgage, deed of trust, or land contract) that: Makes your ownership in a qualified home security for payment of the debt, Provides, in case of default, […]
A person who is your qualifying relative only because he or she lived with you all year as a member of your household is not a qualifying person for the Head of Household filing status even if he or she is your dependent. Per IRS Publication 501 Dependents, Standard Deduction, and Filing Information, page 10: […]
Per IRS Instructions for Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, on page 4: Line 2 The additional tax on early distributions doesn’t apply to the distributions described next. Enter on line 2 the amount that you can exclude. In the space provided, enter the applicable exception number (01–21). […]
Per IRS Publication 936 Home Mortgage Interest Deduction, page 2: Note. Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s home that secures the loan. As under prior law, the loan must be secured by the taxpayer’s main […]
Tax Reform Update: Most of the miscellaneous itemized deductions you may have claimed in the past have been suspended under the new law. These deductions include: Unreimbursed employee expenses (travel expenses, dues/licenses, tools/supplies, education, etc.) Expenses related to the collection of income (investment fees, safe deposit box rental, tax advice, etc.) Tax preparation fees
Per IRS Publication 17 Your Federal Income Tax (For Individuals), page 23: Nonresident alien spouse. You are considered unmarried for head of household purposes if your spouse was a nonresident alien at any time during the year and you don’t choose to treat your nonresident spouse as a resident alien. However, your spouse isn’t a […]
If you are married and your spouse is a nonresident alien without either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN), you may need to paper file your state return. Although the spouse’s SSN or ITIN may not be required on your federal return in certain situations (see IRS instructions below), […]
Many states require income tax returns to incorporate two-dimensional (2D) barcodes on forms. These 2D barcodes contain more information than conventional barcodes you see on retail packages. Conventional barcodes get wider as more data is encoded, while 2D barcodes make use of the vertical dimension for data. These barcodes contain all pertinent tax information from […]
Per IRS Instructions for Form 1040 and 1040-SR, on page 30: Line 7 Capital Gain or (Loss) If you sold a capital asset, such as a stock or bond, you must complete and attach Form 8949 and Schedule D. Exception 1. You don’t have to file Form 8949 or Schedule D if you aren’t deferring […]
On Schedule D (Form 1040) Capital Gains and Losses, you may enter amounts of up to nine digits for such items as cost basis, sales proceeds, or gain or loss in the TaxAct program.
The TaxAct® program supports the entry of 100 Forms 1099-DIV Dividends and Distributions. If you own all the stocks that are issuing dividends in one brokerage account, you normally will receive just one Form 1099-DIV that will summarize all of the year’s dividends. It will most likely list each payer, but you don’t need to list […]
The TaxAct® program supports the entry of 100 Forms 1099-INT Interest Income. Form(s) 1099-INT is not transmitted electronically with your return; only the amounts which transfer to the Schedule B (Form 1040) Interest and Ordinary Dividends get transmitted. If Schedule B (Form 1040) is not required to be a part of the return, the total amount […]
The TaxAct® program does not support filing Schedule C (Form 1040) Profit or Loss From Business for those who are not a material participant in their Schedule C business. Users are not allowed to check “No” on Line G Did you “materially participate” in the operation of this business during the current tax year?. Therefore, TaxAct […]
When more than one vehicle is listed for Schedule C (Form 1040) Profit or Loss From Business, the vehicle information will transfer to Form 4562 Depreciation and Amortization instead of Part IV of Schedule C. The vehicle information will also transfer to Form 4562 when another asset entered on the return creates the need for […]
In IRS Publication 538 Accounting Periods and Methods, there is a section regarding Inventories starting on page 13. Page 15 is regarding the valuing of inventory: Valuing Inventory The value of your inventory is a major factor in figuring your taxable income. The method you use to value the inventory is very important. The following […]
While the IRS Closing a Business video mentions marking a Schedule C (Form 1040) Profit or Loss From Business as a “Final Return” in the space at the top of the last Schedule C filed for a business, they do not require this or actually use it in any way. It would only be for […]
Page 2 of Schedule C (Form 1040) Profit or Loss From Business is only printed if IRS-required information is included. Page 2 of Schedule C does not print if there are no relevant entries for that page, and Page 2 will not print without Page 1. You can print a blank copy of Schedule C […]
The TaxAct® program provides nine lines for entry of Other Expenses in Part V of Schedule C (Form 1040) Profit or Loss from Business because the IRS only provides nine such lines on the Schedule C (Form 1040) they release. If you need to enter more than nine Other Expenses, your options are: Consolidate some […]
Although TaxAct® supports the individual tax return on Form 1040 U.S. Individual Income Tax Return and the reporting of Forms W-2 Wage and Tax Statement or Forms 1099 received, the program does not support the preparation and issuance of Form 1099-MISC Miscellaneous Income and the related reporting form (Form 1096 Annual Summary and Transmittal of […]
The general information in Form 1099-MISC Miscellaneous Income is not e-filed with the return (this includes the Payer’s information and the Recipient’s Identification Number). As this information is not e-filed, it will not cause any problems to leave the Payer’s name and Payer’s identification number fields blank (i.e. for situations where that information is unavailable […]
The TaxAct® program supports the entry of up to 48 rental properties on Schedule E (Form 1040) Supplemental Income and Loss in a return. If you have more than 48 properties to report, the following workaround will enable you to accomplish that (please note, you would be required to paper file the return): Complete the […]
If you own property that you rent and report the income and expenses on Schedule E (Form 1040) Supplemental Income and Loss, you are not eligible to claim expenses for business use of your home. The IRS generally considers a property owner to be involved in a “passive” investment activity rather than an “active” income […]
Losses Not Allowed in Prior Years Due to Basis Limitations (nonpassive): Enter your total prior year unallowed losses that are now deductible on a separate, line in Column (I) of Line 28. Do not combine these losses with, or net them against, any current year amounts from the partnership or S corporation. Enter “PYA” in […]
Per IRS Publication 334 Tax Guide for Small Businesses (For Individuals Who Use Schedule C), page 32: Methods for Deducting Car and Truck Expenses For local transportation or overnight travel by car or truck, you generally can use one of the following methods to figure your expenses. Standard mileage rate. Actual expenses. Standard mileage rate. […]
Per IRS Publication 946 How to Depreciate Property, page 15: You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. This is the section 179 deduction. You can elect the section 179 deduction instead […]
The depreciation deduction, including the section 179 deduction, you can claim for a passenger automobile each year is limited. Go to IRS Publication 946 How to Depreciate Property, page 59, for more information on depreciation limits for vehicles. Note that any link in the information above is updated each year automatically and will take you […]
Your section 179 deduction is generally the cost of the qualifying property. However, the total amount you can elect to deduct for the current year under section 179 is subject to a dollar limit and a business income limit. There may also be further limitations for certain vehicles (also called the “luxury” limits). However, as […]
Your section 179 deduction is generally the cost of the qualifying property. However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. Per IRS Publication 946 How to Depreciate Property, page 18: Sport Utility and Certain Other Vehicles You cannot elect to […]
Since resident and nonresident aliens are taxed differently, it is important for you to determine your status. You are considered a nonresident alien for any period that you are neither a United States citizen nor a United States resident alien. Determining Residency You are considered a resident alien if you met one of two tests […]
TaxAct® business products have supported fiscal and short year depreciation calculations since the 2012 tax year. Go to our TaxAct Business Editions webpage to view our business products.
If you reside in Massachusetts and have incurred certain commuting expenses (such as tolls and mass-transit passes) over the current tax year, you may be able to deduct some of those expenses from your taxes. You can use TaxAct to claim the Massachusetts Commuter Tax Deduction. Learn more about the Massachusetts Commuter Tax Deduction. To […]
Expenses up to $50 per month can be deducted for a child living with you from a Student Exchange Program. Per IRS Publication 526 Charitable Contributions, page 5: Expenses Paid for Student Living With You You may be able to deduct some expenses of having a student live with you. You can deduct qualifying expenses […]
Per IRS Publication 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit), page 7: Car You can include in medical expenses the cost of special hand controls and other special equipment installed in a car for the use of a person with a disability. Special design. You can include in medical expenses the […]
Per IRS Publication 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit), page 6: Capital Expenses You can include in medical expenses amounts you pay for special equipment installed in a home, or for improvements, if their main purpose is medical care for you, your spouse, or your dependent. The cost of permanent […]
Mortgage interest may be deducted on a timeshare loan. The interest is deductible only if the loan is secured by the timeshare as a mortgage. Per IRS Publication 936 Home Mortgage Interest Deduction, page 4: Time-sharing arrangements. You can treat a home you own under a time-sharing plan as a qualified home if it meets […]
The IRS does not specifically state whether expenses for the care of an Alzheimer’s patient are deductible, but they do provide information on how to make such a determination. The primary factor is whether the lodging is essential for medical care. This can vary depending on the individual circumstances (i.e. how far an individual’s Alzheimer’s […]
Per IRS Publication 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit), page 2: Introduction Medical expenses include dental expenses, and in this publication the term “medical expenses” is often used to refer to medical and dental expenses. Page 15: Flexible Spending Arrangement You can’t include in medical expenses amounts for which you […]
You cannot deduct the costs of taking a bus, trolley, subway, or taxi, or of driving a car between your home and your main or regular place of work. These costs are personal commuting expenses. You cannot deduct commuting expenses no matter how far your home is from your regular place of work. You cannot […]
A charitable contribution is a donation or gift to, or for the use of, a qualified organization. Per IRS Publication 526 Charitable Contributions, page 2: Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if you make them to a qualified organization. How to check whether an organization can receive deductible […]
When you bought your home, you may have paid settlement fees or closing costs in addition to the contract price of the property. Generally speaking, closing costs are not allowable as a deduction on your return. They are an increase in your basis or cost of the property to you. When you sell the property […]
Membership fees generally would not be deductible because a benefit is received in return for the fee. The deductible portion, if any, would be the excess of the fee over the value of the benefits received. The same applies to tickets purchased since an entertainment benefit is received. The deductible portion would be the amount […]
Per IRS Publication 502 Medical and Dental Expenses (Including the Health Coverage Tax Credit), page 5: Alcoholism You can include in medical expenses amounts you pay for an inpatient’s treatment at a therapeutic center for alcohol addiction. This includes meals and lodging provided by the center during treatment. You can also include in medical expenses […]
If you are unable to deduct charitable contributions due to the AGI limitations in the current tax year, you may be able to carry forward the excess amounts to future years. Per IRS Publication 526 Charitable Contributions, page 19: Carryovers You can carry over any contributions you can’t deduct in the current year because they […]
You can deduct impairment-related work expenses of persons with disabilities as miscellaneous itemized deductions. They are not subject to the 2% limit. Per IRS Publication 529 Miscellaneous Deductions, page 3: Employee with impairment-related work expenses. Impairment-related work expenses are the allowable expenses of an individual with physical or mental disabilities for attendant care at his or […]
Per IRS Instructions for Form 2441 Child and Dependent Care Expenses, page 1: Married persons filing separately checkbox. Generally, married persons must file a joint return to claim the credit. If you claim the credit and your filing status is married filing separately, you are required to show you meet the special requirements listed in […]
The amount of child care expenses you can take (or have on your Form W-2 Wage and Tax Statement) is limited to the lower of your (or your spouse’s, if applicable) earned income. Per IRS Publication 503 Child and Dependent Care Expenses, page 11: Earned Income Limit The amount of work-related expenses you use to […]
Per IRS Publication 970 Tax Benefits for Education, page 5: Tax-Free Scholarships and Fellowship Grants A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. A scholarship or fellowship grant is tax free only to the extent: It doesn’t […]
TaxAct® currently supports the entry of up to 50 copies of Form 1098-T Tuition Statement. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.
