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Filing Taxes

Same-Sex Marriage & Filing Taxes: What You Need To Know

Same-Sex Marriage & Filing Taxes: What You Need To Know

By on Feb 28, 2017 in Consultation, Filing Taxes, Tax Preparation, Tax Tips | 0 comments

It used to be that same-sex couples could only file separate tax returns, and if they had children, only one of them could claim a child, and only one could file Head of Household. In a sense, same-sex couples had to live like they were roommates when it came to filing their annual taxes. They had to do this because they weren’t allowed to get married, because it wasn’t legal. This all changed in 2015 when the Supreme Court ruled on June 26 that same-sex marriage is now legal. After that, a surge of marriages was filed, but what some newlyweds didn’t bother to take into account is how to take care of their annual tax filings. It could be said that there may have been some confusion for the following tax year because depending on when you marry, you may either have to file separately or married filing jointly. The Supreme Court ruling requires that all legally married same sex couples are to file their annual taxes as married filing jointly or married filing separately, just like anyone else. The Good News and the Bad News It can be said that there is a slight disadvantage for some same-sex couples who must now combine their income. A larger annual household income will boost you into a higher tax bracket causing you to pay more in taxes. However, there is the benefit of what’s called the “marriage bonus”. According to Investopedia, the marriage bonus benefits couples who bring in more income than the other, therefore, have the advantage of not paying so much more in taxes. In fact, they might end up paying less depending on what the combined income is for that household. Two Ways to File As aforementioned, same-sex married couples can file two ways: married filing jointly and married filing separately. Married Filing Jointly – This may be the better way to file in order to get a tax break. If either of you are in school, you’ll be able to take advantage of the student loan interest or tuition deduction. If you file married filing separately, you will not be able to do this according to Investopedia. If a couple is adopting a child, then,...

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Things to Know About Claiming Your Boyfriend / Girlfriend As Dependent On Taxes

Things to Know About Claiming Your Boyfriend / Girlfriend As Dependent On Taxes

By on Feb 23, 2017 in Consultation, Filing Taxes, Tax Tips, Taxes | 0 comments

As you think about completing your tax return this year, you may be wondering if there are additional items that you might be able to deduct.  It is always helpful to think about things in your life that may have changed over the year that could have positive or negative tax implications.  If you had a child, went back to school, or purchased a house, you could claim new deductions or credits on your annual return. So, what if you are in a serious relationship in which your girlfriend or boyfriend lives with you?  Can you claim them as a dependent on your taxes?  This is actually possible in some instances, but as with most things related to taxes, you should be careful and make sure that you follow specific guidelines set by the Internal Revenue Service (IRS). Criteria for Claiming Your Significant Other This Year In order to legally claim your boyfriend or girlfriend as a dependent on your annual tax return, the following criteria must be met: Your significant other must have lived with you for the entire calendar year (January through December). Your boyfriend or girlfriend must make less than the annual limit that the IRS sets. You should note that this limit can change. In 2016, the limit is $4,050 and can include any income that is subject to tax. You need to have paid more than ½ of your partner’s living expenses for the entire tax year that you claim your boyfriend/girlfriend. This calculation can be tricky, so you should be aware that you have to account for funds that your significant other receives from other sources.  If he/she also received support from their parents and that support exceeded the support provided by you, then you cannot claim them as a dependent. Two other important factors to note: You cannot claim a married person as your dependent if they are also filing a joint return with their spouse. You cannot claim a boyfriend/girlfriend as a dependent in states where “cohabitation” is illegal. You should check with your state laws to be sure that your state does not have this law on the books. Finding Reliable Tax Support The IRS website has a calculator that...

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Do I Really Have to File Taxes on Lottery Winnings?

Do I Really Have to File Taxes on Lottery Winnings?

By on Feb 19, 2017 in Filing Taxes | 0 comments

  If you are one of the fortunate lottery winners, then congratulations are certainly in order! It’s a part of your income that you may not have expected. But, nonetheless, it is part of your income, and in the United States of America, every taxpaying citizen is required to pay taxes on their annual income. So when it comes to lottery winnings, it’s not exactly free money after all! Handling Your Winnings A smart way to go about handling your lottery winnings is to deduct a percentage of your state taxes from the total and save it. This way, when tax season rolls around, you’ll have the money needed to pay taxes on winnings that may or may not be gone already! One of the biggest mistakes that lottery winners make is forgetting to take taxes into consideration. Don’t worry, it happens to the best of them. It’s not exactly about winning the lottery per-say, rather than coming into a great deal of money that you’re not used to managing. There’s a lot of responsibility to it. Handling money isn’t always about spending. Even though the media and society in general may portray it that way. After all, spending money is what helps our economy thrive! However, if the amount won is over hundreds of thousands of dollars, then even the most frivolous spender might find that kind of money challenging to get rid of and manage, not to mention the tax obligations behind it. Lottery Winning Woes The problem with managing lottery winnings is that the winners seldom track what they’ve spent. Between getting the dream car and home, and helping everyone with their hand out, the thought of acquiring a receipt might be far from the mind. However, it’s absolutely important to track your spendings because this is the thing that might help you lower your tax bill. There Is a Way! While you’re expected to pay taxes on your annual income, you’re actually required to pay taxes on your adjusted gross income (AGI). In order to get your AGI down, you need to deduct the total amount of taxable expenses. You won’t be able to write off everything you spend, but money spent toward charitable contributions...

