All about the Six Schedules of the New Form 1040

In a bid to simplify the tax filing process for many Americans who have quite a very simple tax affair, the Internal Revenue Service introduced a new and smaller Form 1040. This change saw many of the lines of the previous form moved to six new schedules. What are these new schedules and who are they for? Tax blog, American Tax Service provides answers to all these questions in its latest post.

The first schedule, the Additional Taxes and Adjustments to Income is used to report certain types of additional income or adjustments. This could include, capital gains, wins from gambling, unemployment compensations, etc. Student loan deductions must also be entered into this schedule.

The second schedule is seldom used as it pertains to only a few sets of people who pay the alternative minimum tax (AMT).

Schedule 3 is for Nonrefundable Credits and it applies to all nonrefundable credits apart from the child tax credit, or any other dependency-based tax credits.

Other federal taxes like the self-employment tax, household employment taxes and any additional taxes on your retirement plans can be reported using Schedule 4.

Should you decide to claim certain refundable credits or report any withheld payments, then Schedule 5 will come in handy.

The sixth and last schedule is used only if you have a foreign address. It is mostly used by Americans living and working abroad. This schedule allows a third-party file taxes on your behalf.

The American Tax Service sums up its post by recommending that taxpayers file their taxes online with the H&R Block. The H&R Block is up to date with the latest IRS tax forms and schedules and it helps taxpayers find their w2 form and file their taxes online.

To find out more about the IRS 1040 Form and the six new schedules plus how to get a 35% discount for filing your taxes online with the H&R Block, please visit,

Self-Employment Tax – How to File

There are so many benefits to being self-employed – making money on your own terms, being your own boss and living the life that you dream of. But when it comes to filing your taxes, there is just one little disadvantage to being self-employed and that is if you are already used to filing the regular W-2 forms, there won’t be a need for it any longer. You will need to file self-employment tax forms. So what is the self-employment tax and what are the rates for 2019. A tax information blog, National Tax report has just published a new guide to help self-employed people easily figure out what the self-employed tax is, what the rates are for the tax year 2019, as well as the deductions that can be taken from the self-employment tax.

For the tax year 2019, the self-employment tax rate is set at 15.3% on the first $132,900 of net income. And should the net income exceed $132,900, there will be a charge of 2.9% on the excess. The self-employed tax rate is broken into two parts: Social Security tax and Medicare. Social security takes a majority part of the self-employed tax and is set at 12.4% while Medicare balances it up at 2.9%.

Self-employed taxpayers are expected to pay both the employee and employer parts of these taxes. But they will be able to claim back half of their self-employment tax contributions. One other deduction self-employed taxpayers will find useful is the Self-employed insurance. This offers full deductions on the cost of premiums on medical, dental, and long-term care insurance and can cover the taxpayer’s spouse, dependents including adult children up to the age of 27. Other deductions available to self-employed taxpayers are home office, phone bills, Internet bills, business mileage, and meals.

To file the self-employment tax, taxpayers will need to use the Schedule SE, which is a part of Form 1040. To help determine how much you need to pay in self-employment taxes and how much you’ll be able to claim in credits and deductions, it is best advised to use a self-employed tax calculator from TurboTax. This will ensure you get the most of your tax credit and deductions.

For more information, please read the full post from National Tax Report here,

How Possible is it to Claim the Deduct Mortgage Interest?

In a new post, the American Tax Service, a tax blog dedicated to educating Americans about the US tax system has revealed all there is to know about the mortgage interest tax breaks. Recent changes to the US tax system by the Tax Cuts and Jobs Act (TCJA) has left so many Americans puzzled as to what they are entitled to or which credits and deductions are still available for them.

One popular deduction which is still very much available to taxpayers is the mortgage interest tax deduction. The post sheds light into this once popular mortgage tax deduction, what has changed about it, and if it is still worth claiming.

Starting from 2018, the TCJA has reduced the principal limit in which interest can be deducted from $1,000,000 to $750,000. For married taxpayers who are filing a separate return, the limit has been scaled down from $500,000 to $375,000. These new changes are to last till the 2025 tax year but the limits do not apply to loans from 2017 or before.