When completing the Child and Dependent Care Expenses form, you are required to supply the care provider’s identification number. If you are living abroad, your care provider may not have or be required to have a U.S. taxpayer identification number. Per IRS Publication 503 Child and Dependent Care Expenses, page 10: U.S. citizens and resident […]
Per IRS Publication 54 Tax Guide for U.S. Citizens and Resident Aliens Abroad, page 22: Foreign Housing Exclusion and Deduction In addition to the foreign earned income exclusion, you can also claim an exclusion or a deduction from gross income for your housing amount if your tax home is in a foreign country and you […]
If you received a foreign pension, you first must determine whether the foreign pension is taxable. TaxAct® has no process to determine this; please review the following IRS links to make this determination: United States Income Tax Treaties – A to Z Publication 901 U.S. Tax Treaties Publication 54 Tax Guide for U.S. Citizens and […]
When there are multiple entries coming from separate Forms 1099-DIV Dividends and Distributions in a return, all the entries are consolidated into one single column on Form 1116 Foreign Tax Credit. In the IRS Instructions for Form 1116, starting on page 8, are instructions that apply. When there are Qualified Dividends or Capital Gain Distributions […]
The TaxAct® calculation of Line 3e Gross income from all sources of Federal Form 1116 Foreign Tax Credit is not necessarily the same amount as reflected on Line 6 of Federal Form 1040 U.S. Individual Income Tax Return. This is because only gross amounts are taken into consideration (before subtracting losses and deductions). For example, […]
If an individual has multiple foreign employers, all foreign earned income (for that individual taxpayer) would be combined on to one Form 2555 Foreign Earned Income. The IRS only allows two Forms 2555 to be filed per return (one for the taxpayer and one for the spouse). This is because completing more than one Form […]
If you are claimed as a dependent on another return, you cannot use the Optional State and Certain Local Sales Tax Tables for calculating an itemized deduction for General Sales Taxes on Line 5 of Schedule A (Form 1040) Itemized Deductions. You would be eligible to claim the actual state and local general sales tax […]
Generally, you must include in gross income everything you receive in payment for personal services. Per IRS Publication 525 Taxable and Nontaxable Income, page 4: Severance pay. You must include in income amounts you receive as severance pay and any payment for the cancellation of your employment contract. Note that any link in the information […]
Per IRS Publication 907 Tax Highlights for Persons with Disabilities, page 4: VA disability benefits. Don’t include disability benefits you receive from the Department of Veterans Affairs (VA) in your gross income. If you are a military retiree and don’t receive your disability benefits from the VA, see Pub. 525 for more information. Don’t include […]
The wage brackets for income tax withholding are outlined by the IRS in Publication 15-T Federal Income Tax Withholding Methods (this publication is released early each calendar year). 1. Percentage Method Tables for Automated Payroll Systems If you have an automated payroll system, use the worksheet below and the Percentage Method tables that follow to […]
Beginning in 2009, the spouse of a servicemember is no longer required to release their residency of the servicemember’s domicile state. This means that if the couple was domiciled in State A and then moved (due to the servicemember’s military orders) to State B, the spouse can now elect (subject to state instructions, which do […]
Per the IRS Individuals Living or Working in U.S. Territories/Possessions webpage: An individual who has income from American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, Puerto Rico or the U.S. Virgin Islands will usually have to file a tax return with the tax department of one of these territories. In some situations, […]
**The information below has not been verified for the 2023 tax year as the IRS Pub. 550 has not yet been released by the IRS.** A stock split will affect your number of shares and your basis in each share. To determine your new basis per share, you would divide your total adjusted basis of […]
**The information below has not been verified for the 2023 tax year as the IRS Pub. 550 has not yet been released by the IRS.** A “put option” is the right to sell to the writer, at any time before a specified future date, a stated number of shares at a specified price. Conversely, a […]
The amount realized on the sale of your home is the selling price minus selling expenses. Per IRS Publication 523 Selling Your Home, page 12: 2. Determine your selling expenses. These are the costs directly associated with selling your home. Any sales commissions (for example, a real estate agent’s sales commission) . Any advertising fees […]
To determine the gain or loss on the sale of your home, there is a worksheet in TaxAct. However, TaxAct supports only one sale of home worksheet. If you have another home sale for the same tax year, you will need to go through the worksheet calculations manually to determine the amount of gain or […]
To report the Form W-2 you received in the TaxAct program, go to our Instructions to Enter Form W-2 Information FAQ. Per IRS Publication 525 Taxable and Nontaxable Income, page 12: Tax form. If you have income from the exercise of nonstatutory stock options, your employer should report the amount to you inbox 12 of […]
Restricted Stock Units (RSUs) are a form of compensation that is starting to be used by many employers. These are generally taxed at the time of vesting, whereas employee stock options are usually taxed at the time of option exercise. The employer is required to withhold taxes as soon as the RSUs become vested. However, […]
A “short sale” is when a home is sold for less than the amount still owed on the mortgage and an attempt is made to get the lender to forgive the unpaid balance. If you received a Form 1099-C Cancellation of Debt, this income may qualify to be excluded on your tax return if it […]
If you sell a vehicle for which the Standard Mileage rate was used for deduction purposes in your business, there is a depreciation adjustment that must be made when accounting for the sale on your tax return. Because depreciation expense was already included in the Standard Mileage rate (the IRS figures it into the calculation […]
Per IRS Publication 946 How to Depreciate Property, page 7: Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. You retire property from service when you permanently withdraw it from use in a trade or business or from use […]
The number of assets which TaxAct supports is as follows: TaxAct supports 1,000 MACRS assets and 1,000 ACRS assets (ACRS assets are pre-1987 assets, such as residential rental property). TaxAct supports up to eight Schedule Cs for e-filing. The number of depreciable assets on Schedule C (Form 1040) Profit or Loss From Business are not […]
To enter sales tax deductions in the TaxAct program, go to our Sales Tax – Entering in the Program FAQ. Sales tax paid on a vacation home is not allowed as an itemized deduction for specified items on Schedule A (Form 1040) Itemized Deductions, Line 5. Sales tax would not be deductible if the vacation […]
There are federal income tax rules that apply to civil service retirement benefits received by retired federal employees (including those disabled) or their survivors. The Thrift Savings Plan (TSP) provides federal employees with the same savings and tax benefits that many private employers offer their employees. This plan is similar to private sector 401(k) plans. […]
Per IRS Publication 936 Home Mortgage Interest Deduction, page 4: Qualified Home For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that […]
TaxAct calculates the Standard Deduction Worksheet for Dependents, but there is not a viewable worksheet within the program. You can find this worksheet displayed as Table 21-3 on page 157 of IRS Publication 17 Your Federal Income Tax For Individuals. Note that any link in the information above is updated each year automatically and will […]
Every fourth year (i.e. 2016, 2020, 2024) is a Leap Year and the calculation for the Sales Tax Deduction contains a factor in the calculation for the number of days lived in the State. In these years, if you adjust the days entered in this field to “366” (the number of days in a leap-year) […]
You can elect to deduct state and local GENERAL SALES TAXES instead of state and local INCOME TAXES as an itemized deduction on Schedule A (Form 1040) Itemized Deductions. You cannot deduct both. To figure your state and local general sales tax deduction, you can use either your actual expenses or the optional sales tax […]
Per IRS Publication 503 Child and Dependent Care Expenses, page 4: You Must Have Earned Income To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Earned income. Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. A net loss from […]
Since one of the tests to claim the child and dependent care credit on your return is that you must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work (i.e. the Work-Related Expense Test). If the expense is not considered “work-related,” you are not […]
General Limits: In figuring the Child and Dependent Care credit, take into account qualifying expenses up to a limit of $3,000 for one dependent, or $6,000 for two or more dependents. The $3,000 or $6,000 limit applies even if your actual expenses are much greater. This $3,000 or $6,000 limit must be reduced by tax-free […]
Per IRS Instructions for Form 2441 Child and Dependent Care Expenses, page 3: Column (c) If the care provider is an individual, enter his or her SSN. Otherwise, enter the provider’s employer identification number (EIN). If the provider is a tax-exempt organization, enter “Tax-Exempt” in column (c). U.S. citizens and resident aliens living abroad. If […]
Per IRS Publication 503 Child and Dependent Care Expenses, page 2: Dependent care benefits. If you received any dependent care benefits from your employer during the year, you may be able to exclude all or part of them from your income. You must complete Form 2441, Part III, before you can figure the amount of […]
If you had to repay any unemployment compensation (note the method would be similar for repaying any nonbusiness income) in 2024 which you received in 2024, subtract the amount you repaid from the total amount you received and enter the difference on your return. On the dotted line next to your entry, enter “Repaid” and […]
You can only import one prior year return into your TaxAct current year return. If you are now married and filing jointly, you can import the prior year return for the spouse with the most complex tax information, and manually enter the information for the other spouse. Related Links Import Last Year’s Return Filing Status […]
Per IRS Publication 17 Your Federal Income Tax, page 29: Residency Test To meet this test, your child must have lived with you for more than half the year. There are exceptions for temporary absences, children who were born or died during the year, kidnapped children, and children of divorced or separated parents. Temporary absences. […]
While an adopted child is considered to be your child for tax purposes, you should only enter the number of months the child actually lived with you in the first year of adoption for purposes of calculating credits, etc. Although the child may not qualify to be your “qualifying child” in the first year of […]
Under the tax law, one spouse is not considered a dependent of the other. If you’re divorced or legally separated during the year, your former spouse cannot be your qualifying relative even if he or she is a member of your household for the whole year.
Per IRS Publication 17 Your Federal Income Tax (For Individuals), page 31: Support Test (To Be a Qualifying Child) To meet this test, the child can’t have provided more than half of his or her own support for the year. This test is different from the support test to be a qualifying relative, which is […]
Whether you can claim your child as a dependent, if your ex-spouse did not, is based on who the custodial parent is and whose qualifying child the child is determined to be for that year according to the IRS rules. The following information will help determine who can: take the child tax credit, use the […]
There are many things to consider when determining if you have provided more than half of a person’s support during the year, and if they are a qualifying relative. Below is a link and information from IRS Publication 17 to help you make this determination. Per IRS Publication 17 Your Federal Income Tax (For Individuals), […]
Per IRS Publication 929 Tax Rules for Children and Dependents, page 9: Part 2. Tax on Unearned Income of Certain Children The two rules that follow may affect the tax on the unearned income of certain children. If the child’s interest and dividend income (including capital gain distributions) total less than $11,000, the child’s parent […]
If you have state or local withholdings for more than eight states, you will need to create another Form W-2 Wage and Tax Statement in the TaxAct program to enter the additional state and or local withholdings. Be sure to select the state and locality from the drop-downs for Boxes 15 and 20 again. You will not be […]
The TaxAct program supports the entry of 150 copies of Forms W-2G for Gambling Winnings. If you have more than 150 Forms W-2G, you need to enter the total amount into your return and paper-file the return so you can attach copies of each Form W-2G that you received. While you can e-file the return by […]
The TaxAct program does not provide Alerts regarding the limits on deferred income as there are many situations where the limits may vary. This is outlined in detail in IRS Publication 525 Taxable and Nontaxable Income. Your employer or plan administrator should apply the proper annual limit when figuring your plan contributions; however, you are […]
Per IRS Publication 17 Your Federal Income Tax (For Individuals), page 74: Child support payments. You shouldn’t report these payments on your return. See Pub. 504 for more information. Per IRS Publication 504 Divorced or Separated Individuals, page 14: Child support. To determine whether a payment is child support, see the discussion under Certain Rules […]
TaxAct supports entering an address up to 35 characters on Federal Form 1040 U.S. Individual Income Tax Return, as that is the number of characters allowed for e-filing by the IRS. If you e-file your return, you will need to abbreviate some parts of the address if it exceeds 35 characters in length. If you […]
Per IRS Publication 525 Taxable and Nontaxable Income, page 22: Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person aren’t taxable on the Federal unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident […]
Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding, even if no amount is deducted and withheld from the payment because of a treaty or code exception to taxation or if any amount […]
Per IRS Instructions for Form 1040 and 1040-SR: Rounding Off to Whole Dollars You can round off cents to whole dollars on your return and schedules. Any amounts under $.50 would be rounded down to the nearest dollar. Amounts that are $.50 and over are rounded up to the nearest dollar. If you have to […]
According to the IRS, if you are self-employed, your business income is the amount of your gross income less expenses. In determining earned income for purposes of the EIC, if you have a net loss from your self-employment activities (i.e., sole proprietorship or partnership interest), then you would reduce your earned income by the overall […]
Certain property cannot be depreciated. This includes land and certain excepted property. Per IRS Publication 946 How To Depreciate Property, page 6: Excepted Property Even if the requirements explained in the preceding discussions are met, you cannot depreciate the following property. Property placed in service and disposed of in the same year. Determining when property […]
Listed Property generally refers to property that could be used for personal and business purposes. For listed property, the business use must be over 50% for the taxpayer to claim the Section 179 expense or the accelerated depreciation, MACRS. In TaxAct, the “business-use percentage” dictates whether or not property is considered listed property: 100% business […]
Information regarding the applicable depreciation methods for each classification of property is listed below. Refer to IRS Instructions for Form 4562 Depreciation and Amortization (Including Information on Listed Property) and IRS Publication 946 How To Depreciate Property for additional information. 3-, 5-, 7-, and 10-year property – the applicable method is generally the 200% Declining […]
Use Form W-4P Withholding Certificate for Pension or Annuity Payments to tell payers the correct amount of federal income tax to withhold from your pension and annuity payments(s). Form W-4P is not available in the TaxAct program, but the form can be filled in at the IRS website, printed, and then mailed to each payer. […]
If your employer provided more than $50,000 of group-term life insurance coverage during the year, the amount included in your income is reported as wages in Box 1 of Form W-2. Also, it is shown separately in Box 12 as code “C.” Box 12 will also show the amount of uncollected Social Security and Medicare […]
