Tax Tips Archives - JT Tax Services

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Adoption Tax Credit: What You Need To Know

April 3, 2024

The Adoption Tax Credit serves as a valuable help with some of the financial aspects of adoption. In this blog post, we will explore the Adoption Tax Credit, its benefits, eligibility criteria, and essential information that prospective adoptive parents need to know.

Understanding the Adoption Tax Credit

The Adoption Tax Credit is a non-refundable tax credit provided by the Internal Revenue Service (IRS) to assist adoptive parents with the expenses incurred during the adoption process.

This credit helps offset qualifying adoption expenses, making adoption more accessible and affordable for families.

Note that taxpayers who adopt their spouse’s child can’t claim this credit.

Benefits of the Adoption Tax Credit

One of the primary benefits of the Adoption Tax Credit is its financial assistance to adoptive parents.

It allows eligible families to claim a tax credit for qualified adoption expenses, including adoption fees, court costs, attorney fees, travel expenses, and other related costs.

The credit helps reduce the financial barriers associated with adoption and encourages more families to consider adoption as a viable option for expanding their families.

Eligibility Criteria for the Adoption Tax Credit

To qualify for the Adoption Tax Credit, adoptive parents must meet certain criteria set forth by the IRS. Some key eligibility requirements include:

The adoption must be finalized.
The child must be under the age of 18 or have a physical, mental, or emotional disability.
Qualifying adoption expenses include reasonable and necessary adoption fees, court costs, legal fees, and adoption-related travel expenses, among others.
The adoptive parents’ modified adjusted gross income must be within the specified limits to claim the full credit.

It is essential for adoptive parents to review the specific guidelines and requirements outlined by the IRS to determine their eligibility for the Adoption Tax Credit.

Claiming the Adoption Tax Credit

Adoptive parents can claim the Adoption Tax Credit by filing IRS Form 8839, Qualified Adoption Expenses, along with their federal tax return. The form requires detailed information about the adoption, the child, and the qualified adoption expenses incurred. It is crucial to maintain accurate records and documentation of all adoption-related expenses to support the claim for the tax credit.

Wrapping It Up

The Adoption Tax Credit provides valuable financial support to adoptive parents, making the adoption process more feasible and affordable.

By understanding the benefits, eligibility criteria, and claiming process of the Adoption Tax Credit, prospective adoptive parents can navigate the financial aspects of adoption with confidence.

If you are considering adoption or in the midst of the adoption process, exploring the Adoption Tax Credit can help you effectively deal with some of the financial concerns associated with adoption.

JT Tax Services: Taxes Made Easy

We are located in Oxnard, California, contact us today by email (info@jttaxservices.com), telephone (805-984-8890), or through our social media accounts on Facebook, Twitter, and LinkedIn to schedule a consultation or to learn more about our services. Feel free to contact us today!

What Is Form 1099-K?

By: UNIKO Media Group

November 22, 2023

As a business owner, you must keep yourself updated about tax obligations. One of these obligations is to file annual tax returns and issue necessary forms to your contractors and employees. A crucial form in this regard is Form 1099-K. But do you know what this form is and how it works? In this blog post, we will guide you through the basics of Form 1099-K.

What is Form 1099-K?

Form 1099-K is a tax form issued by third-party payment processors to merchants, sellers, and other businesses that receive card payments such as credit and debit card transactions.

The form lists the total dollar amount of all transactions in a given year, and businesses use it to report their income to the Internal Revenue Service (IRS).

In short, Form 1099-K is used to track electronic payment transactions.

Who Files Form 1099-K?

If your business accepts digital payments exceeding $20,000 and does over 200 transactions, you must issue a Form 1099-K. Third-party transaction processors such as PayPal, Stripe or other payment vendors issue 1099-K on the IRS’s behalf.

Note that even if the third-party processor has not reported this, you as business owner will be still responsible for issuing a 1099-K.

What Information is Required?

Form 1099-K requires certain basic information about the business and its transactions. Commonly asked questions such as “What type of payment was accepted?”, “what is the total exchange of money spent?”, “what is the name and address of the payee?” must be included in the form. It’s up to the business owner to ensure that the information is accurate and complete.