The tax blog did put to rest the belief by most Americans that they will not be able to deduct any home equity loan interest with the new tax reforms. As long as the loan is used to improve the home and not used for other personal expenses, taxpayers will be able to deduct the interest. The mortgage deductions will only apply to a taxpayer’s primary residence or second home and will not apply to an investment property. Furthermore, the loan value and the interest deducted can’t be worth more than the initial cost of the home.

Mortgage interest deduction still remains an itemized deduction. So in order to claim it, taxpayers will need to make sure that their standard deduction isn’t worth more than their itemized deductions. But with the TCJA doubling the standard deduction, it is no longer a tough choice to make. This leaves only 30% of American taxpayers itemizing their deductions. And this is expected to drop even further to 5% in the coming years.

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How Capital Gains Can Affect Your Tax Bracket

Capital gain tax is paid on the profit made from selling your own assets. This tax levy is only due after a sale is made or completed. That is, if the value of your asset most likely a property increases, you are not required to pay the capital gain tax but as soon as you sell your asset then you will need to report it in your tax return.

Depending on a number of factors such as your income, other profit gains, and the number of deductions and credits that are available to you, the capital gain tax can affect your tax bracket. Efile Tax Advisor, a tax advisory blog explains in a recent post how capital gains can affect your tax brackets and clears any confusion taxpayers might have about the capital gain tax.

According to the tax blog, taxpayers who are not in the higher income brackets should not expect their capital gains from home sale to push them into a higher tax bracket if they are selling their house below the threshold of $250,000 for single filers or $500,000 for couples. Also, as long as the profit margin is not above the limit, taxpayers really do not need to file with the government.

The blog also offers scenarios where a taxpayer can avoid paying the capital gains tax or reduce it to the barest minimum. Taxpayers can pay little or nothing at all if their property increases in value every year since it was purchased or if their property has not been sold or exchanged in the last 5 years. This implies that there are higher tax rates for short-term capital gains as compared to long-term capital gains. Homeowners who reinvest their capital gains will get no deductions or credit but the gains can be used to fund other income avenues that are taxed at a rate much lower than most personal incomes.

For more information about the capital gain tax, please visit

Understanding the Child & Dependent Care Tax Credit

Childcare is perhaps the steepest monthly expense many families can not shy away from. Parents or custodians are left with no choice than to pay for daycare for their infants or disabled adults under their care. However, families who are struggling to keep up with this ever-increasing bill can get a bit of respite from the IRS according to a recent post by the National Tax Reports. The post sheds light on the child and dependent care tax credit and how taxpayers can take advantage of this credit to cover the cost of their childcare.

The Child and Dependent Care Credit can cover a percentage of daycare costs up to a maximum of $3,000 for one dependent and it is capped at $6,000 for two or more dependents. This percentage can range from 20% to 35% of the taxpayer’s adjusted gross income. National Tax Report recommends using a free dependent online calculator to quickly estimate your credit amount. The online software will only ask simple questions about your family so as to ascertain who qualifies as a dependent on your tax return to help you get the biggest tax return.

There are just a few basic requirements to be met in order to qualify for the child and dependent care tax credit. First off, taxpayers must have a dependent child less than the age of 13 or an older child who is physically or mentally unable to care for himself due to disability. The purpose of paying child care for these dependents must be to allow both parents to work or get a job or attend school on a full-time basis. It is also expected that both parents must have earned income either from a job or through self-employment. The only exception to this is if one of the parents is disabled and incapable of caring for another person.

There are also rules concerning daycare. The person providing the daycare must not be listed as a dependent of the taxpayer. Summer day camps qualify as providers while overnight camps do not qualify. This is because the IRS does not think an overnight camp as a form of work-related expense.

For more information about the Child and Dependent Care Credit, please visit,

Which Home Improvements Qualify for Residential Energy Credits?

