us tax form

IRS Transcript

If you need an IRS Transcript to fulfill requirements of applying for a loan, here’s how you get one.  The IRS makes it easy for you, surprisingly!  Another good thing: an IRS Transcript is totally free.  Now, if it’ s a copy of your tax return that you need, that’s a different story.  Also, it’s a totally different IRS form.  Usually lenders don’t need your entire tax return to get the necessary information for making a decision on whether to fund your loan.  They just need the vital statistics, which are what’s on an IRS Transcript.

How to Order an IRS Transcript

If you are a phone-based person, you can call the IRS to order a transcript.  The number is 1-800-908-9946.  Alternatively, you can order one online at https://sa1.www4.irs.gov/irfof-tra/start.do.  It’s on the irs.gov website.  By the way, a note on security and the internet: if you’re ordering an IRS transcript and you don’t see irs.gov somewhere in the address line then GET OUT.  It’s a scam website that is trying to steal your identity by having you type in your Social Security number and other vital personal information.

Yes, the IRS website transcript ordering page will ask you for personal information so do that address check before entering anything.  You’ll need your Social Security number, your date of birth, your street address and your zip code.  That’s the first screen.  Once you enter that info, you’re done entering information.

If you’re ordering an IRS transcript online, the only place you can have it sent is to yourself.

What’s Included on the IRS Transcript?

Whoever gets that copy of your IRS transcript will be able to know the following things about you:

  • your taxable income
  • your adjusted gross income
  • any adjustments you made to taxable income, like tax credits etc
  • your marital status

You may think it doesn’t matter what adjustments to income you made on your income tax return, but your adjustments are based on your life.  For example, if you have dependents then that’s basically spelled out in plain English on your IRS transcript because having dependents means you adjust the heck out of your income because you get all kinds of tax credits when you have dependents.

What Form is Needed for an IRS Transcript?

Since the only place you can have an IRS transcript sent if you order it online is to yourself, you’ll need to fill out a paper form if you want one sent directly to a lender or a school.  You will need IRS Form 4506-t.  It’s short and easy; you just download it, fill it out, and mail it to the address provided.

f4506t

Tax

Announcement: 2014 IRS Tax Brackets Are Out

Want to know what the 2014 IRS tax brackets look like? They came out in January and you can see a big difference in the way they’re structured compared to last year.  That’s because there’s a new tax bracket at the top for the very wealthy: 39.6%.   It’s a result of the Fiscal Cliff deals famously made at the last minute by Congress.  We were afraid we’d lose the lowest bracket (10%) but it was saved at the last minute.  Most taxpayers will stay  at or under 25% marginal tax rate, since the average annual income in the US is around $43,000.

2014 IRS Tax Brackets are for Tax Year 2013

Keep in mind that the 2014 IRS tax brackets are good for one year only: they’ll change again next January, of course.  They are for doing your taxes in 2014, which means tax year 2013.  They are not for doing your tax year 2014 taxes in 2015.  A lot of people get that all mixed up so make sure you know what a tax year means!

2014 IRS Tax Brackets
Filing Status: Married Filing Jointly
Marginal Tax Rate Taxable Income (AGI)
10.00% $0 – $17,850
15.00% $17,851 – $72,500
25.00% $72,501 – $146,400
28.00% $146,401 – $223,050
33.00% $223,051 – $398,350
35.00% $398,351 – $450,000
39.60% $450,001 and up
2014 IRS Tax Brackets
Filing Status: Married Filing Separately
Marginal Tax Rate Taxable Income (AGI)
10.00% $0 – $8925
15.00% $8926 – $36,250
25.00% $36,251 – $76,200
28.00% $73,201 – $111,525
33.00% $111,526 – $199,175
35.00% $199,176 – $225,000
39.60% $225,001 and up
2014 IRS Tax Brackets
Filing Status: Individual
Marginal Tax Rate Taxable Income (AGI)
10.00% $0 – $8925
15.00% $8926 – $36,250
25.00% $36,251 – $87,850
28.00% $87,851 – $183,250
33.00% $1983,251 – $398,350
35.00% $398,351 – $400,000
39.60% $400,001.00

 

Businesswoman calculating expenses

IRS Tax Tables & You: Evolving Together Through the Years

IRS tax tables change every year, and thank goodness for that or we’d all be taxed to poverty levels by the IRS.  One thing nobody can do is stop inflation- the price of everything creeps up a bit each year, the dollar is worth just a teensy bit less, and there’s nothing we can reasonably do to stop the process.  A loaf of bread was once five cents.  Now it’s four dollars.  But wages used to be twenty five cents an hour (1938) and now they’re $1007.25 an hour.  Hopefully, wages keep up with prices of things.

