Thanks dude this is good info. Really should have been a high school course (which our tax dollars pay for). Really thankful someone out there is willing to help educate the general public on a confusing subject that affects everyone. Good luck to you and thank you
I know right! The burden is 100% on the parents of the student when it comes to personal finance, and unfortunately, if the parents have bad financial habits, then the children are probably also going to follow in the same footsteps.
Why would they😂 just think about it. The government funds the schools and decides what is taught. You really think they’re gonna show you how to keep them out of your pockets? They greedy homie💯 the taxman will take as much as you will let him.
This is my first time filling taxes and I got a standard deduction of 12,400 but I still unsure what that means even by watching your video. Does that mean I get to claim this total amount or what exactly those it mean. I am lost and clueless also very slow into understanding how this all works out. Please explain.
That just means that the first $12,400 of your income is not taxable by the federal government. After that amount, then your income starts entering the tax brackets (assuming no other adjustments).
the standard deduction exists so people aren't taxes on the basic necessities to live, not to make filing less complicated. If complexity was the issue then why would they make you decide between it and itemizing? Making the choice between itemizing and the standard deduction is stupid and evil. If the standard deduction is $25000 but you have $26,000 worth of deductible expenses, that means that your really only getting back $1000 of those expenses. On the other hand if your deductible expenses were 25000 or less than you're getting none of it back.
Itemized deductions also help guide the actions of certain high income/high wealth individuals to seek tax reduction while also getting what the government wants done: home ownership and charitable contributions for example. 9/10 people don't have to make the choice between itemizing and the standard deduction because the standard deduction is the easy and clear winner for the vast majority of us. It dose make taxes a little less complicated (not much though)
My only income this year is a gross income of 4000 of online gambling with only 900 winnings /profit. Does the standard deduction cover my taxes this upcoming tax season ? I am a little nervous. Thank you. Love the the video and your calm presence
Thank you very much for your kind words! I can't legally give tax advice, but it is my understanding that you will be covered because you will report your "profit" on schedule 1 under "other income" and then it will be transferred to your 1040. After which, the standard deduction will be taken and if your total income was less than it, you will owe no federal income tax. I hope this helps, Kyle! :) This IRS article may also help: www.irs.gov/taxtopics/tc419
@@LJ-fb1ms It depends, but if your income is very low or no income then technically you may not have to file. However, I would still file every year because you may qualify for a tax credit, and/or you may need the completed form for other reasons (loans, identity verification, etc.)
So my social security is $1500 per month and my standard deduction $15700. So if I make less than that in my home based business does that mean I just don't have to file taxes at all?
If you have a business, then you are self-employed, and if you had net earnings of >$400 then you must file a return. www.irs.gov/newsroom/who-needs-to-file-a-tax-return
My friend, concerning charitable donation under standard deduction. I understand the $300 limit. What I am not sure about is the non-cash donation. In other words, can I make a non-cash donation to a qualified charity under standard deduction?
You can make all the non-cash donations that you want to (I encourage it!) however, unfortunately, it will not reduce your taxes if you take the standard deduction.
Yes, you should. Your tax bill should be $0 if you earned less than the standard deduction, but still probably had some fed tax withheld. You should get it all back, maybe more of you qualify for certain tax credits.
No it is one or the other. You should select the one that will get you the highest deduction. About 9/10 people don't have enough qualified itemized expenses high enough to surpass the current standard deduction. There is no income cut off for either one of them. Typically high income people would be more likely to use itemized deductions. I don't know if you have seen it or not but I have a video titled "Standard vs itemized deductions" and I think it would help you understand them better, thank you for your questions!
I made 36k and file 2 dependent, i choose standard deduction and i got 1,789 dollars back. I dont know why i hope you would give me more understanding.
