Tax Refunds: Just the Facts | Factors Affecting Refund Timing

As tax-filing season gets underway, taxpayers may be anticipating receiving their refund by a certain date, especially if they plan on making major purchases or paying bills. While some tax returns are processed quickly, others may require additional review. As such, those refunds may take longer.

Just as each tax return is unique and individual, so is each taxpayer’s refund. Here is what taxpayers should keep in mind as they are waiting for their refund – especially if they hear about or see that other taxpayers on social media have already received theirs.

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Home Equity Loan Interest Still Deductible

The Tax Cuts and Jobs Act has resulted in questions from taxpayers about many tax provisions including whether interest paid on home equity loans is still deductible. The good news is that despite newly-enacted restrictions on home mortgages, taxpayers can often still deduct interest on a home equity loan, home equity line of credit (HELOC) or second mortgage, regardless of how the loan is labeled.

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Tax Treatment of State and Local Tax Refunds

The Tax Cuts and Jobs Act (TCJA), enacted in December 2017, limited the itemized deduction for state and local taxes to $5,000 for a married person filing a separate return and $10,000 for all other tax filers. The limit applies to tax years 2018 to 2025.

As in prior years, if a taxpayer chose the standard deduction then state and local tax refunds are not subject to tax. However, if a taxpayer itemizes deductions for that year on Schedule A, Itemized Deductions, part or all of the refund may be subject to tax – but only to the extent that the taxpayer received a tax benefit from the deduction.

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Form 8962: Reconciling the Premium Tax Credit

Form 8962, Premium Tax Credit, reconciles 2019 advance payments of the premium tax credit and may also affect a taxpayer’s ability to get advance payments of the premium tax credit or cost-sharing reductions. Taxpayers who don’t file and reconcile their 2019 advance credit payments may not be eligible for advance payments of the premium tax credit in the future. Furthermore, filing Form 8962, with a return avoids possible delays in processing tax returns and subsequent delays in receiving tax refunds.

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It’s Not Too Late to Make an IRA Contribution

If you haven’t contributed funds to an Individual Retirement Account (IRA) for tax year 2019, or if you’ve put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April 15th due date, not including extensions.

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New Tax Law Affects Tax-Exempt Organizations

The Taxpayer Certainty and Disaster Tax Relief Act, passed on December 20, 2019, includes several provisions that may apply to tax-exempt organizations’ current and previous tax years. As such, tax-exempt organizations should understand how these recent tax law changes might affect them. With this in mind, let’s take a look at three key pieces of legislation that affect nonprofit organizations:

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New Rules for Depreciation and Expensing of Qualified Property

As part of final guidance issued that pertains to the Tax Cuts and Jobs Act of 2017, new rules and limitations are in effect for taxpayers who deduct depreciation for qualified property acquired and placed in service after September 27, 2017, and, as a business owner, they could affect your tax situation. Let’s take a closer look:

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Are Tips Taxable? | Reporting Tip Income: The Basics

The short answer is yes, tips are taxable. If you work at a hair salon, barbershop, casino, golf course, hotel, or restaurant, or drive a taxicab, then the tip income you receive as an employee from those services is taxable income. Here are a few other tips about tips:

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Claiming an Elderly Parent or Relative as a Dependent

Are you taking care of an elderly parent or relative? Whether it’s driving to doctor appointments, paying for nursing home care or medical expenses, or handling their personal finances, dealing with an elderly parent or relative can be emotionally and financially draining, especially when you are taking care of your own family as well.

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Tips for Taxpayers Who Make Money From a Hobby

Many people enjoy hobbies that are also a source of income. From soap making to pottery and jewelry making to calligraphy, these activities can be sources of both fun and finances. Taxpayers who make money from a hobby must report that income on their tax return.

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