Per IRS Publication 936 Home Mortgage Interest Deduction, page 5: Reverse mortgages. A reverse mortgage is a loan where the lender pays you (in a lump sum, a monthly advance, a line of credit, or a combination of all three) while you continue to live in your home. With a reverse mortgage, you retain title […]
Your child must be under 17 at the end of the tax year in order to qualify for the Child Tax Credit. Per IRS Publication 17 Your Federal Income Tax, page 108: Qualifying Child for the CTC A child qualifies you for the CTC if the child meets all of the following conditions. The child […]
Per the IRS Individual Taxpayer Identification Number (ITIN) Reminders for Tax Professionals webpage: Tax returns filed with an Individual Taxpayer Identification Number reporting wages paid are required to show the Social Security Number under which the wages were earned. This creates an identification number (ITIN/SSN) mismatch. In the past, returns with this mismatch could only […]
Per IRS Publication 550 Investment Income and Expenses, on page 65: Form 1099-CAP transactions. If a corporation in which you own stock has had a change in control or a substantial change in capital structure, you should receive Form 1099-CAP, Changes in Corporate Control and Capital Structure, from the corporation. Use the Form 1099-CAP to […]
If the Government bought the right of way on a piece of land for some purpose (i.e. to run water or sewer lines) then the following information may be of help if this would be considered a granting of an easement. Per IRS Publication 544 Sales and Other Dispositions of Assets, page 3: Easement. The […]
Per IRS Publication 527 Residential Rental Property (Including Rental of Vacation Homes), page 15: Basis of Property Changed to Rental Use When you change property you held for personal use to rental use (for example, you rent your former home), the basis for depreciation will be the lesser of the fair market value or adjusted basis on […]
When you sell or exchange your mutual fund shares, or if they are redeemed (a redemption), you will generally have a taxable gain or a deductible loss. Per IRS Instructions for Form 8949 Sales and Other Dispositions of Capital Assets, page 6: Average basis. You can use the average basis method to determine the basis […]
Nonbusiness bad debts are deducted as short-term capital losses on Federal Schedule D (Form 1040) Capital Gains and Losses. You may claim a loss from bad debt only in the year the debt becomes totally worthless. If you have a loss from a nonbusiness bad debt, you deduct it from capital gains, if any, and […]
Capital gains and losses are reported on Form 8949 Sales and Other Dispositions of Capital Assets and Schedule D (Form 1040) Capital Gains and Losses. For more information regarding capital gains and losses, go to: Publication 550 Investment Income and Expenses (Including Capital Gains and Losses) Publication 551 Basis of Assets ADJUSTED BASIS: Before you […]
Per IRS Publication 550 Investment Income and Expenses (Including Capital Gains and Losses), page 48: Capital or Ordinary Gain or Loss If you have a taxable gain or a deductible loss from a transaction, it may be either a capital gain or loss or an ordinary gain or loss, depending on the circumstances. Generally, a […]
If you used an accelerated method of depreciation, any gain you have on the sale attributable to this depreciation must be recaptured and reported as ordinary income. If you used straight-line depreciation, you may not have to report any recapture as ordinary income, but any gain computed would be considered capital gain income. You must […]
Your actual adjusted basis may be different from what is reported on Form 1099-B Proceeds From Broker and Barter Exchange Transactions. Per IRS Publication 550 Investment Income and Expenses (Including Capital Gains and Losses), page 40: Stocks and Bonds The basis of stocks or bonds you own is generally the purchase price plus the costs […]
Employee Stock Purchase Plan (ESPP) You will need to review the information you received on Form W-2 Wage and Tax Statement and/or Form 1099-B Proceeds From Broker and Barter Exchange Transactions before making your entries into the program. Outlined below is a series of steps you will need to review before entering your stock transaction […]
When you need to calculate your property’s basis (e.g. for depreciation purposes or when you sell the asset), the basis of your depreciable property must be reduced by the depreciation that was allowed or allowable, whichever is greater. Because of this, it is best to calculate and take the depreciation on any asset from the […]
Although the description for Line 11 of Form 4562 Depreciation and Amortization is “Business income limitation,” the calculation for this line is not strictly based on your business income (loss). Per IRS Instructions for Form 4562, page 4: Line 11 The total cost you can deduct is limited to your taxable income from the active […]
Under the Modified Accelerated Cost Recovery System (MACRS) of depreciation, there are three types of depreciation conventions: Half-year, Mid-quarter, and Mid-month. The convention determines the portion of the tax year for which depreciation is allowable during a year property is either placed in service or disposed of. HALF-YEAR CONVENTION treats all property placed in service […]
You can claim the section 179 deduction and a special depreciation allowance for listed property and depreciated listed property using GDS and a declining balance method if the property meets the business-use requirement. Per IRS Publication 946 How To Depreciate Property, page 53: How To Allocate Use To determine whether the business-use requirement is met, […]
The amount of IRA contribution allowed when also receiving social security may need to be calculated on a special worksheet. Per IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits, page 6: Which worksheet to use. A worksheet you can use to figure your taxable benefits is in the Instructions for Forms 1040 and […]
When determining how much can be contributed to your IRA, it may be helpful to know which income is not considered “compensation.” Per IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs), page 7: What Isn’t Compensation? Compensation doesn’t include any of the following items. Earnings and profits from property, such as rental income, interest […]
Per IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs), page 11: How Much Can You Deduct? Generally, you can deduct the lesser of: The contributions to your traditional IRA for the year, or The general limit (or the Kay Bailey Hutchison Spousal IRA limit, if applicable) explained earlier under How Much Can Be Contributed. […]
The TaxAct program will not prompt you to enter the basis of your traditional IRAs if you do not enter the information for Boxes 1, 2a or 2b, and 7, on your Form 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.. To report Form 1099-R and the basis of your […]
The TaxAct program supports the entry of 200 Forms 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., however the IRS only allows 20 Forms 1099-R to be e-filed. If you have more than 20 Forms 1099-R, you will need to file a paper return. Note that any link in the […]
Per IRS Instructions for Form 5329, page 5: Line 4 If any amount on line 3 was a distribution from a SIMPLE IRA received within 2 years from the date you first participated in the SIMPLE IRA plan, you must multiply that amount by 25% instead of 10%. These distributions are included in boxes 1 […]
If you have a 401(k) plan that allows loans to be taken and have elected to take a loan, this is called a “deemed distribution”. A deemed distribution is treated as an actual distribution for purposes of determining the tax on the distribution, including any early distribution tax. A deemed distribution is not treated as […]
If you received Form 1099-R with a Disability Code of 3, the distribution is not subject to the additional 10% tax, but the disability distribution is still included in taxable income. See IRS Publication 575 for details. To enter this distribution into the TaxAct program, follow the steps in the FAQ Form 1099-R – Entering […]
Per IRS Publication 17 Your Federal Income Tax (For Individuals), page 92: Higher Standard Deduction for Blindness If you are blind on the last day of the year and you don’t itemize deductions, you are entitled to a higher standard deduction. Not totally blind. If you aren’t totally blind, you must get a certified statement […]
The TaxAct® program imports limited information from the PDF file of your prior year return in order to ensure our $100k Accuracy Guarantee and Maximum Refund Guarantee. Data from a prior year return PDF that was created in a different tax program will be different from a TaxAct prior year return PDF, and TaxAct will […]
Per IRS Publication 17, Your Federal Income Tax For Individuals, page 23: Considered married. You are considered married for the whole year if, on the last day of your tax year, you and your spouse meet any one of the following tests. You are married and living together. You are living together in a common […]
Per IRS Instructions for Form 8582 Passive Activity Loss Limitations, starting page 4: Active participation. If you actively participated in a passive rental real estate activity, you may be able to deduct up to $25,000 of loss from the activity from your nonpassive income. This special allowance is an exception to the general rule disallowing […]
Per IRS Publication 527 Residential Rental Property, page 5: Repairs and Improvements Generally, an expense for repairing or maintaining your rental property may be deducted if you aren’t required to capitalize the expense. Improvements. You must capitalize any expense you pay to improve your rental property. An expense is for an improvement if it results […]
A vacation home property won’t be considered passive and won’t be entered on Form 8582 Passive Activity Loss Limitations. Per IRS Publication 925 Passive Activity and At-Risk Rules, page 5: Activities That Aren’t Passive Activities 3. The rental of a dwelling unit that you also used for personal purposes during the year for more than […]
Deductible closing costs are generally those for interest, certain mortgage points, and deductible real estate taxes. Other settlement fees and closing costs for buying the property become additions to your basis in the property. These include abstract fees, charges for installing utility services, legal fees, recording fees, surveys, transfer taxes, title insurance, and any amounts […]
A rental activity is a passive activity even if you materially participated in that activity, unless you materially participated as a real estate professional. Per IRS Publication 925 Passive Activity and At-Risk Rules, page 4: Phaseout rule. The maximum special allowance of $25,000 ($12,500 for married individuals filing separate returns and living apart at all […]
Per IRS Instructions for Form 1040 or 1040-SR: If your pension or annuity is fully taxable, enter the total pension or annuity payments (from Form(s) 1099-R, box 1) on line 5b; don’t make an entry on line 5a. If your Form 1099-R shows a taxable amount, you can report that amount on line 5b. But […]
The “General Rule” is the method generally used to determine the tax treatment of pension and annuity income from nonqualified plans (including commercial annuities). For a qualified plan, you generally cannot use the General Rule unless your annuity starting date is before November 19, 1996. Although IRS Publication 575 Pension and Annuity Income will help […]
Generally, if you are under age 59 1/2, you must pay a 10% additional tax on the distribution of any assets (money or other property) from your traditional IRA. Distributions before you are age 59 1/2 are called “Early Distributions.” The 10% additional tax applies to the part of the distribution that you have to […]
Per IRS Publication 526, page 5: Question. I volunteer as a Red Cross nurse’s aide at a hospital. Can I deduct the cost of the uniforms I must wear? Answer. Yes, you can deduct the cost of buying and cleaning your uniforms if the hospital is a qualified organization, the uniforms aren’t suitable for everyday […]
You generally cannot deduct the full amount of points in the year paid. Because they are prepaid interest, you generally must deduct them over the life (term) of the mortgage. Per IRS Publication 936 Home Mortgage Interest Deduction, starting page 6: Points The term “points” is used to describe certain charges paid, or treated as paid, by […]
Per IRS Publication 502, Medical and Dental Expenses, page 2: What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, but generally not payments for medical or dental care you will receive in a future year. (But see Decedent under Whose Medical Expenses Can You […]
Per IRS Publication 502 Medical and Dental Expenses, page 3: Whose Medical Expenses Can You Include? You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. There are […]
You can generally include medical expenses you pay for yourself, as well as those you pay for someone who was your spouse or your dependent either when the services were provided or when you paid for them. There are different rules for decedents and for individuals who are the subject of multiple support agreements. Go […]
To enter mortgage interest in the TaxAct program, go to our Form 1098 – Entering in Program FAQ. Per IRS Publication 936 Home Mortgage Interest Deduction, page 2: Note. Interest on home equity loans and lines of credit are deductible only if the borrowed funds are used to buy, build, or substantially improve the taxpayer’s […]
Per IRS Publication 936 Home Mortgage Interest Deduction: Home mortgage interest. You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017. Related Links Instructions […]
Personal interest is not deductible. Personal interest is any interest that is not home mortgage interest, investment interest, business interest, or other deductible interest. Note. You may be able to deduct interest you pay on a qualified student loan. For more information, go to IRS Publication 970, Tax Benefits for Education. Note that any link […]
Qualified Charitable Distributions (QCDs) were first made available to taxpayers in 2007. A qualified charitable distribution (QCD) is generally a nontaxable distribution made directly by the trustee of your IRA (other than a SEP or SIMPLE IRA) to an organization eligible to receive tax deductible contributions. You must be at least age 70 1/2 when […]
Per IRS Publication 547 Casualties, Disasters, and Thefts, page 9: Reimbursement Received After Deducting Loss If you figured your casualty or theft loss using the amount of your expected reimbursement, you may have to adjust your tax return for the tax year in which you get your actual reimbursement. This section explains the adjustment you […]
Per the Oregon Department of Revenue Frequently asked questions webpage: We are filing an Injured Spouse Claim and Allocation form, federal Form 8379, with our joint federal return. What should we do for our Oregon return? If you want your Oregon refund apportioned between spouses, you need to request it in writing. When your return […]
Per the IA Net Income Expanded Instructions webpage: Qualifications for Exemption from Tax If you qualify for the low income exemption as explained below, enter the words “low income exemption” in the area to the left of your net income figure on line 26. Skip lines 27-54, then enter zero on line 55 and complete […]
To enter federal or state withholding amounts when there is not an applicable section in the Q&A interview, use Form 1099-MISC Miscellaneous Income for Box 3. This will transfer the federal/state withholding to the appropriate lines of the returns. The actual Form 1099-MISC is not electronically filed with the return; only the information that it […]
Pensions from New York state and local governments are entered in the Federal Q&A in the Retirement Plan Income section. This would also be reported on Line 10 of Form IT-201. Exclusions of these pensions from New York income are reported on Line 26 of Form IT-201. Unlike the regular Pension and Annuity Income Exclusion, […]
Per the NH Form DP-10 Instructions Interest and Dividends Tax Return, page 3: LINE 2 DISTRIBUTIONS SUBJECT TO THE NEW HAMPSHIRE INTEREST AND DIVIDENDS TAX Enter any taxable annuities or the actual cash or property distributions you received or constructively received from any of the taxable income classes described in RSA 77:4. These distributions are […]
Federal pension income is pension provided to the user through the federal government. This could be from services with the Department of Agriculture, Air Force, Department of Defense, etc. This would be income paid to the retiree or the beneficiary. You may be able to subtract some or all of your taxable federal pension included […]
If you have claimed the Mortgage Interest Credit on Form 8396 Mortgage Interest Credit on the federal return, your home mortgage interest from Form 1098 Mortgage Interest Statement is reduced on Federal Schedule A (Form 1040) Itemized Deductions by the amount of the credit. The credit is generally 20% of the interest paid on the […]