Without looking at the tax return, I can't say for certain, but my educated guess is that you got all of your withheld taxes back? Are those two dependents children that you claim on your return? In that case, your tax refund seems low because I would expect you to qualify for the Child Tax Credit and the Earned Income Tax Credit if so. Child Tax Credit: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-7jtUvClyDro.html Earned Income Tax Credit: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-0Sq0aVMYOMM.html
You may not have any taxes being withheld for some reason? If your income ends up being larger than the std deduction then you could possibly owe some tax once you file your tax return, even if none was withheld initially.
So everyone says married filing joint is better because the standard deduction is bigger. But it is exactly 2x filing jointly than filing separate. So isn’t the standard deduction the same weather you file joint ($24k-ish) or separate ($12k x2)? I don’t understand any benefit with the standard deduction with regard to joint or single, to me they look the same?
Filing jointly usually leads to a smaller marginal tax bracket unless both are very high income earners. Look at the tax brackets and imagine two people making a median income of $50,000 each. Single people will end up in the 22% bracket, married filing joint will end up in the 12% bracket.
@@OnCashFlow oh yes I'm with you there, but I'm talking about all these people saying "the standard deduction filing jointly is bigger" when it's not, it's just double the amount for 2 people instead of one.
Hello! - So let's say you work a full time job making 50k where taxes are taken from your paycheck. - You make an additional 15k doing freelance work. - Would you be able to use standard deduction on the 15k you earned from freelance?
The standard deduction is the same regardless of where your income comes from. For example, if the standard deduction was $15k. It would still be $15k whether you were making $50k/yr or you were making $65k/yr.
if someone claims 'exempt' from withholding at the job and then has an unexpected increase, such as selling an investment, is that legal trouble if at tax time they went over the limit or do they just pay the tax owed?
State tax is an itemized deduction, so I think that would be a no, it's either itemized or standard. For your business specifically, there are business taxes that would be deductible on your business return separate from your main 1040. (not a tax professional, btw)
My standard Deduction is $18,800 and I single and head of house hold and my Itemized Deduction is $154 what do I do? Do I have to pay this back help not shore what to do
If you filed HOH for the 2021 tax year then that just means the first $18,000 of your income is not subject to federal income tax. You can take the standard OR itemized deductions. If itemized is only $154 then obviously, you want to take the standard :)
For estimated taxes (self employment)? It will be based on your estimated profit. 15.3% of profit for self-employment tax. Then take profit less the standard deduction to find taxable income. Plug taxable income into the tax brackets. Take the sum of SE tax and income tax and divide it by 4 to find estimated quarterly tax. I hope this helps a little, the IRS also has an estimator tool online you can search and find :)
@@GenevaBell Anytime! If you ever need a more in-depth question answered, let me know because I am trying to develop a system to help out more that way. :)
If I make 90K+ per year, single. With the standard deduction, does it mean my federal income tax brackets fall into 22% -> $40,526 to $86,375 instead of 90K+ one? Thanks
Yes! Take your total income +/- adjustments to income - tax deductions (standard or itemized) = taxable income. In this case: $90,000 - $0 (assuming no adjustments) - $12,550 (standard deduction) = $77,450 of taxable income. Therefore putting you into the 22% marginal tax bracket. I hope this helps :)
I understand that the Standard Deduction does not reduce your taxable income for the purposes of calculating what you owe in Social Security and Medicare Taxes, but does it apply to State Income Taxes and other State-level programs? For example, in CT there is both a marginal income tax (like the federal income tax) and a program called the Paid Family Medical Leave Act which is a 0.5% tax on all earnings. Am I calculating those two taxes based on my original income or my reduced, post-standard deduction income?
