Little Known Tax Facts You Should Be Aware Of
Tax season is well under way, and as you feverishly work toward getting everything together, here are some lesser-known tax facts you might not be aware of:
Did you know that you have few extra days to file your federal taxes this year? That’s right – you have until April 18th to get everything in order and filed (to avoid conflicts with Emancipation Day). Just remember: this is both the deadline to file, and the deadline to pay. If you owe the government money, even if you file an extension, you must pay your best estimate–within 90% accuracy–of what you think you owe or you’ll be hit with interest and penalties on any balance due.
Unemployment benefits ARE taxable
There’s some confusion here, particularly since in the 2009 tax season, an exemption was given for the first $2,400 in unemployment benefits. Sorry, but that break has expired for tax year 2010. Unemployment benefits are considered taxable income and must be reported on your federal tax return.
You may be eligible for the EITC
Maybe you weren’t eligible for the Earned Income Tax Credit last year or even the previous year, but you may be eligible this year as you may have seen your income take a bit of a hit. And you’re not alone. Many individuals and families, previously classified as “middle class,” are now eligible for this tax break which are designed to supplement wages for low to middle-income workers. To determine whether you qualify, use the EITC Assistant, an interactive tool that’s available on IRS.gov. All you have to do is answer a few simple questions to find out if you qualify and if you do, this credit could be worth a whopping $5666 this year.
Consider weather-related tax breaks
It’s been a brutal winter! And while homeowners insurance can protect your home and possessions during damaging weather, what you might not realize is that you may be able to deduct storm damages — providing the damage meets the definition of a casualty loss. What’s that? A casualty loss is something that happens suddenly and unexpectedly (like a roof collapsing due to heavy snow) as opposed to something that happens gradually (such as water seepage in a basement).
Claim the Making Work Pay credit
If you were eligible for this tax credit, the government simply took less money from your paycheck (a single taxpayer was eligible for up to $400 last year; married couples, up to $800), but that’s not the official credit claim. To account for this money, you need to do a little extra work and file Schedule M.