As a senior citizen, you may be eligible to claim a refundable credit on your personal state income tax return. The Circuit Breaker tax credit is based on the actual real estate taxes paid on the Massachusetts residential property you own or rent and occupy as your principal residence. Massachusetts Senior Circuit Breaker Credit data […]
According to IL Publication 108 Illinois Property Tax Credit, on page 2: You must own your residence in order to take this credit. If you and your spouse each have a principal residence or if you had two principal residences during the tax year due to the sale of your home, you may claim the […]
The process of applying for the qualified education expense credit involves three Georgia tax forms, which should be completed in the following order: Georgia Form IT-QEE-TP1 Qualified Education Expense Credit Preapproval Form Georgia Form IT-QEE-SSO1 Qualified Education Expense Credit Letter of Confirmation Georgia Form IT-QEE-TP2 Qualified Education Expense Credit Computation The Qualified Education Expense Credit […]
Georgia has a number of Non IND-CR Credits and Pass-Through Credits which are entered on Georgia Schedule 2 and flow to Line 20 of Georgia Form 500. To enter these credits in TaxAct®: From within your TaxAct return (Online or Desktop), click State, then click Georgia (or GA). On smaller devices, click in the upper […]
Massachusetts College Tuition Deduction Massachusetts allows a deduction for undergraduate tuition if the total paid exceeds 25% of the taxpayer’s Massachusetts adjusted gross income. Qualified expenses include only those expenses designated as tuition or mandatory fees required for enrollment at an eligible educational institution The deduction is equal to the amount by which the tuition […]
For Connecticut income to be correctly reflected on Line 6 of Form CT-1040NR/PY, you must complete the Part-Year Residents and Nonresidents section of the State Q&A. This information will be included in the calculation of the percentage to prorate the tax figured on Line 10. To enter this information in TaxAct: From within your TaxAct […]
Generally, the basis in property you inherited from a decedent is the Fair Market Value (FMV) at the date of the individual’s death. However, you should refer to IRS Publication 551 Basis of Assets for additional information and exceptions. Note that any link in the information above is updated each year automatically and will take […]
The CUSIP acronym typically refers to both the Committee on Uniform Security Identification Procedures and the 9-character alphanumeric security identifiers that it distributes for all North American securities for the purposes of facilitating, clearing, and settlement of trades. This number is not the Federal Identification Number (FEIN) for a company. A CUSIP number identifies most […]
To report or edit Form 1099-MISC Miscellaneous Income Box 3 – Other income (if you need help reporting Form 1099-MISC in the TaxAct program, go to our Form 1099-MISC – Entering in Program FAQ): From within your Form 1099-MISC, continue with the interview process until you reach the screen titled 1099-MISC: Enter information on form. Click the data entry field below […]
When entering names or social security numbers on the tax return, it is very important to enter them exactly as they appear on the social security card the individual was issued by the Social Security Administration (SSA). The IRS matches the name and SSN on the return with the records from the Social Security Administration. […]
You cannot deduct a contribution to a donor advised-fund if the sponsoring organization is a war veterans’ organization, a fraternal society, or a nonprofit cemetery company. There are also other circumstances in which you cannot deduct your contribution to a donor-advised fund. Generally, a donor-advised fund is a fund or account in which a donor […]
Pre-tax medical premiums are not an itemized deduction because you have already received a tax benefit as the premiums were not included in your gross wages in Box 1 of Form W-2.
Usually, tax relief assistance payments are not taxable. People in a presidentially-declared disaster area who receive grants from state programs, charitable organizations, or employers to cover medical, transportation, or temporary housing expenses do not include these grants in their income. In the case of a federally-declared disaster, an affected taxpayer can call 1-866-562-5227 to speak […]
The IRS News From Around the Nation webpage provides news specific to local areas, primarily disaster relief or tax provisions that affect certain states. In the case of a federally declared disaster, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues. Note that any link in the […]
Returns can still be electronically filed if the taxpayer or spouse (or any of their dependents) has an Individual Taxpayer Identification Number (ITIN) instead of a Social Security Number (SSN). If the dependent does not have a SSN or ITIN yet, the taxpayer can e-file without the dependent and file an amended return later, or […]
The Internal Revenue Procedure 2005-11 sets forth the standards that are used to determine whether student-employees are eligible for the student FICA exemption. This is not reported on the individual tax return, but is reflected on Form W-2 Wage and Tax Statement and on the school’s employment tax returns filed with the IRS. The employer […]
Per IRS instructions, when making a line item entry that contains multiple documents, add all amounts and then round the total with 50 cents or more rounding up to the next dollar and 49 cents or less rounding down. For items listed individually (i.e. on Schedule B (Form 1040) Interest and Ordinary Dividends) and transmitted […]
The TaxAct program does not support a separate Schedule D (Form 1040) Capital Gains and Losses for Alternative Minimum Tax (AMT) purposes. You would need to manually complete the form, enter the amount on Line 17 of Form 6251 Alternative Minimum Tax – Individuals, and paper-file the return. Note that any link in the information […]
To report sale of personal property (or inherited property that is considered personal property) on Schedule D (Form 1040) Capital Gains and Losses in the TaxAct program, you will report it in the Capital Gains and Losses section of the program, and select Adjustment Code “L” (if the inherited property is not considered “personal use” property, […]
The law sets the self-employment tax rate as a percentage of your net earnings from self-employment. This rate consists of 12.4% for social security and 2.9% for Medicare taxes. The maximum amount of net earnings subject to the 12.4% social security portion of the self-employment (SE) tax for 2023 is $160,200. All net earnings of […]
If you are depreciating assets used less than 100% for business on Schedule E Supplemental Income and Loss, those assets will be listed on Line 26 or 27 of Form 4562 Depreciation and Amortization (Including Information on Listed Property). To calculate rental expenses for a property in which you live in one part and rent […]
IRS Publication 527 Residential Rental Property (Including Rental of Vacation Homes) provides information for renting out a house or vacation home. Chapter 2 provides information regarding depreciation of rental property. There is a chart in this chapter which provides information regarding the recovery periods for property used in rental activities. Note that any link in […]
To calculate rental expenses for a property in which you live in one part and rent out the other, first calculate the percentage of the rental portion by figuring the square footage of that part compared to the square footage of the entire property. Apply this percentage to each expense and enter those amounts as […]
To claim rental expenses for a duplex where you live in one unit and rent the other, you would normally enter half of the expense amounts into the program. In a situation when one side of the duplex is larger than the other, you will need to compute the expenses based on square footage. To […]
The information from Schedule K-1 will only transfer to Schedule E (Form 1040) Supplemental Income and Loss, page 2, columns (a) though (f) when there are amounts to be reported in columns (g) through (k) on Line 28. Per the IRS, information only needs to be transferred to Part II when passive and non-passive amounts […]
Tax Reform Update: Employee business expenses can be claimed on Form 2106 Employee Business Expenses only by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Home mortgage interest and real estate taxes are transferred to Schedule A (Form 1040) Itemized Deductions in the following circumstances: […]
Per the IRS Retirement Plans FAQs on Designated Roth Accounts webpage: What is a designated Roth account? A designated Roth account is a feature in new or existing 401(k), 403(b), or governmental 457(b) plans. If a plan includes a designated Roth feature, employees can designate some or all of their elective deferrals as designated Roth […]
Generally, you can contribute to a Roth IRA if you have taxable compensation (defined below) and your 2023 modified AGI is less than: $228,000 for MFJ or Qualifying Widow(er), $153,000 for Single, Head of Household, or MFS and you did not live with your spouse at any time during the year, and $10,000 for MFS […]
A qualified retirement plan is a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan. If you made after-tax contributions to your pension or annuity plan, you can exclude part of your payments from your income. Determine the tax-free amount based on when your payments first began. This amount will always be […]
The Simplified Method Worksheet in the TaxAct® program shows the calculation of the taxable amount from entries made in the retirement income section. To view this worksheet in the TaxAct program: Online Navigation Instructions You need to view the worksheet as a print PDF; if you need help, go to our Printing Your Return and […]
Call 1-800-772-1213 (the national Social Security Administration number) to contact the Social Security Administration toll free, or go to the Social Security Office Locator to find the phone number of your local office. Alternatively, go to the SSA Frequently Asked Questions webpage.
The amount of social security and Medicare tax withheld from your pay appears in Boxes 4 and 6 of Form W-2 Wage and Tax Statement. There is no limit on the amount of wages subject to the Medicare tax (1.45%), but there is a maximum amount of wages subject to social security tax (6.2%). The […]
Per IRS Instructions for Form 2106 Employee Business Expenses, page 2: Line 1. If you were a rural mail carrier, you can treat the amount of qualified reimbursement you received as the amount of your allowable expense. Because the qualified reimbursement is treated as paid under an accountable plan, your employer shouldn’t include the amount […]
Contributions to a 529 plan are not deductible on the federal return. Per the IRS 529 Plans: Questions and Answers webpage: Q. What is the main advantage of a typical 529 plan? A. Earnings are not subject to federal tax and generally not subject to state tax when used for the qualified education expenses of […]
Per the IRS Other Deduction Questions webpage: Question My spouse and I are filing separate returns. How can we split our itemized deductions? Answer If you and your spouse file separate returns and one of you itemizes deductions, the other spouse must also itemize, because in this case, the standard deduction amount is zero for […]
Per IRS Publication 501, page 24: Higher Standard Deduction for Age (65 or Older) If you are age 65 or older on the last day of the year and don’t itemize deductions, you are entitled to a higher standard deduction. You are considered 65 on the day before your 65th birthday. Therefore, you can take a […]
To calculate the vehicle expenses amount to report on Line 9 of Schedule C (Form 1040) Profit or Loss From Business (if you need help accessing Schedule C, go to our Schedule C – Entering Sole Proprietorship in Program FAQ): From within your Schedule C, continue with the interview process until you reach the screen […]
If you make a State Estimated Tax payment in January that is applied to the Fourth Quarter Tax Payment of the previous year, you would enter that state tax payment on Schedule A (Form 1040) Itemized Deductions for the year the payment was made. Example: If you made a State Estimated Tax payment on January […]
You can only deduct interest on the first $375,000 of your mortgage if you bought your home after December 15, 2017. Per IRS Publication 587 Business Use of Your Home, page 18: Home mortgage interest. You will figure the business portion of your home mortgage interest using Form 8829 (if you file Schedule C (Form […]
The Patient Protection and Affordable Care Act, signed into law on March 23, 2010, amends Section 108(f) of the Internal Revenue Code of 1986 to expand the exclusion from taxable income the assistance received for student loan forgiveness for health care professionals working in underserved areas. Per the Patient Protection and Affordable Care Act, page […]
For Social Security recipients, the TaxAct® program will calculate the taxable portion of the Social Security benefits reported on Line 5a of Form 1040 U.S. Individual Income Tax Return based on Worksheet 1 from IRS Publication 915 Social Security and Equivalent Railroad Retirement Benefits, page 16. If you reside in a country (listed in Publication […]
To report Form 1099-MISC Miscellaneous Income, Box 12 (if you need help reporting Form 1099-MISC, go to our Form 1099-MISC – Entering in Program FAQ): From within your Form 1099-MISC, continue with the interview process until you reach the screen titled 1099-MISC: Enter information on form. Click the data entry field below Box 12 – Section […]
If your contributions to a Traditional IRA, Roth IRA, or Health Savings Account (HSA) exceed the allowed limit for the year, an additional tax may apply. This tax is calculated and reported on Form 5329. If you need help accessing Form 5329, go to our Form 5329 – Entering in Program FAQ. IRA (Traditional and […]
Noncash Charitable Contribution Limit. The TaxAct program currently allows a maximum of 45 entries for noncash charitable contributions. These would be reported on nine Forms 8283 Noncash Charitable Contributions. The total noncash charitable contributions are reported on Federal Schedule A (Form 1040) Itemized Deductions, Line 17 as an itemized deduction. Note that any link in […]
A nonrefundable credit can reduce your tax liability to 0 (zero); however, it cannot result in a refund. If, for example, you qualify for a $350 nonrefundable credit and your tax liability is only $200, you will only receive a $200 credit. If your tax liability is zero, you would not receive the credit at […]
Per IRS Publication 3 Armed Forces’ Tax Guide, page 15: Combat Zone Defined A combat zone is any area the President of the United States designates by Executive order as an area in which the U.S. Armed Forces are engaging or have engaged in combat. An area usually becomes a combat zone and ceases to […]
For military personnel, your permanent residence is generally considered to be your residence when you entered the military. However, if you or your spouse have earned income in the state in which you were stationed, you may need to file a state tax return as a nonresident of that state. You will need to determine […]
Per IRS Publication 3 Armed Forces’ Tax Guide, page 35: Spouse incapacitated. If your spouse can’t sign because of disease or injury and he or she tells you to sign, you can sign your spouse’s name in the proper space on the return, followed by the words “by [your name], Husband (or Wife).” Be sure […]
If you owe a debt to someone else and they cancel or forgive that debt, the canceled amount may be taxable. The Bipartisan Budget Act of 2018 extends the exclusion from gross income of discharge of qualified principal residence indebtedness, which generally allows taxpayers to exclude income from the discharge of debt on their principal […]
Railroad employees have these possible entries in Box 14 of Form W-2 Wage and Tax Statement: RRTA Compensation Tier I Tier II Medicare Tax Additional Medicare Tax If you’re a railroad employee covered by the Railroad Retirement Act (RRTA), these amounts are located in Box 14 with the previous descriptions. Enter the correct amounts for […]
The IRS’s moving expense deduction has been temporarily suspended since 2018. The only exceptions are for active-duty members of the Armed Forces who are required by military order to move because of a permanent change of station. An amount with code “P” will transfer to Line 4 of Form 3903 Moving Expenses for moving expenses. Form 3903 can be […]
If you are a member of the U.S. Armed Forces who serves in a combat zone, you may exclude certain pay from your income. You do not actually need to show the exclusion on your tax return because income that qualifies for the exclusion is not included in the wages reported on your Form W-2 […]
If an employer issues two separate Forms W-2: Wage and Tax Statement, and both contain state-specific information from different states, but only one contains federal information, you can combine the two sets of state information when you enter it into TaxAct. Doing so allows you to file the return electronically, and ensures that all state information […]
The TaxAct program supports the entry of 20 Forms 1099-OID Original Issue Discount. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.