What Happens if You Fail To File Form 1099-K

If a business owner fails to file or issue 1099-K, the IRS imposes penalties and interest. Remember that it is the responsibility of the business owner to keep accurate records of their earnings and follow through on their tax requirements to avoid any unwarranted penalties.

Wrapping It Up

As a business owner, it is crucial to be aware of your tax filing duties and follow them diligently. Knowing about Form 1099-K and its requirements will assist you in avoiding penalties and ensuring that your tax obligations are met in a timely, responsible, and cost-efficient manner. Familiarize yourself with the 1099-K form and stay ahead of the game, to save yourself from any predicaments.

JT Tax Services: Taxes Made Easy

Closeup of a man talking on the phone illustrates blog "Scammers Impersonating the IRS on the Phone: What You Need To Know"

What You Need To Know About Scammers Impersonating the IRS on the Phone

By: UNIKO Media Group

September 28, 2023

The Internal Revenue Service (IRS) is the federal agency responsible for administering and enforcing the nation’s tax laws. Unfortunately, scammers and fraudsters have found a way to exploit the agency’s reputation and use it to perpetrate fraud schemes. Here’s what you need to know about this scheme.

How IRS Phone Scams Work

Scammers use different tactics to defraud taxpayers, but the most common method is to mimic the IRS. They call unsuspecting victims, often telling them they owe back taxes or claiming there is an issue with their tax return.

The scammer then demands immediate payment or threatens legal action, including arrest, deportation, or revocation of their driver’s license.

They may also ask for personal or financial information to “verify” the target’s identity or eligibility for a refund. These calls often use scare tactics or urgency to get the victim to act quickly without verifying the validity of the caller or the information provided.

How To Spot an IRS Phone Scam

Knowing the red flags of a scam call can help you avoid becoming a victim. Some common signs of an IRS phone scam include:

A caller who demands immediate payment over the phone or threatens legal action.
A caller who uses aggressive or abusive language, or speaks in a robotic or scripted tone.
A caller who claims to be from the IRS but doesn’t know your name or other personal details.
A caller who asks for sensitive information, such as your Social Security number, bank account number, or credit card information.
A caller who asks you to transfer money or buy gift cards or other prepaid cards.

What To Do if You Receive an IRS Phone Scam Call

If you receive a call from someone who claims to be from the IRS and you suspect it’s a fraudulent call, don’t panic or engage with the caller. Here are some steps you can take to protect yourself:

Hang up immediately
Don’t give out any personal information
Don’t make any payment or transfer money
If possible, note the caller ID information or the number the caller used
Report the call to the IRS and the Federal Trade Commission (FTC)
How to report an IRS phone scam

Reporting IRS phone scams is essential to help law enforcement catch the perpetrators and prevent them from defrauding others.

If you think you’ve been targeted by an IRS phone scam, report it to the IRS by email at phishing@irs.gov (Subject: IRS Phone Scam). Make sure to include the number of the caller, any phone number you are instructed to call, and a brief description of the communication.

JT Tax Services: Taxes Made Easy

When it comes to taxes, knowledge is power. That’s why at At JT Tax Services, we give you the peace of mind that comes with knowing that you are working with experienced professionals with in-depth knowledge of all applicable tax laws and regulations.We are located in Oxnard, California, contact us today by email (info@jttaxservices.com), telephone (805-984-8890), or through our social media accounts on Facebook, Twitter, and LinkedIn to schedule a consultation or to learn more about our services. Feel free to contact us today!

What Is a C Corporation and How Does It Work?

By: UNIKO Media Group

September 8, 2023

When starting a new business, it’s important to choose the right structure for your company. One popular option is a C Corporation. But what are they, exactly? Read on to learn more about C corporations, from a basic definition to their pros and cons.

Definition of a C Corporation

A C Corporation is a type of business structure in which the company is owned by shareholders who have limited liability for the company’s debts and obligations.

The corporation operates as a separate legal entity that can conduct business, own assets, and enter into contracts.

This means that the corporation can sue and be sued, enter into agreements, and pay taxes separately from its owners.

How a C Corporation Works

A C Corporation is managed by a board of directors who are elected by the shareholders.

The board of directors is responsible for making major business decisions, such as choosing the company’s officers, approving budgets, and setting corporate policies. The officers of the corporation, such as the CEO and CFO, are responsible for the day-to-day operations of the business.