With rising energy cost, it is now a wise choice to invest in home energy efficiency. As it doesn’t just save you energy and money alone, it increases your property’s value and gives you money back in the form of residential energy tax credits for home improvements. Homeowners who are interested in knowing how to take care of the upfront cost with the help of tax breaks on specific home improvement projects will find a new blog post on American Tax Service very resourceful. The post reveals all they need to know about the residential energy tax credits and how they can easily claim it.

According to American Tax Service, there is no better time to consider energy-efficient home improvements than now as most of the energy tax credits decreases in value every year. The Residential Renewable Energy Tax Credits is perhaps one of the most generous energy tax credits and it applies to newly built homes as well as an existing primary or secondary property. Homeowners can claim up to 30% of the overall cost of installing their system including labor cost using this tax credit.

Homeowners who would like to claim the Residential Energy Tax Credit must file Form 5695 with their tax return. They are also expected to provide information regarding the costs of installing their energy-efficient system. The tax credits are nonrefundable, so while it can reduce the tax bill up to zero, it does not offer a tax refund. In addition, the total amount of tax credits can’t exceed the amount of tax owed.

Another energy credit homeowners might also take note of is the non-business energy property tax credit. While this tax credit has expired, there is a possibility it could be renewed by Congress. The American Tax Service recommends using the H&R Block Online Tax to maximize the tax deduction and energy credit that you are eligible for. It offers step by step instruction and ensures that you get the largest refund possible.

For more information about the Residential Energy Credits, please visit,

What Are the Best Tax Credits for Education

Students who would like to get a bit of respite on the high cost of their education will find a new blog post on American Tax Service very resourceful. The post offers some insight into two of the best educational tax credits available to them in the upcoming tax year. And it seeks to help them make an informed decision on which of the educational tax breaks is best suited to their needs as they cannot use more than one in any given tax year.

The first of the tax credits explained by the American Tax Service is the American Opportunity Credit. To be eligible, the student must be enrolled at least half-time per academic period during the tax year in a school currently participating in the student aid program of the Federal government. Students who are already done with the first four years of schooling are excluded from the scheme as well as students with felony drug convictions. The American Opportunity Credit can be worth as much as $2500 and can be claimed on anything a student needs to attend school including tuition, books, and supplies. It is best suited for undergraduate college students

The other tax credit is the Lifetime Learning Tax Credit. To be eligible, a taxpayer needs to only take a course per year at a school that is enrolled in the Federal student aid program. The credit does not also consider whether it is the first four years of schooling or not. Regardless of how many years you have spent in school, you can qualify for this tax credit. The Lifetime Learning Credit can also be used for anything from tuition to supplies but all supplies must be purchased directly through your school. The Lifetime Learning Credit is worth $2,000. However, it is a nonrefundable tax credit. It is best suited for students in postgraduate programs.

To claim any of the education tax credit, taxpayers must fill in and file Form 8863 with their tax returns. The American Tax service recommends using the H&R Block online tax filing. It will provide the form and easily help calculate exactly how much you are entitled to.

For more information, please read the original blog post by the American Tax Service here,

Medical Expenses Tax Deduction

The cost of medical care in America might be sky high but a lot of Americans are eligible for an itemized deduction for medical expenses in 2019 if they meet certain qualifications. A new blog post on Efile Tax Advisor sheds light on what these qualifications are and how to easily claim the medical expenses tax deduction in the 2019, 2020 tax season. So, if you do not want to potentially miss out on thousands of dollars in deductions.

Taxpayers whose medical expenses exceed 7.5% of their calculated adjusted gross income in the 2017 and 2018 tax year are allowed to make deductions for any medical expenses. For instance, if a taxpayer has an adjusted gross income of $45,000 and a medical expense of $5,475, the adjusted gross income of $45,000 will be multiplied by 0.075. This equals $3,375. So, any medical expenses above this figure will be deductible. In this case, that would be $2,100 in medical expenses.

Taxpayers should also note that not every type of medical expense is deductible as the IRS will only give credence to qualified medical expenses.