The TaxAct® program does not support the Heavy Highway Use Tax return on Form 2290 Heavy Highway Vehicle Use Tax Return. This is a separate tax return from Form 1040 U.S. Individual Income Tax Return. You can find it on the IRS website. Related Links Instructions for Form 2290 Note that any link in the information […]
Issuers of Forms 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. use Box 8 to report other information they consider important. The TaxAct program does not transfer an amount entered in Box 8 of Forms 1099-R to anywhere else in the return, since the appropriate tax treatment cannot be determined. Verify […]
If you have a code “U” in Box 7, you will not use code “1” with it. Distributions from a ESOP are not subject to a 10% additional tax. Code “B” is the only code that can be used with code “U.” Code “B” should be used when the account is a designated Roth account. […]
For more information on individual retirement arrangements, go to the IRS Retirement Plans Frequently Asked Questions (FAQs) webpage. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.
Per IRS Instructions for Form 5695: The Consolidated Appropriations Act, 2021: Extends the residential energy efficient property credit to qualified biomass fuel property costs on line 5, and provides definitions in these instructions. Extends the 26 percent residential energy efficient property credit rate to property placed in service in 2021. For property placed into service […]
The Patient Protection and Affordable Care Act allows small businesses and tax-exempt organizations to earn a tax credit for providing or maintaining employee health insurance. Starting in 2014, businesses with ten or fewer full-time equivalent (FTE) employees with an average annual salary of $25,000 or less can earn the maximum credit of 50%, while tax-exempt […]
When you receive income, the payer will usually have to send you an income statement that shows taxes withheld each year. Depending on the type of income, you will receive a different type of form. Forms that you receive need to be reported on your tax return, and the TaxAct program will ask what forms […]
Adjusted Cost Basis Calculation Cost basis times business use percentage equals Business portion cost basis Business portion cost basis less Section 179 deduction equals Adjusted cost basis Adjusted cost basis times 30% Special bonus depreciation equals Special bonus depreciation amount Adjusted cost basis less 30% bonus depreciation amount equals Adjusted cost basis to use for […]
Generally, to find the basis for depreciation: Multiply the cost or other basis of the property by the percentage of business/investment use. Subtract any section 179 expense deduction. Subtract any special depreciation allowance (50% and 30%). For more information, go to IRS Instructions for Form 4562 Depreciation and Amortization (Including Information on Listed Property) and […]
Information reported to you on Form 1099-DIV and Form 1099-B can be entered in the TaxAct program in the Investment Income section of the Federal Q&A, or directly on the forms where applicable. The Tax Summary screen will indicate if the tax has been computed on the Schedule D Worksheet or the Qualified Dividends and Capital Gain […]
If there is an amount on Line 18 (from the 28% Rate Gain Worksheet) or Line 19 (from the Unrecaptured Section 1250 Gain Worksheet) of Schedule D (Form 1040) Capital Gains and Losses, according to the IRS, the tax is calculated on the Schedule D Tax Worksheet instead of the Qualified Dividends and Capital Gain […]
Per IRS Instructions for Form 1040 and 1040-SR, page 23: Rounding Off to Whole Dollars You can round off cents to whole dollars on your return and schedules. If you do round to whole dollars, you must round all amounts. To round, drop amounts under 50 cents and increase amounts from 50 to 99 cents […]
Per IRS Instructions for Forms 1099-INT and 1099-OID, on page 4: Box 14. Tax-Exempt and Tax Credit Bond CUSIP No. For single bonds or accounts containing a single bond, enter the CUSIP number of the tax-exempt bond for which tax-exempt interest is reported in box 8 or tax credit bond (including build America bond and […]
Follow the steps below to report exempt interest. If you need help accessing Form 1099-INT, go to our Form 1099-INT – Entering in Program FAQ. To enter only interest that is exempt from State: From within your Form 1099-INT, continue with the interview process until you reach the screen titled Interest Income – 1099-INT Income. Click the data entry […]
Form 1099-MISC Box 10 shows gross proceeds paid to an attorney in connection with legal services. These amounts are generally reported on Schedule C (Form 1040). Enter only the taxable portion as income on your return. You need to complete Schedule C before Form 1099-MISC, if you need help completing Schedule C, go to our […]
Go to page 14 of IRS Instructions for Form 4562 Depreciation and Amortization (Including Information on Listed Property), Part VI. Amortization for information for Line 42. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the […]
For record-keeping purposes, when entering an asset that is completely depreciated, enter the cost basis, prior depreciation, date in service, and the actual life used to depreciate the asset so that no current depreciation will calculate.
Form 4562 Depreciation and Amortization is generated for a business form (i.e. Schedule C (Form 1040) Profit or Loss From Business, Schedule F (Form 1040) Profit or Loss From Farming, etc.) only if an asset is entered for that business (including a vehicle even if only the standard mileage rate deduction is taken for that […]
When information is imported from a prior year return, all previous depreciation data and assets are automatically inserted into the current year return (the asset description, date placed in service, asset type, cost, method, life, convention, section 179 expense, and prior depreciation are included). You will need to verify and edit your depreciable assets if […]
When information is imported from a prior year return, all previous depreciation amounts and assets are automatically put into the current year return. You will need to verify and edit your depreciable assets if any have been sold or taken out of service. The asset description, date placed in service, asset type, cost, method, life, […]
To determine the classification of property being depreciated, whether it is 3-year property, 5-year property, etc., refer to IRS Instructions for Form 4562 Depreciation and Amortization (Including Information on Listed Property). For further information, you can refer to Appendix B – Table of Class Lives and Recovery Periods on page 97 of IRS Publication 946 […]
The Asset type selected must be either “Car” or “Light Truck/SUV” before you can enter the mileage within the Q&A interview. Generally, this is because owners of “Heavy Truck” (heavy-duty trucks) will use depreciation instead of the standard mileage rate. The standard mileage rate is the same for cars and light trucks/SUVs. Related Links Mileage […]
Select “Other Asset” for the Asset type if you wish to enter an asset with the depreciation having specific criteria not defaulted with any other Asset type selection in the TaxAct® program. This will allow you to select the method, life, and convention of the depreciation as needed in the specific situation. We provide this […]
To claim an amount of depreciation for part-year use of an asset (if you need help accessing Form 1099-B in the TaxAct program, go to our Schedule C – Entering Sole Proprietorship in Program FAQ) that was converted from business use to personal use during the year (this excludes the capital loss that cannot be […]
Tax Reform Update Most of the miscellaneous itemized deductions you may have claimed in the past have been suspended. These deductions include: Unreimbursed employee expenses (travel expenses, dues/licenses, tools/supplies, education, etc.) Expenses related to the collection of income (investment fees, safe deposit box rental, tax advice, etc.) Tax preparation fees
If you are claimed as a dependent on someone else’s tax return (such as your parent’s), then your qualifying educational expenses can only be used on your parent’s return. Your return would not qualify for the education credits or deduction on your own return, because you are claimed as a dependent on another taxpayer’s return. […]
Per IRS Instructions for Form 8917, page 2: Deduction extended. The tuition and fees deduction is extended for qualified tuition and fees paid in calendar years 2018, 2019, and 2020. Don’t claim the deduction for expenses paid after 2020 unless the credit is extended again. Use Form 8917 (Rev. January 2020) and these instructions for […]
Form 1098-T, Tuition Statement, is sent to a student from their college and reports the following: The payments received for qualified tuition and related expenses; The amount billed for qualified tuition and related expenses; The amount of scholarships and grants administered and processed for the student by the college; If the student was considered enrolled at […]
For purposes of calculating the Earned Income Credit (EIC), unemployment is not included in earned income but is included in Adjusted Gross Income (AGI). If your AGI results in a lower EIC, you must use that amount. The TaxAct® program will automatically do this calculation for you on the Form 1040 Earned Income Credit Worksheet. […]
The filing requirements for a federal tax return depend on factors such as the taxpayer’s income, the taxpayer’s age and filing status, the age of the spouse on joint returns, if the taxpayer is claimed as a dependent on someone else’s return, earnings from self-employment, and more. The IRS Interactive Tax Assistant (ITA) Do I […]
Go to the IRS Contact My Local Office Internationally webpage to learn about international taxpayer service centers. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.
