Textbook Tax

The first step in filing your taxes is to determine your tax filing status. While this initial step may seem simple, several tax filing options exist. The selected filing status will have an impact on your tax return; therefore, it is helpful to have a basic understanding about the filing statuses available to U.S. taxpayers. Related Posts -  Guide to Taxable Income -  Paying taxes as an independent contractor or business owner -  Save on taxes by taking advantage of a declining market -  Guide on how to file a tax return for a dependent child Tax Filing Status Five unique tax filing statuses exist for U.S. taxpayers, which include: single, married filing jointly (MFJ), married filing separately (MFS), qualifying widower, and head of household (HOH). U.S. tax law categorizes taxpayers into the five categories based on the taxpayers' current situation. I will detail each filing status below to help you determine your tax filing status. Single You shoul...

You are preparing your tax return when faced with the question about if you have any dependents. You think of your children but may fail to think about other relatives you are supporting. In general, people tend to think of their young son or daughter when they hear the word dependent. However, the IRS has a broader definition of dependency, which includes both qualifying children and qualifying relatives. It is important to understand how the IRS defines dependents because claiming a dependent entitles taxpayers to certain tax benefits, including an advantageous filing status, tax credits, and other beneficial tax breaks. I will detail the requirements for each dependency category below. Lets get started! Related Posts -  How to file a tax return for your dependent kids -  How to determine your tax filing status -  How to calculate your taxable income -  How to save on future taxes during a recession Qualifying Child What is a qualifying chil...

When you file your individual income tax return (Form 1040), you must report your income items. The income amount reported determines your federal and state income tax liability; therefore, it is essential to understand how the tax laws affect your income items. Additionally, even if you utilize a tax return software, it is helpful to have a basic understanding of the income concepts in order to optimize the tax return preparation process. Below, I detail the major components of the individual income tax formula. I also provide examples of items for each major taxable income formula component. Lets begin. Guide to Taxable Income for Individuals As you can see from the table above, the major components of the taxable income formula are gross income, adjustments, AGI, standard deduction/itemized deductions, QBI deduction, taxable income, income tax liability, tax credits, and tax payments. It is important to understand each component, including examples of the items that make up ...

The market experienced a crazy summer. We saw the market plummet at record rates, followed by continuous volatility caused by further market declines, an inverted yield curve, and ongoing trade war discussions. Talks of recession started during the summer and will continue into the fall. I cannot speak to when the recession will come, but I can speak to what actions to take when we experience an economic recession. For those panicking about the decline in the markets, I have a positive spin on the potential economic downturn. During a recession, taxpayers should take advantage of a declining market by saving on taxes by converting retirement savings accounts. Related Posts -  Five easy steps to decrease spending -  How to file a tax return for your child? -  How to file taxes as an independent contractor? Recession Tax Planning: Roth IRA Conversion As stated, taxpayers can save on taxes by converting a traditional individual retirement arrangement (...

When I grow up, I want to be an accountant! In that case, you should know the requirements and the journey ahead. As an accountant, you will most likely get your CPA license. The process in becoming a CPA is extensive and challenging. However, the CPA license will prove valuable as you advance in your career. Taking and passing all four sections of the CPA exam is the most challenging part of the CPA process. In my own personal experience, the actual test-taking process took approximately six months. However, many people do not realize the process begins before studying/test-taking and continues after passing the four CPA sections. It is important to know the entire CPA process and its related challenges. Lets begin! Related Posts -  Preparing for the CPA Exam: How to Study for the CPA exam using Becker? -  10-Day CPA Exam Review Study Strategy - 20 Tips & Tricks for Studying for the CPA Exam CPA Process Challenges Below, I detail what requirements...

For those on the way to becoming a certified public accountant, you now know it is a long and difficult journey. For those just beginning, good luck! The most difficult and time-consuming task is passing the CPA Exam. CPA candidates must spend hundreds of hours preparing for all four sections of the CPA. Each CPA section represents an entirely different topic, creating a daunting task for anyone looking to start studying for the CPA exam. I passed all four sections of the CPA with an average score of 91. Luckily, I did not have to retake any of the exams, which is a common occurrence as the average passing rate is around 40-50% per exam. Having personal experience dealing with the CPA exam process, I want to share valuable tips for conquering the CPA exam. I want you to feel confident and comfortable during the CPA exam process, and so, I believe the following tips will help you during the CPA exam process. Lets begin! Related Posts -  Preparing for the CPA Exam: How to St...

Preparing for and passing all four parts of the CPA is a long and strenuous process. It takes serious commitment and discipline to pass the exams and earn your CPA license. Remember to stay focused and committed to your study plan and goals. You will pass your next CPA exam! I want to share my 10-day CPA exam review strategy. In my study plan, I categorize the CPA preparation into the learning stage and the review stage. The learning stage involves listening to the lectures, taking notes on the lectures, and answering the multiple choice questions. Follow the link to see my do's and don'ts on how to best study for the CPA using Becker . Once you have covered all the material and formed a strong learning foundation, it is time to move onto the review stage! I will cover in detail my review stage study strategy for the CPA exams. Becker, which I used as my CPA exam review course, recommends two weeks to review the material before taking the exam. I believe that is to...

The CPA exam is a long and extensive journey. I passed all four parts of the CPA exam on my first tries, averaging a score of 91. In order to do so, I learned, studied, and reviewed the CPA materials for many hours. Through the process, I improved upon my study methods and preparation strategies. I felt that I learned to study more effectively and efficiently throughout the process. Now, having passed all the CPA exams, I want to share my insights on how to best study for the CPA exam. It will remain a lengthy study process, but I hope my guidance will help establish a successful and efficient study system to prepare you for each CPA exam! My firm provided me access to the Becker CPA review course. Like most people, I elected to enroll in the online course only, which means I listened to prerecorded lectures for each section posted on Becker’s review course website. I chose this method because I wanted the ability to study at my own pace. Additionally, I felt confident in my ab...