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Questions tagged [income-tax]

This tag is to be used for any question pertaining to an individual's income taxes. If this tag is used, ideally a country-specific tag should also be specified, to indicate which region a question belongs to, as the answer may differ based on the country.

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83 votes
22 answers
28k views

Why would you ever turn down a raise in salary?

Related to a comment on this question: Is it true that Income Tax was created to finance troops for World War I? Does it ever make financial sense to turn down a raise at your job? It was mentioned ...
MrChrister's user avatar
  • 25.2k
71 votes
9 answers
41k views

Making $100,000 USD per month, no idea what to do with it

I have a few consulting jobs I do on the side, and this year I've had a lot of extra work, with several months in 2016 exceeding $100,000 USD in billing. I do this work from my home with no ...
Fixee's user avatar
  • 4,516
69 votes
2 answers
13k views

Our friends and we often barter babysitting time with each other. Do we owe taxes?

Our friends and we have an informal agreement that we will babysit eachother's kids when necessary. We don't pay any cash to each other for the service, but we agree to "repay" by providing ...
CodyBugstein's user avatar
  • 1,290
54 votes
10 answers
26k views

What dissuades people from lying about where they live in order to reduce state income taxes?

Lets say you work in Chicago and live in Chicago but put your home address as somewhere in Indiana. Then every week you collect the mail that is being sent to you in Indiana. Wouldn't you save a lot ...
alexcioby122's user avatar
48 votes
6 answers
9k views

How do tax brackets work? Do they yield significantly different results than a continuous curve?

In Canada (and many other countries), high-earners pay a greater percentage of their income in taxes than low-earners. Here is our Schedule 1 form: The marginal utility of money decreases smoothly ...
maservant's user avatar
  • 479
48 votes
3 answers
13k views

If a kid makes money, do the parents take on the tax liability?

Suppose your kid (8 years old) decided to set up a neighborhood lemonade stand and by some freak occurrence managed to somehow make about $3,000. How does one manage the tax liability on that income? ...
Kai Qing's user avatar
  • 1,217
46 votes
9 answers
11k views

What do I need to do, tax-wise, for a sudden windfall?

I had stock options in a company which was recently sold to a private investment firm. As a result, my options were converted into a single large sum ( > $100,000) and delivered via wire transfer into ...
Sable Dreamer's user avatar
44 votes
2 answers
5k views

What US tax laws apply to a 13 year old game developer?

I'm a thirteen year old game developer and I am wondering what the tax laws are as a minor in the US. I don't currently make any money off of my games but I'm thinking of selling on the Google play ...
Kaden Atmore's user avatar
40 votes
4 answers
3k views

Will my children owe taxes on my life insurance proceeds?

I had always thought that life insurance proceeds were not treated as taxable income. From IRS publication 525: Life insurance proceeds paid to you because of the death of the insured person are not ...
Portman's user avatar
  • 496
39 votes
5 answers
8k views

How to report $27 in cap gains affordably

I'm preparing my taxes using TurboTax's basic free tier. Last year I had $26.62 in realized long term capital gains. To report this using TurboTax, I need Premier, which is a $54 add on. Even in a ...
Lost Odinson's user avatar
39 votes
6 answers
5k views

How can I adjust tax withholding so that I don't get a large Tax Refund?

I'm a few years out of college now. I've filled out my W4 accurately and I still get a tax refund every year of a pretty sizable sum. The thing is, I have student loans and I would much rather have ...
Carlos Bribiescas's user avatar
38 votes
3 answers
9k views

In the USA, why is the Free File software only available for people earning less than $62k?

Free File is a software by the American IRS, which allows one to easily fill out their taxes as long as they earn less than $62k per year. Is there a particular reason for such a restriction? I ...
JonathanReez's user avatar
  • 5,842
38 votes
3 answers
11k views

In USA, can I set up a one-person corporation and pay myself mainly through dividends?

In the UK an IT-contractor can save in taxes by opening a company, paying themselves a minimum wage as a salary and then taking a larger amount of income as dividends. Is this possible (for a single-...
x457812's user avatar
  • 991
38 votes
2 answers
48k views

How are long-term capital gains taxed if the gain pushes income into a new tax bracket?

First, my understanding is that the long-term capital gains tax rate is 0% for those whose marginal rate on ordinary income is 10% or 15%, and (ignoring the highest 39.6% bracket) the rate is 15% for ...
Lee Hachadoorian's user avatar
37 votes
3 answers
10k views

Is one spouse responsible if other failed to file taxes

I have a friend who's in a unique situation. She has not worked since she and her husband were married 7 years ago. He has typically worked contract jobs receiving 1099's at the end of the year. She ...
Anthony Shaw's user avatar
37 votes
4 answers
5k views

Deducting charitable donations under new U.S. tax law

I usually donate about $20k to charities every year, and I don't have many other deductions to claim. Given that the new tax law doubles the standard deduction to $24k, I effectively don't get tax ...
painter48179's user avatar
  • 2,761
37 votes
3 answers
10k views

How do I deal with an erroneously large refund?