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Should You File Your Taxes From Last Year If You Haven’t Yet?

Should You File Your Taxes From Last Year If You Haven’t Yet?

By on Sep 11, 2016 in Filing Taxes | 0 comments

Absolutely! The most common mistake that late filers make is putting off this kind of responsibility until the next tax season. While it’s most certainly your choice to do so, we highly advise against this. The sooner that you take action in addressing your tax responsibilities, the least likely it is that you’ll have to deal with tax debt. You Can Run, But You Can’t Hide! While some people may have think that they’ve gotten away with not filing their annual taxes, it’s only a matter of time before the Internal Revenue Service (IRS) finds out. It’s much better if you address these neglected filings before the IRS does. Putting them off only results in late penalty filings and if your annual tax filings states that you owe the IRS, then you’ll also be charged with late payments—and they are sometimes added on a daily basis! This is the main reason that you absolutely do not want to wait another second to file your annual taxes. There have been instances where people may have gone multiple years without submitting an annual filing. If you happen to be one of those people, we encourage you to swiftly take action to rectify this matter. There are a couple of ways you can take care of this error: Option #1: Call the IRS. You can call the IRS and explain your situation to them. Many people might be intimidated by this as if they might scold you or slap you on the hand, but that shouldn’t be the case. The IRS representatives are expected to handle all of their cases in a professional manner. If for some reason you do not feel that you are being treated fairly, you reserve the right to ask for another representative or even request to speak with their supervisor. It could be said that paying any type of fee or penalty might sting a little, so truthfully the only slap on the hand that you’ll get is the penalty itself! In some cases, depending on what type of IRS form you’re qualified to file with, the IRS representative might be able to calculate your delinquent filings and present you with the amount that you need to...

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Habits That Will Keep You Out of Tax Trouble

Habits That Will Keep You Out of Tax Trouble

By on Jul 19, 2016 in Filing Taxes | 0 comments

The early 90s rapper MC Hammer became famous off of his hit song, U Can’t Touch This, but the Internal Revenue Service (IRS) proved that they could! In November 21, 2011, the United States Government filed a lawsuit against the rapper for unpaid taxes during the years of 1996 and 1997. It is estimated that he owed over $800,000 in back taxes. Maybe he was too legit to quit? The real question is: What could MC Hammer have done differently to avoid his tax woes? Here, we give you a list of habits that you should practice in order to keep yourself out of tax trouble. Understand How Taxes Work People often get the concept that taxes are just the extra money that you are charged when you make a transaction, but people often do not know that there is just more than Sales Tax. You have the Payroll Tax, Income Tax, Capital Gains Tax, and a Property Tax. The Payroll Tax is collected out of your paycheck, and it contributes to the state that you live in as well as the federal government. (Did you know that Americans overpay the government by $945 million every year?) This is often refunded to you through your Income Tax. FILE! FILE! FILE! It’s important that you get into the rhythm of filing your taxes every single year. It’s important that the government knows your income. Trying to reduce your tax liability is not easy, almost impossible, but do not hide what you make. According to the United States government, that is considered Tax Evasion, and can be punishable up to 5 years in prison. You can read all about it here. Make An Arrangement If you cannot pay for the taxes that you owe, arrange to make a payment plan . This is the easy way and it’s the first step to assume the responsibility of paying back the taxes that you owe. This is crucial because it can establish credibility with the IRS. Do not be late when filing your tax return. You’ll avoid penalties this way. Then, consider the options: there is the IRS Direct Pay, extensions, monthly payment plans, and you can even compromise! Know How Much You...

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5 Ways to Get Your Tax Refund on Time

5 Ways to Get Your Tax Refund on Time

By on Jul 12, 2016 in Filing Taxes, Tax Refund | 0 comments

Sometimes, certain situations are out of our hands. However, if there’s something we can do to make sure that things go smoothly, like receiving our tax refund on time, then it’s our responsibility to make sure that as responsible taxpaying citizens, we’re doing everything on our part to make sure that happens. Unfortunately, there are some people who think that all they have to do once they receive their W2s is hire a tax preparer and wait 30 minutes before everything is processed. If you’re 20 years old, it might go down that way, but as you get older, more responsibilities come your way that sometimes affect your annual income, and you have to include this in your filings. When it comes to tax filings, there’s always proof of documentation needed to support your information. Oftentimes, this is where you may run into some problems. That’s why Success Tax Relief, a full service tax relief firm in LaPorte, Texas has proposed five ways that will help ensure you get your tax refund on time: Gather important documents ahead of time. By being proactive and getting all of your documents ahead of time, you’ll eliminate any wasted time spent on finding social security cards, marriage license, divorce papers, birth certificates and adoption papers. These types of documents often require a certain amount of processing time to re-acquire if for some reason you’ve lost or misplaced these things. If you wait until tax season to start gathering these documents and find that you’ll need to get new ones, this will delay the tax filing process. It could ultimately make you miss the deadline that could in turn, result in a late filing with penalties that could be deducted from your late filing. To avoid all of this, just make sure that you have all the important documents needed to file. Keep your previous tax filings organized. Every time you file taxes, the Internal Revenue Service (IRS) will want to know how much income you earned last year. This doesn’t have to be a complicated answer if you have your tax filing from the previous year. Whether it’s in a filing cabinet, filed electronically, in a flash drive, or in the cloud,...

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