The TaxAct® program does not support Form 2555-EZ Foreign Earned Income Exclusion. But, all Foreign Earned Income Exclusion information will be reported on Form 2555 Foreign Earned Income (Part VIII Taxpayers Claiming the Housing Exclusion, Foreign Earned Income Exclusion, or Both), for you to claim the benefits. Note that any link in the information above is […]
A U.S. citizen or resident alien is generally subject to U.S. tax on total worldwide income; however, if you are a U.S. citizen or a resident alien who lives and works abroad, you may qualify to exclude all or part of your foreign earned income. You may wish to refer to IRS Publication 54 Tax […]
The TaxAct® program does not support IRS Form 1040-C U.S. Departing Alien Income Tax Return. Form 1040-C is used by aliens who intend to leave the United States or any of its possessions to report income received or expected to be received for the entire tax year, and pay the expected tax liability on that […]
Per IRS Publication 17, page 8: Who Should File Even if you don’t have to file, you should file a federal income tax return to get money back if any of the following conditions apply. 5. You qualify for the health coverage tax credit. See Form 8885, Health Coverage Tax Credit, and its instructions, for […]
Per IRS Frequently Asked Questions Dependents webpage: Question: My child was stillborn. May I claim my child as a dependent on my tax return? Answer: In order to claim a newborn child as a dependent, state or local law must treat the child as having been born alive, and there must be proof of a […]
If you list a child in the process of being adopted as a dependent on your tax return, you need to provide a valid Adoption Taxpayer Identification Number (ATIN) in order to file. If you have not received the ATIN for your child yet, there are two options: File for an extension with Form 4868 Application […]
Per IRS Publication 501 Dependents, Standard Deduction, and Filing Information, page 11: Tests To Be a Qualifying Relative The person can’t be your qualifying child or the qualifying child of any other taxpayer. The person either (a) must be related to you in one of the ways listed under Relatives who don’t have to live […]
Lines 26 and 27 of IRS Form 4562 Depreciation and Amortization are for listed assets. Rental real property is not listed property. Property placed in service in the current tax year will appear on Line 19 and any older properties will appear on Line 17. When entering the depreciation information for a rental duplex, of […]
If your dependent receives a Form SSA-1099, you are not supposed to report it on your tax return. Your dependent needs to report the SSA-1099 on their own tax return (if they are required to file). If you need help reporting Form SSA-1099, go to our Forms SSA-1099 and RRB-1099 – Entering Social Security or […]
Per IRS Form 8924, page 1: Who Must File An eligible entity who subsequently transfers ownership or possession (by sale, exchange, or lease) of a qualifying mineral or geothermal interest must file Form 8924 for each transfer of an interest acquired, directly or indirectly, in: A conservation sale in which the previous transferor excluded 25% […]
If your employer provides dependent care benefits under a qualified plan, you may be able to exclude these benefits from your income. Your employer can tell you whether your benefit plan qualifies. The amount you can exclude is limited to the smallest of: The total amount of dependent care benefits you received during the year, […]
In the TaxAct program, you can use Capital Gain Summary reports to review all of your capital gain transactions during the year. The transactions are organized by short-term and long-term. To review your short-term and/or long-term capital gains/losses summary report: From within your TaxAct return (Online or Desktop), click Review, then click Reports (on smaller […]
You may deduct capital losses up to the amount of your capital gains, plus $3,000 ($1,500 if married filing separately). If part of the loss is still unused, you can carry it forward to later years until it is completely depleted. This “unused loss” includes any amount appearing on Line 7 of IRS Form 1040 […]
To properly report your capital gains and losses on Form 8949 Sales and Other Dispositions of Capital Assets and Schedule D Capital Gains and Losses, you will need to determine your basis (cost) of your shares sold to enter in Purchase price or other basis. Your basis should be maintained in your records. Your plan […]
If you are entering information for the sale of stock you inherited, in the Date Acquired entry field for Form 1099-B Proceeds From Broker and Barter Exchange Transactions, enter the word “Inherited” instead of an actual date (you will still be allowed to e-file your return). The program will then compute the transaction as long […]
Per IRS Publication 551 Basis of Assets, page 9: Property Received as a Gift To figure the basis of property you receive as a gift, you must know its adjusted basis (defined earlier) to the donor just before it was given to you, its FMV at the time it was given to you, and any […]
Per IRS Instructions for Form 8949, page 5: Stock acquired on various dates. If you sold a block of stock (or similar property) that you acquired through several different purchases, you may report the sale on one row and enter “VARIOUS” in column (b). However, you still must report the short-term gain or (loss) on the sale […]
You need to add expenses of sales and commissions to your original cost basis to calculate the cost or other basis amount. The TaxAct interview process does not ask for these items separately; you need to keep detailed records to complete this entry. To access Form 1099-B and report cost or other basis in the […]
If you need to delete a Form 1099-MISC, or if there is a blank Form 1099-MISC preventing you from e-filing your return, click one of the following links for instructions to delete the form. To delete a form in your Online TaxAct return, go to our Delete Online Forms FAQ. To delete a form in your […]
Business expenses are the costs of carrying on a trade or business, and they are usually deductible if the business is operated to make a profit. While the TaxAct® program does not calculate depletion for Line 12 of Schedule C (Form 1040) Profit or Loss From Business, you can calculate the amount and enter it […]
Per the IRS Closing a Business webpage: Closing your business can be a difficult and challenging task. The IRS has resources that can help you navigate this. On this page, you’ll find the steps you’ll need to take to close your business from a federal tax perspective regardless of your business type and information to […]
Commercial revitalization is the rehabilitation of a building in a distressed community. Prior year unallowed commercial revitalization deduction (CRD). If you have prior year unallowed CRDs limited by the passive loss rules, you may continue to include them in the calculations as shown in the Form 8582 Instructions In the TaxAct® program, any CRD entered […]
TaxAct® requests a valid Social Security Number (SSN) be entered in order for certain credits and deductions to calculate (i.e. child tax credit, other dependent credit, etc.). If you have applied for and are currently waiting to receive the child’s new SSN, you may either: Electronically file the return without the dependent, and then file […]
The TaxAct® Online program supports up to 50 entries on the Detailed Information for Contributions of cash or check in the Charitable Contributions section of the Itemized Deductions.
There is a limitation for charitable contributions as an itemized deduction on Schedule A (Form 1040) Itemized Deductions. The charitable contribution amounts are reported on Schedule A, Lines 11, 12, 13, and 14. The contribution limitation on Line 14 is computed on the Charitable Contribution Limitation Worksheet. Contributions are compared with the adjusted gross income […]
To see which fuel credits are still available, go to IRS Instructions for Form 4136 Credit for Federal Tax Paid on Fuels. Go to IRS Publication 510 Excise Taxes (Including Fuel Tax Credits and Refunds) for definitions and information on nontaxable uses. The IRS will not begin accepting 2025 returns that include Form 4136 until February […]
One of the eligibility requirements for the child and dependent care credit states that the childcare must be provided so you (and your spouse if filing jointly) could work or look for work. However, if your spouse did not have a job and had no earned income, you still may take the credit if he […]
To review your child tax credit and additional child tax credit in the TaxAct program, go to our Dependents – Entering and Reviewing FAQ. The TaxAct program automatically calculates your credit amount based on your dependent and income information. Some taxpayers cannot take full advantage of the child tax credit because their credit amount is […]
The Child Tax Credit is a nonrefundable credit. This means if your tax liability is $0, you will not receive this credit because there is no tax to reduce. However, you may receive an additional child tax credit calculated on Schedule 8812 Additional Child Tax Credit and reported on Line 28 of IRS Form 1040 […]
To export a CSV file from Charles Schwab for import into your TaxAct® return: Go to the Charles Schwab website. Click Log In to log into your account. Click Accounts tab in the upper left corner. When the Accounts tab is displaying, click History submenu item, then click the Realized Gain/Loss tab. Select a date […]
Alimony in solido (also referred to as lump sum alimony) is alimony in the nature of a final property settlement award that is not subject to change. It is an award of a definite sum of money to be paid in a lump sum or as installments over a definite period of time to make […]
When using Form 2210 Underpayment of Estimated Tax by Individuals, Estates, and Trusts and you incur a net capital loss, by law this loss is limited to $3,000 for the tax year. When TaxAct® calculates your annualized income on Line 3 of Schedule AI and you are claiming a net capital loss, this loss limitation […]
All capital gains (long-term and short-term) are reported on Form 8949 Sales and Other Dispositions of Capital Assets and Schedule D Capital Gains and Losses is used to calculate a net capital gain or loss. If there is a net gain that is all short-term, then the short-term gain will be taxed at the taxpayer’s […]
You should report income from odd jobs as business income on Schedule C (Form 1040) Profit or Loss From Business. A payer is required to issue you a Form 1099-MISC Miscellaneous Income if you received more than $600 in compensation. Because you are considered a contractor, you may deduct expenses related to this business activity. […]
The at-risk rules place a limit on the amount you can deduct as losses from activities. Generally, any loss from an activity (such as a rental) subject to the at-risk rules is allowed only to the extent of the total amount you have at risk in the activity at the end of the tax year. […]
If an author is self-employed, they would need to complete Schedule C (Form 1040) Profit or Loss From Business, as an advance would be considered income. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time […]
If someone owes you money you cannot collect, you may have a bad debt. There are two kinds of bad debts: business bad debts and nonbusiness bad debts. A business bad debt is generally one that comes from operating your trade or business. You may be able to deduct business bad debts as an expense […]
You may be able to deduct expenses related to the business use of part of your home if you meet specific requirements. Even then, your deduction may be limited. Per IRS Publication 587 Business Use of Your Home (Including Use by Daycare Providers), page 3: Trade or Business Use To qualify under the trade-or-business-use test, […]
Two tax credits that can help you offset the cost of higher education are the American Opportunity Credit and the Lifetime Learning Credit. American Opportunity Credit You may be able to take a credit of up to $2,500 for qualified education expenses for each student who qualifies for the American opportunity credit. This credit equals […]
While the Foreign Earned Income (FEI) Tax Worksheet is linked to Federal Form 1040 U.S. Individual Income Tax Return, it is only used if the return reports an amount on Form 2555 Foreign Earned Income, Line 45 for the Foreign Earned Income Exclusion. If that information is not present on Form 2555, the tax amount […]
If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and for paying estimated tax are generally the same whether you are in the United States or abroad. Your income, filing status, and age generally determine whether you must file an income tax return. If you […]
The TaxAct program no longer supports the creation of FinCEN Form 114 (FBAR) as of tax year 2019. Since this is a Bank Secrecy Act (BSA) form, it is not processed by the IRS. You can fill out and e-file the form through the BSA E-Filing System. If you own a foreign bank account, brokerage […]
Per IRS Publication 908 Bankruptcy Tax Guide, page 3: Individuals in Chapter 12 or 13 Only individuals may file a chapter 13 bankruptcy. Chapter 13 relief isn’t available to corporations or partnerships. The bankruptcy estate is not treated as a separate entity for tax purposes when an individual files a petition under chapter 12 (Adjustment […]
Per IRS Publication 908 Bankruptcy Tax Guide, page 2: Bankruptcy proceedings begin with the filing of either a voluntary petition in the United States Bankruptcy Court, or in certain cases an involuntary petition filed by creditors. This filing creates the bankruptcy estate. The bankruptcy estate generally consists of all of the assets the individual or […]
Per IRS Publication 908 Bankruptcy Tax Guide, page 2: CAUTION! This publication isn’t intended to cover bankruptcy law in general, or to provide detailed discussions of the tax rules for the more complex corporate bankruptcy reorganizations or other highly technical transactions. Page 3: Individuals in Chapter 7 or 11 When an individual debtor files for […]
The Foreign Tax Credit is available if you paid taxes to a foreign country on foreign-source income and are subject to U.S. tax on the same income. This credit is intended to relieve taxpayers of a double tax burden. Generally, you must be a U.S. citizen or resident alien to take the credit. Foreign taxes […]
Per IRS Publication 525 Taxable and Nontaxable Income, page 31: Court awards and damages. To determine if settlement amounts you receive by compromise or judgment must be included in your income, you must consider the item that the settlement replaces. The character of the income as ordinary income or capital gain depends on the nature […]
An important part of the Taxpayer Bill of Rights is the Taxpayer Advocate Service. The function of the Taxpayer Advocate is to assist taxpayers in resolving problems with the IRS, identify areas in which taxpayers have problems dealing with the IRS, propose changes in administrative practices of the IRS, and identify potential legislative changes that […]
Per IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs), page 38: How Much Can Be Contributed? The contribution limit for Roth IRAs generally depends on whether contributions are made only to Roth IRAs or to both traditional IRAs and Roth IRAs. Roth IRAs only. If contributions are made only to Roth IRAs, your contribution […]
To deduct expenses related to the business use of part of your home, you must meet specific requirements. Even then, your deduction may be limited. To qualify to claim expenses for business use of your home, you must meet both of the following tests. Your use of the business part of your home must be […]
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. Even though an […]
Per IRS Publication 526 Charitable Contributions, page 2: A charitable contribution is a donation or gift to, or for the use of, a qualified organization. It is voluntary and is made without getting, or expecting to get, anything of equal value. Organizations That Qualify To Receive Deductible Contributions You can deduct your contributions only if […]
The amount of your nontaxable combat pay should be shown on your Form W-2 Wage and Tax Statement, Box 12, code “Q.” For information about how to report this in your TaxAct return, go to our Form W-2 – E-Filing with Nontaxable Combat Pay FAQ. Per IRS Publication 3 Armed Forces’ Tax Guide, page 24: […]
Some boxes are not presented on Schedule K-1 because they are used to report various items and they can be treated differently, or they are merely informational and are not relevant to your tax return. Because we cannot determine what the items on these lines represent, we cannot accurately transfer it to the appropriate place […]
The following steps will enable you to enter or review rental property related depreciation information to populate IRS Form 4562 Depreciation and Amortization (Including Information on Listed Property) for Federal Schedule E (Form 1040) Supplemental Income and Loss. To enter or review rental property related depreciation information (if you need help accessing Schedule E, go […]