Alright, it's a weird complaint, I know. But I just checked on the status of my refund on the IRS Refund Status website, and the IRS had corrected upward the refund I filed for by a lot. Based on the ...
NickCHK's user avatar
  • 513
36 votes
8 answers
24k views

How can I achieve a 13% U.S. Federal tax rate?

MSNBC just had a segment explaining how Bernie Sanders paid 13% in federal taxes. This year my income changed significantly, and I'm making a little less salary than Sanders's ~$200k. However, unlike ...
Pippy Longstockings's user avatar
35 votes
5 answers
7k views

Why don't you need to pay taxes on cash back bonuses?

I have a Discover credit card that pays 1% cash back on and 5% on select categories. My question is: why isn't that cash back "bonus" taxed when stuff like canceled debt (1099-C), interest (1099-INT), ...
neubert's user avatar
  • 3,832
35 votes
5 answers
5k views

How to handle the Equifax Breach this tax season?

One of the most common forms of fraud is tax return fraud. Generally you don't find out until you go to file and someone has already been kind enough to file your tax return, AND take a payment for it....
user avatar
34 votes
11 answers
13k views

I hate the high taxes in NYC. Should I incorporate in or move to another state?

I'm in NYC currently and make a good living doing remote web development work and I get a 1099 at end of year. My taxes take about 35% of my paycheck. I was thinking about incorporating in another ...
Patoshi パトシ's user avatar
34 votes
1 answer
5k views

When I sell only a portion of my shares of a stock, which shares actually get sold

Two years ago, I bought 100 shares of XYZ. Yesterday, I bought another 100 shares of XYZ. Today, I sold 100 shares of XYZ. Which 100 shares did I actually sell? If it were the 100 shares from 2 ...
Bear Bile Farming is Torture's user avatar
34 votes
2 answers
3k views

How is the taxable value of a goat determined? [duplicate]

I was reading an answer over on Law.SE, and it made me wonder about how the IRS calculates tax on barter transactions. Lets say that I do a job in January, and get paid for my work with 20 goats and ...
JPhi1618's user avatar
  • 1,212
33 votes
8 answers
10k views

Are services provided to Google employees taxed as income or in any way?

The particular service I want to look at is food (though I think the same ideas should apply to all services). So Let's say that a Google employee spends a dollar on food, purchasing groceries. They ...
Retired account's user avatar
33 votes
3 answers
5k views

How do you file taxes earlier than an identity thief?

One of the recommendations to avoid tax return fraud/identity theft is to file your taxes as early as possible: FTC Smart Money Identity Theft Resource Center USA Today Notably, the IRS does not ...
stannius's user avatar
  • 5,301
32 votes
4 answers
10k views

I claim one and my wife claimed zero on our W-4s, but we still owe...why?

I'm getting a head start on this year's income taxes for my wife and I. I have my W-2 already and I have her last paystub for the year. I claimed one exemption on my W-4, and according to her paystub,...
user avatar
30 votes
4 answers
11k views

Did I discover an easy way to make money via PayPal and cashback credit card? If so, is it legal and is the money taxable?

Here it is: I send money to a family member via PayPal using my credit card, PayPal charges a fee but the cash back I get from the PayPal transaction exceeds the PayPal fee, my family member sends me ...
user avatar
30 votes
6 answers
5k views

Is a Roth IRA good for a high schooler?

I am a high-school Senior who will not earn enough income working this summer to have to pay income taxes. I have a full ride to college, so I was thinking of using my earnings/savings for retirement. ...
maxbear123's user avatar
29 votes
9 answers
5k views

Does owing taxes or getting a tax refund imply my paycheck is off?

A thought crossed my mind recently and I was wondering if someone could explain if I'm missing something, and if so what. Simply put, as an individual filing taxes (single, no dependents), taking the ...
PawnInGameOfLife's user avatar
29 votes
2 answers
8k views

How to split bills without it showing as income?

I take dance lessons with one other person: we share the teacher's time 50:50 and pay half the cost each. Currently, my partner pays this money into my bank account and then I pay the teacher. However,...
niemiro's user avatar
  • 461
29 votes
5 answers
2k views

Are credit card rewards taxable?

There have been several questions about reward point/loyalty programs offered by credit cards Best Travel Point Credit Cards Best Reward Benefit Credit Cards Easy Comparison of Reward Benefit Cards ...
Zephyr's user avatar
  • 6,230
28 votes
2 answers
2k views

How does the Patient Affordable Care Act (aka "ObamaCare") affect my taxes?

As someone who already has insurance through my employer and will not be subject to the fines for being uninsured, what other impacts on my taxes are built into the new healthcare law that I should be ...
JohnFx's user avatar
  • 53k
28 votes
1 answer
6k views

If I overpay estimated taxes in Q1, am I allowed to underpay in the other quarters?

I'm an independent contractor and I sent in my first quarterly estimated federal tax payment for 2023, but I realized that I went way over. Is it possible to pay less in the coming three quarters (...
fishingforgoats's user avatar
27 votes
7 answers
19k views

Why do American dual-high-income couples get legally married?

