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Just wanted to add some clarity about the lookback rule that might help. This provision was part of the Taxpayer Certainty and Disaster Tax Relief Act, and for 2021 taxes, you can choose to use your 2019 earned income to calculate your EITC if that gives you a larger credit. Remember these key points: 1. Unemployment benefits do NOT count as earned income for EITC 2. You need to manually enter your 2019 earned income in your tax software 3. If you had $0 earned income in 2021, the lookback can be hugely beneficial 4. This was specifically designed to help people who lost work during COVID
Would this still apply for 2022 taxes? I was unemployed for most of 2021 but also for part of 2022, so wondering if I can use this for next year's filing too.
Unfortunately, the lookback provision was only available for tax years 2020 and 2021 as a temporary COVID relief measure. For your 2022 taxes (which you'll file in 2023), you'll need to use your actual 2022 earned income to calculate your EITC. If you're concerned about a lower EITC for 2022, focus on documenting all eligible earned income you did have during the year, and look into other credits you might qualify for like the Child Tax Credit if you have dependents.
Has anyone used TurboTax for the lookback rule? I'm having the same issue but with TurboTax instead of TaxAct. Can't figure out where to enter my 2019 income!
Just an extra tip - if you've been using FreeTaxUSA for multiple years, you can actually go back and look at your 2019 Schedule A to see exactly how much state income tax you deducted. Look at line 5a. This will help you understand how much of your refund might be taxable. Also remember that if you didn't receive any tax benefit from the deduction (like if you were close to the standard deduction amount), then the refund isn't taxable. The worksheet helps figure this out.
Where do you find old returns in FreeTaxUSA? I've been using them for years but never figured out how to see my past filings.
You need to log into your FreeTaxUSA account, and on the main dashboard there should be a section called "Prior Year Returns" or "Tax Return History." Click on that and you'll see all the years you've filed with them. Select 2019, and you can view or download the full PDF of that return. If you downloaded and saved your returns each year, you can also just open the PDF directly from your computer. The Schedule A is usually around page 11-13 of the complete return.
Is this 1099G thing only an issue if your state refund is large? I got like $340 back from state taxes for 2019 but never received a 1099G. Should I be worried??
States are required to issue 1099-Gs for all refunds they send, but sometimes they don't if the amount is very small. $340 is actually right around the threshold where some states might not bother. Technically you're still supposed to report it if you itemized that year, but realistically the tax impact would be very minimal.
Don't forget about quarterly estimated tax payments if you're making money from these marketplace sales! I learned this the hard way and got hit with an underpayment penalty even though I reported everything correctly on my annual return. If you expect to owe more than $1,000 in taxes from your side hustle, you should be making quarterly payments.
What happens if you miss a quarterly payment? I just realized I should have been doing this for my Etsy shop but I haven't made any payments this year at all...
If you miss quarterly payments, you might have to pay a penalty for underpayment. The penalty is basically interest on the amount you should have paid by each quarterly deadline. The more you earn from your business, the larger the potential penalty. For a small Etsy shop, the penalty might not be huge, but it's still something you want to avoid in the future. You can start making the payments now for the remainder of the year to minimize any potential penalties. Form 1040-ES is what you'll use for these payments. And definitely plan to make these payments next year - it's much easier to pay a little each quarter than to get hit with a big tax bill plus penalties at filing time!
has anyone heard anything about if the 1099k threshold is going back down to $600 next year? i keep seeing conflicting things online and idk if i need to be keeping better records for my marketplace stuff
The latest information is that the threshold is $5,000 for tax year 2024 (filing in 2025), and is scheduled to drop to $600 for tax year 2025 (filing in 2026). Congress has pushed back the $600 threshold implementation several times, so it's possible it could change again.
I'm a tax preparer, and I strongly recommend against trying to compare multiple software programs without understanding the nuances of tax law. Different software may ask questions differently or interpret certain scenarios based on how you input information. If there are significant differences between the refund amounts, it's not necessarily because one is "wrong" - it could be that you entered information differently or one program makes certain assumptions another doesn't. For truly free options, try the IRS Free File program partners, which includes options like TaxSlayer, 1040Now, etc. Many offer truly free filing if your AGI is under certain thresholds (usually $73,000).
If I find different refund amounts between software, how do I know which one is correct? Should I just go with the one that gives me the bigger refund?
You should never simply choose the software that gives you the bigger refund without understanding why there's a difference. A larger refund might be incorrect and could potentially trigger an audit. If you find different results, dig into the actual tax forms and compare them line by line to see where the differences occur. The most common discrepancies happen with education credits, business expense categorizations, or retirement contribution deductions. When you find the specific lines that differ, research that particular tax topic or consult with a professional about that specific issue.
I do this every year! Here's what I've learned: TurboTax: You can go all the way to the end without paying. Just don't click "File" and you'll see your refund amount for free. H&R Block: Same thing! Complete everything but don't submit. Their free version is actually pretty good for basic returns. One weird thing I noticed - sometimes they give different amounts because of how they word certain questions. Last year H&R Block phrased a question about my student loan interest in a way that made me answer differently than in TurboTax, which caused a $200 difference in my refund!
Carter Holmes
For high income earners like you, don't overlook the impact of timing your income and deductions strategically. My spouse and I make around $310K and we've found that bunching deductions in certain years can help with AGI management. For example, we make several years' worth of charitable contributions in a single year using a Donor Advised Fund, then take the standard deduction in other years. Also, if either of you has any control over when you receive bonuses or can defer compensation, that timing can make a huge difference.
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Sophia Long
ā¢How exactly does bunching deductions help with AGI though? I thought charitable contributions were itemized deductions that don't actually reduce AGI. Wouldn't that just help reduce taxable income but not AGI specifically?
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Carter Holmes
ā¢You're absolutely right about the technical distinction - charitable donations are itemized deductions and don't directly reduce AGI. I should have been more precise in my terminology. The bunching strategy affects your taxable income rather than AGI specifically. For truly reducing AGI, focus on the pre-tax retirement contributions, HSA contributions, and certain business expenses if you have self-employment income. The bunching strategy is still valuable for overall tax reduction, just not specifically for AGI reduction.
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Angelica Smith
Has anyone tried using an FSA (Flexible Spending Account) to reduce AGI? My HR department keeps pushing this but I'm not clear if it actually reduces AGI or just taxable income. Also, we have a bunch of medical expenses coming up next year.
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Logan Greenburg
ā¢Yes! FSA contributions are pre-tax and reduce your AGI. If you know you have medical expenses coming up, it's definitely worth doing. Just remember it's usually use-it-or-lose-it by the end of the plan year (some plans offer a grace period or small rollover amount).
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