C Corporations issue stock to shareholders, which represents their ownership in the business. Shareholders are not involved in the day-to-day operations of the business and do not have liability for the debts and obligations of the corporation.

Advantages of a C Corporation

One of the main advantages of a C Corporation is that it offers limited liability to its shareholders.

This means that the personal assets of the shareholders are protected from the corporation’s debts and obligations. Additionally, the corporation can raise capital by issuing stock to investors, which can help the business grow and expand.

Another advantage of a C Corporation is that it can deduct certain business expenses, such as salaries, benefits, and property taxes. This can help reduce the company’s tax liability and increase its profits.

Disadvantages of a C Corporation

One of the main disadvantages of a C Corporation is that it is subject to double taxation. This means that the corporation pays taxes on its profits, and then the shareholders pay taxes on any dividends they receive. This can result in a higher overall tax liability for the company and its shareholders.

Another disadvantage of a C Corporation is that it requires more formalities and paperwork than other business structures, such as a sole proprietorship or partnership. This can result in higher administrative costs and more time spent on compliance.

JT Tax Services: Taxes Made Easy

Scammers are always on the lookout for new victims. Luckily, when it comes to tax scams, there’s a simple step that will help you avoid most of them. Keep reading to learn more.

The Simple Step That Will Help You Avoid Most Tax Scams

By: UNIKO Media Group

August 25, 2021

Scammers are always on the lookout for new victims. Luckily, when it comes to tax scams, there’s a simple step that will help you avoid most of them. Keep reading to learn more.

How to Avoid Most Tax Scams

As the old saying goes, knowledge is power. So it’s no coincidence that knowledge is the best way to prevent falling prey to a tax scam.

Knowing how the IRS interacts with taxpayers will help you notice more easily the odd behaviors that are the hallmark of scammers. Remember:

The IRS doesn’t normally initiate contact with taxpayers by email. Don’t reply to emails from people claiming to represent the IRS. And remember oficial IRS email addresses end with “irs.gov”
The IRS will never get in touch with you by text message or social media. If you receive this tye of message, don’t respond; someone is trying to scam you.
Private debt collectos may contact taxpayers for the collection of certain tax liablities, but only after the taxpayer has received a written notice.
IRS officers and agents may visit the home or place of business to discuss tax liabilities or delinquent tax returns. However, remember that payments will never be requested to a source other that the Treasury Department.
If you are visited by an IRS representative, don’t forget to ask for credentials. IRS officers and agents can provide two types of credentials: a pocket commission and a Personal Identity Verification Credential.

Knowing this information will help you avoid most tax scams. In case you have further questions, or need assistance navigating any process related to tax collection or tax liabilities, don’t hesitate to contact a tax expert for more information.

Contact the Experts at JT Tax Services

Do you need help preparing your taxes? Did you receive a letter from the IRS? JT Tax Services is here to help! We give you the peace of mind that comes with knowing that you are limiting your liability while staying compliant with all regulations.

We are located in Oxnard, California. Contact us today by email (info@jttaxservices.com), telephone (805-984-8890), or through our social media accounts on Facebook, Twitter, and LinkedIn to schedule a consultation or to learn more about our services.

Scammers Are Targeting Immigrants: Here’s How to Protect Yourself and Others

By: UNIKO Media Group

August 6, 2021

Scammers are always looking for ways to take advantage of vulnerable people, including senior citizens and immigrants. Keep reading to learn how to protect yourself or other people you know from this malicious strategy.

What You Need to Know

The IRS has warned that scammers have chosen immigrants as some of their favorite victims.

According to the agency, this type of scam usually occurs with a phone call from the criminals. In these calls, scammers threaten immigrants with deportation, revocation of their driver’s license, or jail if they don’t pay a bogus tax bill.

Ignore these intimidation tactics. Don’t engage the scammers in any way, as they may try to get you to reveal personal information. Remember that the IRS will never make threats over the phone or request that a specific payment method (such as gift cards) be used to pay your taxes.

It’s worth remembering that in most occasions, when the IRS wants to contact you, they will do it by mail and not by phone.