Well, every state has their own rules. Some follow the federal standard deduction, others do not. I think you will find this video about state income tax helpful: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-rwDHCbTEE64.html
Fam, I need to know if I do have to pay taxes if this year. I am a student, but my income from a side hustle on 2020 was around 9-10k. If the standard deduction is 12k, Do I have to pay taxes? I would love to get an answer
With a standard deduction of $12,400 in 2020 for a single filer, and and income of 9-10k, you should owe $0 federal income tax. However, if that side hustle is considered a business, and you are considered self-employed, then you might owe FICA taxes. I have a video on them as well that I think might be beneficial to you: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-trg6gMUP--0.html Regardless, you should still file a tax return using free software. Just do a search for "IRS Free File Program"
The IRS explains it better than I can ;) Taxpayers who do not remarry in the year their spouse dies can file jointly with the deceased spouse. For the two years following the year of death, the surviving spouse may be able to use the Qualifying Widow(er) filing status. To qualify, the taxpayer must: • Be entitled to file a joint return for the year the spouse died, regardless of whether the taxpayer actually filed a joint return that year. • Have had a spouse who died in either of the two prior years. The taxpayer must not remarry before the end of the current tax year. • Have a child, stepchild, or adopted child who qualifies as the taxpayer’s dependent for the year or would qualify as the taxpayer’s dependent except that he or she does not meet the gross income test, or does not meet the joint return test, or except that the taxpayer may be claimed as a dependent of another taxpayer. • Live with this child in the taxpayer’s home all year, except for temporary absences. • Have paid more than half the cost of keeping up the home for the year.
Why does turbo tax on irs website says 8000 for standard deduction? I’m full time student and full time employee. Should I still file with this deduction amount? Am I single dependent if I’m 25?
are you being claimed on your parents tax return? you are usually single and independent after age 24 if I recall correctly. the standard deduction is definitely more than $8,000.
Thank you for the informative video, as someone who has just migrated to the US and know nothing about how taxes work in this country, all these tax stuff just seem a little too complicated to me. Just a question though, if I had a internship over the summer and I earn less the the standard deduction and did not withhold any federal taxes (obviously I did not know what the hell I was doing when I was filling out the forms when I got hired😅), do I owe anything to the IRS?
It is very complicated; on purpose (lobbying, and such). I can't say with that information that you do or do not owe anything to the IRS. Even if you technically might not have to file a tax return if your income is below a certain threshold, I would always error on the side of filing a tax return every year, regardless. Might be eligible for a refund due to tax credit, withholding too much, etc.
Hi this video helps!! Maybe you can help me more. Here’s the scenario: I decided to retire early so I sold my house , I’m 58, no income , Because of covid , lockdowns and travel restrictions, I’m stuck abroad more than 6 months while visiting aging parents. I’m on my 3rd year of my Roth conversion so to lower my taxes , I only convert $80-81,000 a year so I’m on 12% bracket. Me and my wife have no income, just relying on the sale of our house living frugally.Are we eligible for standard deduction if we file our taxes for 2021 even we had lived abroad longer than 6 months?what if we decide to stay abroad more than 6 months in a given year ( taking care of our parents) but still goes back to US yearly ,can we claim standard deductions when we file our taxes? We plan to collect our Social security after all our IRAs been converted which is about 5 years more.your feedback helps. Appreciate it. Thank you so much!
Hello! I'm so glad the video was helpful! Your situation is quite complex and I think you would be a good fit for getting some more in-depth professional help! But as far as your main question goes, I see no reason why you couldn't get the standard deduction while living abroad 6 months or more. As a U.S. citizen you are taxed worldwide on income. You will fill out more or less the same tax forms (1040) and that means after you report all of your income, you will still either itemize or take the standard deduction. Long story short, my opinion is Yes, you can take the standard deduction.
Thank you for your explanation! But I still have a question , if I got 1099-K and my tax will be like : $20000(income) - mileage- standard deduction , is this correct ? Thanks a lot
Assuming you are operating as a small business, then the mileage would go on your schedule C., which is on your schedule 1. The standard deduction would be right on the 1040. The math essentially comes down to what you have described though. If you have 20k income and 5k in mileage deduction then you have a profit of 15k then the standard deduction gets subtracted from that profit to find your taxable income.
@@syfodias-jedimaster 15K income minus 10k of business expenses = 5k profit. Could possibly owe Self employment Tax + Income tax, depending on other factors. The first marginal federal income tax bracket starts at 10%. SE Tax is 15.3%.
