After spending a lifetime working and preparing for retirement, people over the age of 65 -- here in Massachusetts and elsewhere -- often end up living on fixed incomes and others continue to work well after this birthday. Even so, many of them must still pay taxes on the income they do receive. The IRS recognizes their need to retain as much of their income as possible, so for the 2019 tax year, people within this age bracket can use a new tax form.
Even though the country is no longer in the midst of a recession, some Massachusetts families still struggle financially. Many of them work out deals with their creditors to reduce their debt, and that may include having some balances forgiven, which means that the company that extended credit for a home, car or other debt absolves the consumer of responsibility for a portion of the debt. The problem is that the IRS usually considers this forgiven debt as income and that could mean a hefty bill at tax time.
New laws often cause some measure of confusion in their first years. When the Tax Cuts and Jobs Act of 2017 went into effect, it was no exception. It created confusion for a lot of taxpayers, many here in Massachusetts included. Now, the IRS is advising taxpayers to make sure their withholding is correct in order to avoid problems during tax time, but getting it right could present a challenge.
Filling out a withholding form (the W-4) is the first step in paying taxes on income. The IRS recently released a new form it wants to use for withholding that complies with the changes of the Tax Cuts and Jobs Act. The public may comment on the new form through July 1.
Once Massachusetts residents file their tax returns, they may immediately put them out of their minds. Who can blame them? No one wants to pay taxes, and any dealing with the IRS can cause anxiety. While it is possible to move on and forget about taxes until the following year, records should still be kept -- just in case.
Paying taxes is something that nearly every Massachusetts resident must do. People who work as employees often have a certain amount of taxes taken out of their checks each pay period in order to help meet that obligation to the IRS and other applicable tax authorities. This often makes matters simple for them since they never see the money and do not have the responsibility of making sure those payments are made.
Summer is approaching, and many teenagers living here in Boston or elsewhere may begin thinking about getting a job to earn some extra money. Entering the workforce can provide a sense of freedom and independence, but it can also require a wakeup call to the responsibilities that adults tend to assume without much thought. For instance, the IRS expects teenagers to pay taxes and possibly even to file an income tax return.
Tax time has come to a close for this year, and most people want nothing to do with the subject until much later in the year or nearer tax time next year. While many Massachusetts residents can empathize with that sentiment, it may not be the best course of action for dealing with the IRS. In fact, there may be some steps to take now that could make tax time go more smoothly next year.
In just a few weeks, the deadline for federal tax returns will arrive. With the new changes in tax laws, it may be difficult for many in Massachusetts to know what to expect when they get to the final calculation. Many who typically receive refunds may end up owing the IRS, and others who typically owe may be shocked if their bill is much higher than usual. This may cause even more anxiety if the taxpayer does not have the means to pay what is owed.
Many Massachusetts residents may ask this question every year. With the tax changes now in effect this tax season, the answer may prove even more important. Like many questions posed to the IRS, the answer varies depending on the circumstances. There is more than one definition involved.