How to Protect Yourself and Others

It bears repeating: the IRS will never make threats in their communications with you. By keeping in mind this simple rule, you will be able to prevent scammers from intimidating you and parting you with your money.

Another way to protect you is to take advantage of the multilingual resources that the IRS keeps constantly updated. The agency offers content in many languages other than English, including Spanish, Chinese simplified and traditional, Vietnamese, Korean, and Russian.

If you know someone who might be a potential victim of scammers, don’t hesitate to share this information with them. You could sabe them money and many future headaches.

Additionally, you can always turn to a tax profesional you trust when you have questions. The tax experts at JT Taxes stand ready to offer the knowledgeable assistance you need to file and pay your taxes with confidence.

Contact the Experts at JT Tax Services

Do you need help preparing your taxes? Do you have questions about the Child Tax Credit? At JT Tax Services, we give you the peace of mind that comes with knowing that you are limiting your liability while staying compliant with all regulations.

Remember: You Must Also Pay Taxes on Income From Hobby Activities

By: UNIKO Media Group

July 7, 2021

Whether it’s knitting, fishing, or reading books, we all need a hobby. However, if your hobby activity is a source of income, then you should make sure to report it on your tax return.

Paying Taxes on Income From Hobby Activities

Let’s begin with some basic definitions. A hobby is an activity you pursue for pure enjoyment, without intentions of making a profit.

While this seems like a clear-cut definition, things are not always so simple. For example, it happens often that people begin selling the products of their hobby. Do they have to report that income on their tax return?

The answer is yes. If you receive income from an activity you carry out with no intention of making a profit, then you should report it on your tax return, specifically on Schedule 1, Form 1040.

On the other hand, any income from for-profit activities should be reported on Schedule C.

When determining whether an activity is a hobby or a for-profit business, the following factors are taken into account:

Whether you carry out that activity like a business, and maintain complete and accurate books and records.
Whether the time and effort you put into the activity shows you intend to make it profitable.
Whether you depend on income from the activity for your livelihood.
Whether any losses are due to circumstances beyond your control or are normal for the startup phase of their type of business.
Whether you change the way you carry out that activity to improve profitability.
Whether you have the knowledge needed to carry out the activity as a successful business.
Whether you were successful in making a profit in similar activities in the past.
Whether the activity makes a profit in some years and how much profit it makes.
Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

If you find it difficult to figure out whether an activity is a hobby or a business, don’t hesitate to contact a tax professional. They will help you figure out the tax strategy that better fits your unique situation.

Contact the Experts at JT Tax Services

Do you need help preparing your taxes? At JT Tax Services, we give you the peace of mind that comes with knowing that you are limiting your liability while staying compliant with all regulations.

Remember: Tax Season Is Almost Here!

By: UNIKO Media Group

February 3, 2021

Tax season begins Friday, February 12! This means that starting from that date, the IRS will accept and process 2020 tax returns. Here are some tips you should keep in mind to ensure that your tax filing experience is smooth, agile, and stress-free.

General Tips

The IRS recommends that all taxpayers consider these tips as they prepare their tax return:

Combining electronic filing with direct deposit ensures that you get your refund as soon as possible.
Don’t count on receiving your refund by a specific date, especially if you plan to use that money to pay bills.
Remember that unemployment compensation is taxable

The Documents You Should Gather

This is the right time to get your tax records in order, so make sure to have all the documents that apply among the following:

Any receipts, canceled checks, and other documents that support an item on your return.
Forms W-2, Wage and Tax Statement
Form 1099-MISC, Miscellaneous Income
Form 1099-INT, Interest Income
Form 1099-NEC, Nonemployee Compensation
Form 1099-G, Certain Government Payments; like unemployment compensation or state tax refund
Form 1095-A, Health Insurance Marketplace Statements

Other Important Tax Dates to Keep in Mind

In addition to February 12, other important dates that taxpayers should keep in mind during 2021 include:

Thursday, April 15. Due date for filing 2020 tax returns or requesting extension of time to file.
Thursday, April 15. Due date for paying 2020 tax owed to avoid owing interest and penalties.
Friday, October 15. Due date to file for those requesting an extension on their 2020 tax returns.

More Tips About Taxes

Interested in learning more about taxes? Then you’ve come to the right place! Here are some previous posts you may find interesting.