I work under 1099 as a side job. Sometimes I have to buy parts. I get reimbursed for them, but will I then get taxed on the reimbursement as if it was income?
So is higher cash value better or worst? Say theres 2 guys same yearly revenue, one files single the other head of house hold, who will get more money back in the income tax??
So does the Standard deduction happen automatically or do you have ask for it? If so how and can I just tell the tax professional to do a standers deduction?
You will enter it in your form 1040. The tax preparer will most likely automatically put the standard deduction on your tax return unless you specifically give them your itemized Receipts
Standard deduction means that amount of income is not taxed for everyone. So if you make less than the standard deduction, you owe no income tax by default.
So, does this mean anyone who makes under the amount of the standard deductible for self-employment or regular employment and no other income, that they will not owe taxes? I get self-employment income but not that much. I don't think I will reach over the max standard deductible.
They usually wouldn't owe federal income tax, but will still owe FICA or SECA (Social Security/Medicare tax) My related video on Self-employment tax: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Ej87yJHvjR0.html
If a married filing jointly comes in just below the standard deduction but they get another 7k a year in SS, does that raise the threshold so they will owe taxes? thanks
Social Security is a bit "wierd" when it comes to taxation, but here it is: You must pay taxes on up to 85% of your Social Security benefits if you file a: Joint return, and you and your spouse have “combined income” of more than $32,000. faq.ssa.gov/en-us/Topic/article/KA-02471 So, it sounds like their combined income is >$32k so they MAY owe some income tax IF they don't have other deductions, adjustments, or tax credits. I would file a tax return every year regardless of income.
@@OnCashFlow thanks but if the person claims 'exempt' from withholding at the job and then goes a little over the max for owing zero, is it legal trouble?
Can I just put 0 on the line for standard deductions and itemized if I only receive social security and have 3 dependents I dont normally file I just need to get the ctc?
You would still put the standard deduction amount on your 1040. While it's true that you may not be required to file, I would still do so because you might miss out on valuable tax credits and/or miss out on some income based programs that may require tax returns for proof of income. If I were you, I would meet with a tax advisor and probably file amended returns for the past few years.
Hey there🙋♂️ so when can u use as itemizing? Capital gains n losses on stocks n crypto , utilities, etc? What about mortage payments if so( is that only interest or also pricipal?)
Thanks for this video. Do standard deductions also encompass contributions to a 403b account? I'm debating whether to contribute to a 403b in order to bring my income down to the 12% tax bracket, but it looks like the standard deduction (if I understand correctly) will do this for me already.
By contributing to a workplace retirement plan that allows you to defer income tax (Traditional type) You reduce your gross income before it goes on your 1040 box 1. Both the contribution and the standard deduction will reduce your taxable income, along with adjustments to your income on Schedule 1. Adjusted Gross Income: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Mo5t6kHvrfQ.html
It can be used instead of itemizing tax deductions whether you are self-employed or a W-2 employee. It is going to be separate from your Schedule C, which reports business profit/loss.
@@OnCashFlow so just to follow up, I spoke with my accountant and they are telling me that I cannot take the standard deduction and I have to pay all taxes on my income except for deductions for the business. I think I may need to find a new CPA!
That mean's you probably should not owe any federal income tax. If you had any federal income tax withheld from your w-2 then when you file your tax return, you would get all of the withheld amount back.
confused - so if a married couple files jointly and their income is 13k and they had capital gains of 10k they can claim the standard deduction and owe zero taxes? thanks
In that scenario, yes they will pay $0 taxes, but it's even better than that because long-term capital gains are taxed at $0 well above the standard deduction. Just know that for the 2022 tax year the first $25,900 of income is tax-free MFJ. Here's a video where I explain capital gains: ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-vvR39Otxbmw.html
Is it true that a tax return should cover a 12 month period to be eligible for standard deduction? For instance, If a new immigrant started working from August, then he/she won't be eligible for a standard deduction because of only 5 months of income?