If you use a geothermal pump, solar panels, solar water heater, small wind energy system, or fuel cells, you may be able to continue claiming residential energy credits from the use of such devices on future tax returns. Residential energy credits should be claimed on Form 5695. Access current and prior-year versions of Form 5695 on […]
See IRS Instructions for Schedule A (Form 1040) Itemized Deductions, for limits on deductions for 2024: Limitations apply to: State and local taxes Home mortgage interest deduction Casualty and theft losses Some charitable contributions Deductions eliminated in 2018 that have not been brought back: Most miscellaneous itemized deductions Note that any link in the information above is […]
Even if your student hasn’t graduated from high school, you still may be able to get an education credit for the child’s college-level classes. The student qualifies for the tuition deduction if he or she is enrolled at an eligible school. You must have paid tuition to the college and not the high school in […]
The Patient Protection and Affordable Care Act (PPACA), commonly termed the Affordable Care Act (ACA) or “Obamacare”, is a federal statute which was signed into law by President Barack Obama on March 23, 2010. Due to this law impacting so many people, there are a number of IRS websites providing information: Affordable Care Act (ACA) […]
Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding is used to report amounts paid to foreign persons (including persons presumed to be foreign) that are subject to tax withholding. This applies even if no amount is withheld from the payment because of a treaty or code exception to taxation, or if any amount […]
If you were a self-employed individual working abroad, you would still report your self-employment earnings and expenses on Schedule C (Form 1040) Profit or Loss From Business. To access Schedule C in the TaxAct program, go to our Schedule C – Entering Sole Proprietorship in Program FAQ. If you need to remove the self-employment tax […]
IF the noncustodial parent qualifies, they can claim: claim the child as a dependent the child tax credit for the child (up to $2,000) ONLY the custodial parent can claim: head of household filing status due to that child earned income credit due to that child the credit for child and dependent care expenses the […]
Self-employment income is reported on Schedule C (Form 1040) Profit or Loss From Business, and the TaxAct program will transfer the net profit or loss to Schedule 1 (Form 1040) Additional Income and Adjustments to Income, Line 3. To report self-employment income on Schedule C in the TaxAct program, go to our Schedule C – Entering […]
If you recently updated your Social Security Number (SSN) you might not be able to file your return electronically as the IRS updates their E-Filing Database only 1 time a year. The update is generally done around late October, early November. If your name or Social Security Number changed after that date, you will need […]
For information about distribution codes for Form 1099-R, go to the IRS Instructions for Forms 1099-R and 5498 and review Table 1. Guide to Distribution Codes. Then, enter the distribution code in Box 7 when entering the information for Form 1099-R. See the FAQ Form 1099-R – Entering Distributions from Retirement Plans for details. If […]
If you realize a net business loss on Schedule C (Form 1040) Profit or Loss From Business, you are not required to file Schedule SE (Form 1040) Self-Employment Tax or pay self-employment taxes. However, the IRS does provide an optional self-employment tax calculation method which may give you credit toward Social Security without increasing your […]
Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding is used to report amounts paid to foreign persons (including persons presumed to be foreign) who are subject to income tax withholding. For an individual taxpayer, Form 1042-S is a document provided to you (and the IRS) by the payer of the income reported. That […]
To access Form 8815 Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989 (For Filers With Qualified Higher Education Expenses): From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your screen, then click Federal). Click the Investment Income dropdown, then […]
Report IPERS (Iowa Public Employees Retirement System) in Box 14 as it appears on the Form W-2 Wage and Tax Statement document. IPERS contributions are automatically excluded from taxable wages in Box 1 on Form W-2. There is no additional reporting required. If you need help reporting your Form W-2 in the TaxAct program, go to […]
Code “Q” is nontaxable combat pay. In TaxAct®, this is entered in Box 12 of Form W-2 Wage and Tax Statement. To enter military wages reported on a W-2 (if you need help reporting Form W-2 in the TaxAct program, go to our Form W-2 – Entering in Program FAQ): From within your Form W-2, […]
Mandatory State Disability Insurance (SDI) contributions are mandatory contributions you made to: the Rhode Island Temporary Disability Benefit Fund, the Washington State Supplemental Workmen’s Compensation Fund, or the California Nonoccupational Disability Benefit Fund (CA residents: This amount may be reported to you in Box 14 or Box 19 of your W-2 as “SDI” or “CASDI.”) […]
Per IRS Publication 531 Reporting Tip Income, page 2: All tips you receive are income and are subject to federal income tax. You must include in gross income all tips you receive directly, charged tips paid to you by your employer, and your share of any tips you receive under a tip-splitting or tip-pooling arrangement. […]
To see the depletion field in the Q&A for a rental property, you need to select non-active participant in the TaxAct program. To reach the Rental Income – Depletion screen for Schedule E (if you need help accessing Schedule E, go to our Schedule E – Entering Rental Property in Program FAQ): From within your […]
The following steps will enable you to enter or review business-related depreciation information to populate IRS Form 4562 Depreciation and Amortization (Including Information on Listed Property) for Federal Schedule C (Form 1040) Profit or Loss From Business, in the TaxAct® program. To enter or review business-related depreciation information (if you need help accessing Schedule C, […]
Form W-2 Box 14 Per IRS Instructions for Form W-2, page 9: Instructions for Employee Box 14. Railroad employers use this box to report railroad retirement (RRTA) compensation, Tier 1 tax, Tier 2 tax, Medicare tax, and Additional Medicare Tax. Include tips reported by the employee to the employer in railroad retirement (RRTA) compensation. To report Box […]
Follow the instructions to report the basis of your nonqualified Roth IRA distributions, for Line 19 of Form 8606 Nondeductible IRAs to calculate properly, and for Line 4b of Form 1040 to show the correct amount as taxable. To report basis of nonqualified distributions from Form 1099-R in the TaxAct program (if you need help […]
If you are a foreign national who works in the U.S. but is not subject to Social Security or Medicare taxes due to a treaty with your home country, you may request a refund of your Social Security and Medicare taxes from your employer if it mistakenly withheld these taxes from your wages on Form […]
The Tax Cuts and Jobs Act of 2018 suspended most of the itemized deductions you may have claimed in the past. Rental fees for safe deposit boxes are no longer deductible. Related Links Instructions for Schedule A Itemized Deductions Note that any link in the information above is updated each year automatically and will take […]
If you report a self-employment tax adjustment on Schedule SE (Form 1040) Self-Employment Tax, the TaxAct® program will automatically utilize Section B – Long Schedule SE. To enter or review a self-employment tax adjustment, go to our Schedule SE – Adjustments FAQ. Related Links Instructions for Schedule SE Self Employment Tax Note that any link […]
Due to tax reform, the deduction for uniform expenses not covered by your employer has been eliminated for tax years 2018-2025.
Tax reform eliminated the deduction for union dues for tax years 2018-2025. Per IRS Publication 529 Miscellaneous Deductions: This publication explains that you can no longer claim any miscellaneous itemized deductions, unless you fall into one of the qualified categories of employment claiming a deduction relating to unreimbursed employee expenses. Miscellaneous itemized deductions are those […]
Note: Losses you Can deduct for tax years 2018 through 2025: if you are an individual, losses of personal-use property from fire, storm, shipwreck, or other casualty, or theft are deductible only if the loss is attributable to a federally declared disaster (federal casualty loss). See Pub. 547 for more information. If the event causing […]
If your dependent has two last names or a hyphenated last name, both last names need to be entered in the last name data entry field as it appears on their social security card. If the social security card has a middle initial/name on it, that will need to be entered after the first name […]
In the federal section of the interview process, you will report your Form W-2 Wage and Tax Statement information in the TaxAct program. The state withholding amounts will flow to your state return in addition to your federal return. Fill out Form W-2 in your TaxAct return, and enter your State Taxes and Local Taxes […]
Some types of income you receive are not taxable. When you total your gross income to determine whether you are required to file a tax return, do not include your nontaxable income. Keep records of your nontaxable income. Some types of income that generally are not taxable include: Child support payments Welfare benefits Life insurance […]
Employee Stock Option Plan If you have done a same-day sale, all of the income and tax withholdings should be reported on your Form W-2 Wage and Tax Statement. You should not have to report any gain or tax withholdings elsewhere on your return. You will want to verify with your employer that this information […]
All capital gains (long-term and short-term) are reported on Form 8949 Sales and Other Dispositions of Capital Assets, and Schedule D Capital Gains and Losses is used to calculate a net capital gain or loss. If there is a net gain that is all short-term, then the short-term gain will be taxed at the taxpayer’s […]
A second home, or a timeshare, used as a vacation home is a personal use capital asset. A gain on the sale is reportable income, but a loss is NOT deductible. If you receive Form 1099-S Proceeds from Real Estate Transactions for the sale of your vacation home, you need to report it in the TaxAct program on Form […]
You should receive a Form 1099-INT Interest Income from banks and financial institutions where you earned more than $10 in interest. Even if you did not receive a Form 1099-INT, or if you received $10 or less in interest for the year, you must still report any interest earned and credited to your account during […]
If you redeemed a U.S. Savings Bond this year and reported interest for this bond on previous tax returns, you will need to report the amount in the program that you previously reported. The amount reported as income on prior year return(s) will then be subtracted from Schedule B (Form 1040) before transferring to the […]
If you receive a Form W-2 Wage and Tax Statement as a Qualified Performing Artist, Fee-Based Government Official, or National Guard/Reserve member at the end of the year, work-related expenses that are deducted from your paychecks (and are actual expenses to you and not reimbursed by your employer or advanced to you by your employer) […]
Per IRS Publication 587, Business Use of Your Home (Including Use by Daycare Providers), page 7: Rent. If you rent the home you occupy and meet the requirements for business use of the home, you can deduct part of the rent you pay. To figure your deduction, multiply your rent payments by the percentage of […]
If you sometimes use your rental property for personal purposes, you must divide your expenses between rental and personal use. Enter the rental expenses on Schedule E (Form 1040), and the personal expenses (which are eligible for itemized deductions) on Schedule A (Form 1040). Entering the days of personal use and days the property is […]
If you receive income from charitable gift annuities reported on Form 1099-R, the amount reflected in Box 3 will report the capital gains that are already included in the taxable amount reported in Box 2a of the form. The following instructions will ensure the capital gains amount is taxed at the lower rate it is […]
All 50 States, Washington D.C., and five U.S. territories had an ENERGY STAR Appliance Rebate program in 2010. A few states still have active programs. For specific information for each state, go to the ENERGY STAR Rebate Finder webpage. For information on residential energy credits, go to our Energy Star Federal Tax Credits for Energy Efficiency FAQ. […]
For tax years 2018 – 2025, the following occupations can take this deduction: Armed Forces reservist Qualified performing artist Fee-basis state or local government official Employees with impairment-related work expenses To access the home office expenses section, go to our Form 2106 – Entering Unreimbursed Employee Expenses in Program FAQ. Related Links Business – Use […]
Per IRS Instructions for Form W-2, page 7: Instructions for Employee Box 10. This amount includes the total dependent care benefits that your employer paid to you or incurred on your behalf (including amounts from a section 125 (cafeteria) plan). Any amount over $5,000 is also included in box 1. Complete Form 2441, Child and […]
If you want to indicate that you can be claimed as a dependent on someone else’s return, go to our Entering in Program – Dependent on Other Return FAQ. Related Links Form 1098-T – Entering Education Credits and Deductions in Program
Form 1098-T should be sent for anyone who had education expenses or received scholarships, fellowships, or grants. If you, your spouse, or your dependent had education expenses and did not receive Form 1098-T, you may need to still report the amounts on the return. If your expenses are more than your scholarships, fellowships, and grants, you may […]
The amount of dependent care benefits you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse’s earned income, or $5,000 ($2,500 if married filing separately) Any […]
The Federal Tax Calculator is a powerful tool available in the TaxAct® program that helps customers perform “what-if” scenarios for future tax years. If you need help accessing the Tax Calculator, go to our Tax Calculator FAQ. Keep in mind that the Tax Calculator is a report for taxpayers to project their earnings and expenses […]
Excess housing allowance is generated when the housing allowance the clergy member received from the church or organization is more than the amount actually used to provide a home. If you need more information refer to IRS Publication 517 Social Security and Other Information for Members of the Clergy and Religious Workers. If you need […]
To enter the death of a taxpayer or spouse in the TaxAct® program, go to our Death of Taxpayer Prior to Filing Return FAQ. If both the taxpayer and spouse are entered as deceased, the TaxAct program will show the name and date of death for both at the top of the federal return. The representative […]
Your family may have received multiple Forms 1095-A Health Insurance Marketplace Statements. However, there are only certain instances in which the combined amounts from Column B of those forms should be transferred to the Monthly Calculation section (Lines 12-23) of Form 8962 Premium Tax Credit (PTC). Form 1095-A, Columns A and C will always be […]
You need to report your Form 1099-DIV ordinary and qualified dividends in the TaxAct program for the information to transfer to your Form 1040. To report your Form 1099-DIV and enter your ordinary and qualified dividends (if you need help reporting your Form 1099-DIV, go to our Form 1099-DIV – Entering Dividend Income in Program […]
If you receive a dividend income report without a payer’s identification number, enter the information in the TaxAct program as though you received a Form 1099-DIV Dividends and Distributions, but leave the Payer’s Federal Identification Number (FEIN) blank. This number is not required and the return will e-file without the number. The information required by […]
The Form 1099-INT Interest Income or Form 1099-OID Original Issue Discount you received will show the amount of any penalty you were charged. The TaxAct program will transfer the information to line 22 of Schedule 1 (Form 1040) Additional Income and Adjustments to Income after you report it on Form 1099-INT or Form 1099-OID. To […]
If you claimed the First-time Homebuyer Credit, there are certain situations (e.g. if the home ceases to be your main residence within a three-year period following the date of purchase) in which you may need to repay the credit in full. To access repayment of first-time homebuyer credit in the TaxAct program, go to our […]
The TaxAct® program will not always calculate all the possible preference items from the list on Form 6251 Alternative Minimum Tax—Individuals. Checking or unchecking certain boxes will affect the calculations on Form 6251. To access Form 6251, go to our Form 6251 – Alternative Minimum Tax – AMT FAQ. Note that any link in the information above […]