Contact the Experts at JT Tax Services

At JT Tax Services, we give you the peace of mind that comes with knowing that you are limiting your liability while staying compliant with all regulations.

We are located in Oxnard, California. Contact us today by email (info@jttaxservices.com), telephone, or through our social media accounts on Facebook, Twitter, and LinkedIn to schedule a consultation or to learn more about our services.

This Important Tax Deadline Is Less Than One Month Away

By: UNIKO Media Group

January 8, 2021

The year has just begun, but an important tax deadline is already less than one month away. If you are an employer, don’t forget that you should issue and file wage statements by Monday, February 1, 2021. Keep reading to discover what are the statements and forms you should keep in mind.

Form W-2

Companies should complete and file a W-2 form for every employee to whom they pay a salary. Don’t forget that you should also send your employees copies of their W-2 forms by February 1, 2021, so that they can file their taxes before the due date (April 15, 2021).

Form W-3

This form (official name: Transmittal of Wages and Tax Statements) is a detailed summary of all the W-2 forms filed by your company. This form is used by the Social Security Administration (SSA) to keep track of the salaries, commissions, tips, and other compensations that employees receive throughout the year.

Form 1099-MISC

File a 1099-MISC Form for every person to whom you paid the following during the last year:

At least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest.
At least $600 in:
- Prizes and awards.
- Other income payments.
- Medical and health care payments.
- Crop insurance proceeds.
- Cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish.
- Generally, the cash paid from a notional principal contract to an individual, partnership, or estate.
- Payments to an attorney.
- Any fishing boat proceeds.

As is the case with Forms W-2, you should also send Forms 1099-MISC to recipients before February 1, 2021.

Form 1099-NEC

You should file Form 1099-NEC, Nonemployee Compensation, if all the following statements apply:

You made the payment to a person who is not your employee
The payment was for services in the course of your trade or business
You made the payment to an individual, a partnership, an estate, or a corporation
Payments were at least $600 during the year

Also in this case, keep in mind that recipients of Forms 1099-NEC should receive their copies by February 1, 2021.

More Tips About Taxes

Do you want to learn more about taxes and Economic Impact Payments? Here are some previous posts you may find interesting.

Contact the Experts at JT Tax Services

At JT Tax Services we have the experience, the knowledge, and the drive to assist you in the preparation of your taxes. We give you the peace of mind that comes with knowing that you are limiting your liability while staying compliant with all regulations.

The IRS Begins Delivering Second Round of Economic Impact Payments

By: UNIKO Media Group

December 30, 2020

The Internal Revenue Service (IRS) announced that it has begun delivering a second round of Economic Impact Payments (EIP) as part of the Coronavirus Response and Relief Supplemental Appropriations Act of 2021.

The agency began sending payments through direct deposit yesterday (Tuesday), and it will begin sending paper checks today.

Do I Have to Take Any Actions to Receive my Economic Impact Payment?

Economic Impact Payments are automatic. This means that no action is needed on the part of recipients. The IRS has requested taxpayers not to contact financial institutions or the IRS itself with payment timing questions.

Keep in mind that the delivery method may be different for the second stimulus payment. If you received the previous Economic Impact Payment, but don’t receive a direct deposit, then you will receive a check or a debit card.

On the other hand, if you were eligible but didn’t receive either the first or the second payment, you will be able to claim it when you file your taxes for 2020.

How Much is the Second Stimulus Check?

The amounts of the second stimulus payment will be determined as follows: up to $600 for individuals; up to $1,200 for married couples filing jointly: and up to $600 for every qualifying child

Generally, if you have adjusted gross income for 2019 up to $75,000 for individuals and up to $150,000 for married couples filing jointly and surviving spouses, you will receive the full amount of the second payment.

How Can I Check the Status of My EIP?

You will be able to check the status of your payment using the online tool Get my Payment. The service is offline at the moment as the information is being updated. However, the IRS expects that the tool will be available again shortly.

More Tips About Taxes

Do you want to learn more about taxes and Economic Impact Payments? Here are some previous posts you may find interesting.

Contact the Experts at JT Tax Services

We are located in Oxnard, California. Contact us today by email, telephone, or through our social media accounts on Facebook, Twitter, and LinkedIn to learn more about our services.