If each member of a couple makes a high income, they pay much more U.S. income tax if married. So it makes sense for them to avoid legal marriage. They can still do a religious ceremony or a ...
Joshua Fox's user avatar
27 votes
11 answers
18k views

How to pay less tax on a high salary?

I'm working as a software engineer in the Bay Area. I file my taxes as "Single" and because of the high salary, I fall into the 32% bracket. Some of my salary goes into a 401(k). What are some ways ...
Unknown Artist's user avatar
27 votes
3 answers
9k views

Ask mother to pay off entire student loan, then pay her?

To avoid paying additional interest on my student loans, I want to ask my mother to pay off the entire loans with by lump sum, and then I would pay her back with interest. Are there any issues ...
user's user avatar
  • 1,507
27 votes
4 answers
16k views

Why are estimated taxes due "one month early" for the 2nd and 3rd quarters only?

According to the United States internal revenue service, federal estimated tax payments are due on this schedule: April 15 June 15 September 15 January 15 (of the next year) June is only two months ...
Stephen Ostermiller's user avatar
25 votes
11 answers
15k views

What do I do if my income is just a little too high for "free file"?

I live in North Carolina and I'm using the H&R Block website to file my taxes and finally at the end of everything they informed me that there's a limit to how much I could make last year and ...
Kyle Delaney's user avatar
25 votes
9 answers
5k views

Why is income tax generally not in a continuous "spectrum"? [duplicate]

With respect to the countries about which I am familiar, income tax is partitioned into tax "brackets", meaning that the rate of taxation varies discretely. Different tax rates are therefore applied ...
Benjamin Crawford Ctrl-Alt-Tut's user avatar
25 votes
3 answers
10k views

Am I obligated to file through a tax preparer after an unsatisfactory consultation?

I have been doing my taxes for 25 years with TurboTax. Like others, I was a bit upset at them for doubling the price of their software, so I decided I would make an appointment with H&R Block, ...
NickyB's user avatar
  • 267
25 votes
5 answers
8k views

kids pooling money for Lego League and taxes

Based on Will I be taxed for accepting money to help needy?, I am wondering how the law goes. Suppose a kid is taking part in a school activity (e.g. http://www.firstlegoleague.org) along with a team ...
Raj's user avatar
  • 3,492
24 votes
6 answers
14k views

Is it worth filing taxes if I only worked an internship?

This past summer I interned at a company and just got my W-2 Form. I am a 17 year old high school student which qualified for 2 Federal exemptions, 0 State exemptions, and 0 Local exemptions. I made $...
Rob Gates's user avatar
  • 435
24 votes
1 answer
10k views

Why would the IRS ask for birth certificates or even audit a small tax return?

My daughter and her boyfriend live together, and he is the sole earner in the home. They each have a kid plus 1 together. H&R Block told them that he didn't make enough to do his return and now ...
Jen's user avatar
  • 257
24 votes
2 answers
6k views

What is the best way to pay large tax amount owed to IRS?

I recently did a preliminary calculation of my taxes for 2018 and discovered that I am going to owe the IRS about $16,000. I do not have this amount of money in reserve. My question pertains to ...
Mark's user avatar
  • 353
23 votes
6 answers
6k views

Is the Standard Deduction better than Itemized when both are the same amount?

For 2018 the standard deduction is $12,000 for individuals, $24,000 per household. If someone's itemized deductions equals the standard deduction, or is very close, which one is better to take? For ...
jimp's user avatar
  • 366
23 votes
2 answers
3k views

Can I claim household services as business expense? (USA)

I have a side income that takes a lot of time. Part of how I find time for this is to outsource some of my own household chores - such as lawn mowing. Can I deduct the lawn mowing costs and other ...
undetected's user avatar
23 votes
3 answers
8k views

When filing taxes, how do I report "informal income" for which I don't have any forms?

This past summer, I worked a normal summer job and received a W2 form. However, I have also been tutoring two fellow students at the university I attend. They have been paying me "informally"...
MegaWidget's user avatar
23 votes
2 answers
4k views

What is meant by one being in a "tax bracket"?

I've always wondered but just now asking: What is meant by one being in a "tax bracket"? Does that mean only Federal, or does it include State AND Federal? For example: I (would like to) make $100K a ...
Sam D's user avatar
  • 445
23 votes
1 answer
12k views

Is income from a check taxed according to the date written or the date deposited?

Scenario Let's say I was given a check from an LLC on December 15 that was written to my LLC on that same day, and I cash it on January 15 the following year. Question Will I have to claim the ...
Jacksonkr's user avatar
  • 943
23 votes
2 answers
75k views

Canada: Girlfriend did not file tax return since 2006. What to do?

I was just starting my girlfriend's tax return when I realized I didn't have her notice of assessment from 2009. I wanted her tuition carry forward so I decided to call revenue Canada to see what the ...
Granny Smith's user avatar

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