If you are completing the parents’ return, DO NOT enter the information for Form 8615 Tax for Certain Children Who Have Unearned Income but DO complete Form 8814 Parents’ Election To Report Child’s Interest and Dividends. To enter information for the child’s return (Form 8615): From within your TaxAct return (Online or Desktop), click Federal […]
Per IRS Publication 936: Home mortgage interest. You can deduct home mortgage interest on the first $750,000 ($375,000 if married filing separately) of indebtedness. However, higher limitations ($1 million ($500,000 if married filing separately)) apply if you are deducting mortgage interest from indebtedness incurred before December 16, 2017. The TaxAct® program does not calculate for […]
Per IRS Publication 936, page 4: Late payment charge on mortgage payment. You can deduct as home mortgage interest a late payment charge if it wasn’t for a specific service performed in connection with your mortgage loan. To enter home mortgage interest in the TaxAct program, go to our Form 1098 – Entering in Program […]
A qualified tuition program (also known as a 529 plan) is a program set up to allow you to either prepay or contribute to an account established for paying a student’s qualified education expenses at an eligible educational institution. Your state government or eligible educational institution can tell you whether or not they participate in […]
You can elect to have someone of your choosing discuss your federal tax return with the IRS by completing the Third Party Designee section. To enter the Third Party Designee in the TaxAct® program: From within your TaxAct return (Online or Desktop), click Federal (on smaller devices, click in the top left corner of your […]
You can report Form 1099-SA Distributions From an HSA, Archer MSA, or Medicare Advantage MSA two different ways in the TaxAct program depending on where the distribution is from. To report or edit distributions from an HSA, go to our Form 1099-SA – Distributions from an HSA FAQ. To report or edit distributions from an Archer MSA […]
Identity theft occurs when someone uses your personal information to file a fraudulent tax return. Usually, the tax return is filed with your name, Social Security Number (SSN), and other identifying information in an attempt to obtain a fraudulent refund. Be alert to possible identity theft if you receive an IRS notice or letter that […]
Before you file your current year’s tax return, you should make sure you have all necessary documents including Form W-2 Wage and Tax Statement. You should receive a Form W-2 from each of your employers. Employers have until January 31, 2025, to send you a 2024 Form W-2 earnings statement. If you haven’t received your W-2, […]
Although it is possible to prepare a preliminary tax return based on your final pay stub for the year, your pay stub is not the official IRS-recognized document for your income. Taxpayers should not use their final pay stub, a similar substitute form, Form 4852, or Form 1099-R to file their income tax return prior to the receipt […]
Below you will find information to help you determine if you are eligible to file your tax return with the filing status of Head of Household. If necessary, review IRS Publication 17 Your Federal Income Tax (For Individuals) for additional details before making a final determination. You can also go to the IRS Interactive Tax […]
Form W-2C Corrected Wage and Tax Statement is issued by an employer if they discover they made a mistake on Form W-2. In TaxAct, you enter your wage information the same way whether you receive Form W-2 or Form W-2C. If you need help reporting the corrected W-2, read our article Form W-2 – Entering in Program. If […]
Your basis is generally the cost of the investment less any prior nondividend distributions received. Once you enter the basis in TaxAct, the program will determine if there is a gain to report and it will report it on Form 8949 Sales and Other Dispositions of Capital Assets. The most common kinds of distributions are: […]
“Active Participation” and “Passive (Material Participation)” are two separate classifications. Per IRS Publication 925 Passive Activity and At-Risk Rules, page 3: There are two kinds of passive activities. Trade or business activities in which you don’t materially participate during the year Rental activities, even if you do materially participate in them, unless you’re a real estate professional. […]
If you received Form 1099-C Cancellation of Debt and are eligible to exclude a canceled debt from your income because of any of the following, file Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment) with your return. Note: If you didn’t receive a Form 1099-C from the lender, you probably don’t have canceled debt […]
Per IRS Publication 559 Survivors, Executors, and Administrators, page 25: The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts aren’t taxable gifts. Gifts, excluding gifts of future interests, that aren’t more than the annual exclusion for the calendar year. Tuition or medical expenses […]
Code “P” indicates that the taxpayer contributed more than allowed to a 401k, IRA, etc. through payroll withholding. Excess contributions must be included as income for the year in which the contributions were made. If the excess contributions haven’t already been claimed in that year, the return will need to be amended to include the […]
In the United States, federal taxes apply to workers no matter where they live. State taxes, however, can vary — especially for workers who live and work in different states. Generally, if you live in one state but work in another, you must file an income tax return in both states. This is because withholding […]
Your share of sales proceeds (generally reported on Form 1099-S Proceeds From Real Estate Transactions) from the sale of an inherited home should be reported on Schedule D (Form 1040) Capital Gains and Losses in the Investment Income section of TaxAct. Enter “Inherited” as the date the property was acquired, then enter the cost basis, […]
The information below will help you determine if Short Term Disability payments you received are taxable income on your return. Per IRS Publication 525 Taxable and Nontaxable Income: Sickness and Injury Benefits In most cases, you must report as income any amount you receive for personal injury or sickness through an accident or health plan […]
Generally, Code 2 is reflected on the Form 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. received from the payer of the distribution for a Roth IRA conversion, where a Traditional IRA is converted to a Roth IRA. Per IRS Publication 590-A Contributions to Individual Retirement Arrangements (IRAs), on page […]
Tax Reform Update: Employee business expenses can be claimed only by Armed Forces reservists, qualified performing artists, fee-basis state or local government officials, and employees with impairment-related work expenses. Form W-2 Wage and Tax Statement, Box 14, can be used by the employer to give other information to an employee. If you have an amount in Box […]
Per IRS Publication 17 Your Federal Income Tax, page 22: Married Filing Separately You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return. Special […]
Per IRS Instructions for Schedule D Capital Gains and Losses, page D-2: Sale of Your Home You may not need to report the sale or exchange of your main home. If you must report it, complete Form 8949 before Schedule D. Report the sale or exchange of your main home on Form 8949 if: You […]
The EIC is based on several factors such as age, earned income, adjusted gross income, filing status, whether the taxpayer had no qualifying child, had one qualifying child, or had two or more qualifying children, etc. The EIC worksheets and tables can be accessed on IRS Instruction 1040 1040 and 1040-SR Instructions, pages 46-56. You can […]
Financial institutions with which you do business are required to send you a Form 1099-INT: Interest Income if you earned from them more than $10 of interest over the year. Even if you haven’t received a Form 1099-INT, or if you’ve earned interest of $10 or less over the year, you’ll still need to report […]
Until you sell stocks acquired under an Incentive Stock Option (ISO), there is nothing to report as a capital gain or loss. The following information is useful if you still hold the stock at the end of the year after it has been exercised, or for the year you sell the stock. Per IRS Publication […]
If your employer withheld too much Social Security tax in Box 4 of your W-2 form, or withheld too much Medicare tax in Box 6 of your W-2 form, you’ll need to contact your employer for a refund of the excess FICA taxes withheld. Excess social security withholding occurs when Box 4 is more than […]
The original conversion from a Traditional IRA to a Roth IRA must be completed within 60 days after the end of the tax year. A distribution from an IRA is taxable in the year of distribution unless it is rolled over (or converted to a Roth IRA) within 60 days. The distribution from the IRA […]
To qualify for the Section 179 deduction, your property must have been acquired for use in your trade or business. Property acquired only for the production of income, such as investment property or rental property (if renting property is not your trade or business), and property that produces royalties do not qualify. Special qualified properties […]
The IRS has a Business Rule, or rejection code, that will reject a return with wages in Box 16 of Form W-2: Wage and Tax Statement, if either the state abbreviation or state ID field contains incorrect data. This error often appears if you’ve entered only one or more zeroes into either of these fields. TaxAct does not recognize […]
Form 5498 IRA Contribution Information is information for your personal records and is not required to prepare your tax return. Taxpayers should retain this information for their personal records, but there are no tax consequences to the taxpayer until the funds are distributed from the account. When distributions are made, they are then reported on […]
If your dependent receives a Form W-2, you cannot report it on your tax return. If your dependent is required to file taxes, they’ll need to report the Form W-2 on their own tax return. If you don’t know if your dependent needs to file a tax return, consult the IRS’s Do I Need to File a […]
Per IRS Publication 505 Tax Withholding and Estimated Tax, page 7: Exemption From Withholding If you claim exemption from withholding, your employer won’t withhold federal income tax from your wages. The exemption applies only to income tax, not to social security or Medicare tax. You can claim exemption from withholding for 2022 only if both […]
If you cannot get a W-2 from your employer, you can file Form 4852 Substitute for Form W-2, Wage and Tax Statement. TaxAct does not provide Form 4852, so you’ll need to print a hard copy of your return, attach Form 4852, and mail it to the IRS. To submit a substitute for Form W-2: Download and […]
A Flexible Spending Account (FSA) allows employees to be reimbursed for medical or dependent care benefits from an account they set up with pretax dollars. Salary-reduction contributions to an FSA aren’t included in taxable wages reported on Form W-2 Wage and Tax Statement, and are not eligible as tax deductions. Under a typical FSA, you […]
Investors who sold stocks, bonds, options, or other securities will have to prepare Form 8949 Sales and Other Dispositions of Capital Assets and Schedule D (Form 1040) Capital Gains and Losses for capital gains and losses, and file them along with Form 1040 U.S. Individual Income Tax Return. In the TaxAct program, you need to […]
If you state that all your tax-exempt interest is accrued tax-exempt interest, you are essentially saying that none of the interest is attributable to you. When you buy a bond between interest payment dates, there is interest that has accrued since the last interest payment date. The price you pay for the bond will include […]
Form 3922 Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c) is for informational purposes only and isn’t entered into your return. Keep the form for your records because you’ll need the information when you sell, assign, or transfer the stock. When you dispose of the stock, you’ll receive Form 1099-B […]
Per IRS Publication 525 Taxable and Nontaxable Income, page 23: Life Insurance Proceeds Life insurance proceeds paid to you because of the death of the insured person aren’t taxable unless the policy was turned over to you for a price. This is true even if the proceeds were paid under an accident or health insurance […]
Employees and sole proprietors filing Schedule C (Form 1040) Profit or Loss From Business can use either the standard mileage method or actual auto expenses. Corporate and partnership employers can’t use the standard mileage method to compute the auto expense for company-owned cars. Actual auto expenses are deducted at the partnership level. However, employers can […]
If the taxpayer has rolled over all or a portion of a distribution from a retirement account to another retirement account, the word “ROLLOVER” will print on Form 1040 U.S. Individual Income Tax Return. If the distribution is from an IRA: The text “ROLLOVER” will print in the left-hand margin by Line 4a. The total […]
You can claim both the credit and the exclusion for expenses of adopting an eligible child. Qualified adoption expenses are reasonable and necessary expenses directly related to, and for the principal purpose of, the legal adoption of an eligible child. Qualified adoption expenses include: Adoption fees Attorney fees Court costs Travel expenses (including meals and […]
Your deduction for a donated car, boat, or airplane is generally limited to the gross proceeds from its sale by the qualified organization. This rule applies if the claimed value of the donated vehicle is more than $500. In certain cases, you can deduct the vehicle’s Fair Market Value (FMV). For details, see IRS Publication […]
Form 8396 Mortgage Interest Credit is separate from Form 1098 Mortgage Interest Statement you receive from your bank or financial institution for mortgage interest paid. Form 8396 is for holders of Qualified Mortgage Credit Certificates (MCC) issued by state or local governmental units or agencies; the certificate credit rate is shown on the certificate. To […]
When you import your prior year tax return into the current year return, itemized deduction amounts will transfer to the Prior Year Comparison report, even if you used the standard deduction in the prior year. When you enter itemized deductions in the current year return, the amounts will also appear on the Prior Year Comparison report (in […]
Qualified Tuition Programs (QTPs) are different from Coverdell Education Savings Accounts (ESAs). QTPs include state (529 plans) and private plans. With QTPs, ownership remains with the contributor rather than passing to the designated beneficiary. In other words, a taxpayer can own the QTP, have distributions made to them, and report Form 1099-Q Payments From Qualified […]
Generally, you can claim the American Opportunity Credit if: You pay qualified higher education expenses, You pay the education expenses for an eligible student, and The eligible student is yourself, your spouse, or a dependent you claim on your tax return. Eligible Student To be eligible for the American Opportunity Credit, the student must have […]
TaxAct® will determine which education benefit is most advantageous for you based on the data entered on your return (such as income, filing status, amount of qualified expenses, etc.). See Education Credits & Deductions – Enter, Review, Modify for instructions on how to enter or modify your education information in TaxAct, or to compare the […]
You may be able to claim the child and dependent care credit if you pay for the care of a qualifying individual so you can work or look for work. If you are married, both spouses must have earned income to qualify for the credit. Exceptions apply to disabled or student spouses. The amount of […]
Either you, your dependent, or both of you may enter Form 1098-T Tuition Statement and other education information in TaxAct®. If you claim a dependent, only you can claim the education credit. Therefore, you would enter Form 1098-T and the dependent’s other education information in your return. If you do not claim a dependent, the […]
IRS Publication 555 Community Property outlines the requirements for filing the federal tax return for married filing separate spouses, California or Washington same-sex spouses, or registered domestic partners (RDPs) domiciled in Nevada, Washington, or California. See the publication for additional details and definitions. TaxAct supports the completion of these returns so they can be e-filed. […]
The IRS does not provide instructions for what to enter in the “Occupation” field, which appears at the bottom of your federal tax return, to the right of the signature lines. Enter whichever term best reflects your current occupation. Terms such as Student, Laborer, Self-Employed, Homemaker, Unemployed, and Retired are fully acceptable. The contents of the “Occupation” field do […]