Sorry. That's true, there are some cases where someone cannot take the standard deduction! I must remind you that I am just a layman, and not a tax professional! Here is the answer to that question from the IRS: www.irs.gov/taxtopics/tc551#:~:text=Certain%20taxpayers%20aren't%20entitled,see%20below%20for%20certain%20exceptions)
Hey so I made 16,000 in the stock market last year(All Short - Term Capital Gains). If I file as single, can I use the Standard Tax Deduction of 12,500 to only pay $16,000 - $12,500 = $3500? If so, that will be taxed according to my tax bracket?
If that $16k was your only income then yes. You can still use the standard deduction regardless of the kind of income you received. So yes you would theoretically be taxed on $3,500 of income in your example. Assuming no other adjustments or tax credits, you would have $3,500 x 10% tax bracket = $350 of federal income tax liability. Hope this helps! :)
Can you clarify your question? The standard deduction applies to everyone's tax return, whether or ot you have a w-2 or not. It applies against all of your income. Hope that makes sense.
Awesome video, but I’m still a little confused and I apologize for that. Let’s say a couple makes $100,000 a year and after taxes make $80,000. With the standard deduction of $24,800. Does the couple owe 0 income tax, and receive a refund of $4,800? Thank you for you help
If a couple makes $100,000 in 2020 and the standard deduction is $24,800 then assuming no other adjustments to income, their tacxable income would be $100,000 - $24,800 = $75,200. That $75,200 would then be put through the federal tax brackets in order to calculate the tax bill regardless of what was withheld from their paychecks. If they withheld too much then they get a refund. Too little, then they pay the difference. I hope this helps clarify! :)
Under $12,950 you might not need to file, but I would still file anyway because you might get tax credits and/or a refund, etc. Plus it is good for general financial records that may be needed for other purposes. www.hrblock.com/tax-center/income/other-income/how-much-do-you-have-to-make-to-file-taxes/#:~:text=The%20minimum%20income%20amount%20depends,file%20a%20federal%20tax%20return.
If someone makes less than the standard deduction but they want to maximize long-term capital gains for a single filer. Can they take out the $40,000 + any extra long-term gains to bring the income up to standard deduction level.? Or if there is a gap between income and standard deduction are you only allowed to take out $40,000 with no tax for single filer for 2021? So for example someone only makes $8k a year but standard deduction is $12K. Can they only take out $40,000 long term capital gains or can they take out $44k and still have 0 tax
It has to do with total taxable income. So in that scenario. If regular income is $8k and the standard deduction is $12,550 then no federal income taxes would be paid on that. For the long-term capital gains rate, if taxable income is less than 40k then I believe that you could realize $44,550 in long-term capital gains. This is because taxable income is Line 15 on your form 1040. So theoretically you could have a Total income (Line 9) equal to $52,550 less the standard deduction $12,550 (Line 12) equals $40,000 of taxable income (Line 15). Therefore, if you had 8k of total other income, you should theoretically be able to realize $44,250 ($52,550 - $8,000 = $44,250) of long-term capital gains and still pay 0% on those gains. Please do not take this as tax advice, I am not 100% sure that this is correct, and if you are going to realize a large sum of capital gains, please consult a tax advisor. Otherwise, I hope this helps a little!
As far as I know, the non-cash donations are only applicable to itemizing tax deductions. You can make all the donations that you want but it won't affect taxes if you use the standard deduction.
Yeah so the standard deduction is the same for everyone and for a single person in 2020 it is $12,400. So right off the bat, you owe no income on your first $12,400. So if your gross income is $30,000 you subtract the standard deduction to find ($30,000 - $12,400 = $17,600) $17,600 of taxable income (assuming you have no other deductions). Then you would plug $17,600 into the single tax bracket to calculate your total tax bill. Hope this helps!
@@aptly6 Yes, if you file single and can't be claimed as a dependent then technically the first $12,400 (in 2020) of income you earn won't be taxed (you should still file as taxes may have been withheld and you might qualify for credits.
I am sorry about that. I have tried improving so much in the last year by attempting to get to the point much faster. I hope that you could still find some value in the video.