Some of the medical expenses that can be deducted are:

  • Preventative care.
  • Medical treatment.
  • Dental and optical care.
  • Visits to psychiatrists and psychologists.
  • Prescriptions are also deductible, including hearing aids, glasses, and contact lenses.
  • Medical mileage deductions can also be made

Some of the medical expenses that cannot be deducted include:

  • Reimbursed medical expenses
  • Employer-sponsored healthcare programs
  • Cosmetic medical procedures
  • Non-prescription drugs including insulin
  • General health purchases, like vitamins and dietary foods

To claim the medical expenses deduction from the IRS, all deductions need to be itemized. Standard deductions do not apply and taxpayers, whose standard deductions are higher than the itemized deduction, will not be eligible for the medical expenses deduction.

To easily itemize these deductions, Efile Tax Advisor recommends using an online tax preparation to help work out the figures quickly and easily.

For more information on the Medical Expenses Tax Deduction 2019, 2020 and how to easily claim it using an online tax preparation software, please visit,

The New Federal Income Tax Brackets – Find Your Tax Bracket

Every year the IRS tweaks the federal income tax brackets to accommodate changes in inflation and this year 2019 is no different. This is mostly done to prevent inflation from pushing people into higher tax brackets known as the bracket creep. And up to 40 different provisions are taken into account to stop this from happening. Confused? Don’t know how this is set and which federal income tax bracket you fall in? A new post on Efile Tax Advisor clears all the confusion and provides all the information you need to find out which tax bracket you fall in this year 2019.

As long as you earn a taxable income, you will be automatically taxed at the standard rate of 10% irrespective of your filing status. Single taxpayers will need to earn a taxable income of $9,700 to fall within the 12% bracket. They will move into the 22% tax bracket if they hit $39,475 and can end up in the 24% tax bracket once they make as much as $84,200. But for Married taxpayers filing jointly, they will fall within the 12% bracket when their earnings are up to $19,400. They then move to the 22% tax bracket when they reach a $78,950 income and finally will move into the 24% tax bracket when they make a joint taxable income of $168,400.

The tax bracket is calculated different for high-income earners and depending on their income, their tax bracket range will fall within 32% to 37%. Also, long-term capital gains are calculated differently from other forms of income. The rates are 15% on $39,375 for single taxpayers and $78,750 for married taxpayers filing jointly. This could rise up to 20% for single taxpayers gaining $434,550 and $488,850 for married taxpayers filing jointly.

Credits and deductions can force low and middle-income taxpayers into lower tax brackets since these brackets do not consider them. It is best to make use of online tax preparation software to file taxes to ensure you are making the most of every tax credit and deduction.

For more information about the IRS tax brackets and to find out which tax bracket you fall into, please read the original blog post by Efile Tax Advisor here,

Free Tax Refund Calculator – Find Your Estimated Refund

Without the right knowledge, trying to figure out which tax credits you are eligible for and how you can maximize your tax refunds can be harder than it normally should be. It is best to understand what tax credits you are eligible for and the difference between a refundable tax credit and a tax deduction. In a recent post, Efile Tax Advisor sheds more light on the most common mistakes people make when filing their taxes and how best to use a tax refund calculator to get the most returns.

The first mistake which robs a lot of taxpayers of some good cash in tax refunds is dismissing claiming any sort of federal tax refunds simply because they do not pay anything in Federal taxes. This notion is wrong as there are tax credits like the Earned Income Tax Credit (EITC) and Child and Dependent Care Tax Credit which are eligible to anyone regardless of how little they pay in taxes. Some of these credits are also fully refundable, so even if you pay nothing in tax you could still get a refund from the IRS.

Another mistake taxpayers make is trying to figure out everything by themselves. Most of the credits are calculated based on your income, the number of children you have, and your living circumstances. All this information can be inputted into H&R Block online tax filing platform which can then easily determine exactly which tax credits you may be eligible to claim.

It is best for taxpayers to take advantage of the tax refund calculator so as to have a good idea of how much they can get back from their tax refund this year. It is simple to use and no prior experience as regards tax preparation is needed to get accurate results. All that is required is just a few basic questions about your income and living circumstances.

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