How IRS Tax Tables Change Over the Years

As wages rise, tax brackets shift as well.  Let’s go back to 1938.  Back then, you were rich if you made $56,000 a year.  Fabulously wealthy.  Therefore, with our progressive tax system, you were taxed at a higher rate than your poorer neighbors.  According to the IRS tax tables for 1938, a $56,000 salary put you into the 39% tax bracket.  Your marginal tax rate was 39%.

Since 1938 a whole lot of inflation has occurred so that nowadays, lots more taxpayers make that amount.  The average annual income by the way is around $43,000 so it’s slightly above average.  It’s just how things work, it’s inflation.  But if the IRS tax tables hadn’t shifted each year to keep up with inflation, everyone making $62,000 nowadays would be in the 39% tax bracket, which is a pretty hefty tax burden.

According to the IRS tax tables of today, you have to have an annual taxable income of over $400,000 to get bumped into the 39.6% tax bracket.  It’s the highest bracket on the whole table, and it’s reserved for the extra wealthy.  Most people are taxed at the 25% rate and lower (15%, 10%).  Needless to say, it’s pretty important to us that the IRS tax tables get adjusted each year for inflation.

Annual Inflation Adjustments

The IRS tax tables get adjusted each year for inflation, and so do a number of other tax figures related to federal income taxes.  The IRS posts them on their website around the beginning of the year, in early January.  Here’s a list of what important tax numbers get adjusted:

  1. the Personal Exemption.  This rises about $100 a year.  This is an amount that each taxpayer can lop off the adjusted gross income, and it lowers the tax bill.
  2. the Standard Deduction.  This also goes up about $100 or $150 each year.  Same idea: the higher the standard deduction the lower your tax bill.
  3. the Alternative Minimum Tax exemption amount also rises.  That means more people are exempt from this tax.
  4. the IRS tax tables get shifted.  That means more people can stay in their present tax brackets even though their annual income may have gone up.

 

calendar

Calling All Procrastinators: The IRS Extension

Are you a functioning procrastinator?  Do you know yourself enough to know you’ll be late, and therefore make provisions for what will inevitably happen?  If so, then you probably should know about an IRS extension.  This is for procrastinators like you, who know they won’t be able to file their federal income tax return on time.  There are many out there just like you, and do you want to know what they do?  They file the extension automatically, every year, at the beginning of the tax season.  They know they’ll be late, so why fool around with penalties for not filing on time when all you have to do is submit a simple half-page form to the IRS and you get a whole six months more time to file?

An IRS Extension…of What?

You get six more months after the normal tax due date of April 15 to file your federal income tax return.  So, while all your friends are tearing their hair out on April 13-14 trying to finish up tax returns, you can hang out and watch reruns of Baywatch or take a light jog in the park if you want.  That’s because you filed an IRS extension and your due date is October 15, not April 15.

Why isn’t everyone doing this? you ask.

One simple reason. Well maybe two simple reasons.  One:  because not everyone is a procrastinator and some people would rather just get it over with and move on with life.  Two: because an IRS extension gives you more time to submit your tax forms but it doesn’t do anything for your bill.  If you owe money to the IRS on your income tax return, that bill is still due April 15.  If you should be getting an IRS refund, then no problem they’ll let you wait until October of course.  More money for them to play around with for an extra six months or so!

So, what have we learned?  An IRS extension gets you more time to file your taxes but not  more time to pay.  If you usually owe money then get your income tax return in by April 15.  If you don’t, and you don’t file an IRS extension, you’ll face interest charges on the amount you owe, and possibly some penalties as well.

An alternative, if you owe money on your taxes, is to file for the automatic six-month extension and pay some money when you file.  That way the IRS knows you are trying to make good on your bill.  They’ll waive penalties and interest if you do this.  But you should pay what you estimate you’ll owe.  You can’t just pay $10 and they’ll let you off for six months.  Not for $10!

Getting an IRS Extension Online

Thank goodness there are some employees at the IRS who see the beauty of the internet.  Not only has the IRS website become easier to navigate and understand lately, but many services are now available online.  One, thank goodness, is the IRS extension.  You can now request an extension through the IRS website by clicking on the FreeFile link.  That takes you to software through you which can electronically submit IRS form 4868, which is the form used to request an extension.

If I Don’t Have Time to File, How Do I Know How Much I Owe?

IRS Form 4868 has a space in which you can write your estimated your tax liability.  There are numerous tax estimators online.  One sanctioned by the IRS is at eFile.com.  Once you get an estimate, you’ll have to pay that amount when you file for the extension.

Surgeon

The Affordable Care Act’s Health Insurance Marketplace: Where’s MY Bargain?

The Affordable Care Act offers a tax credit beginning in the tax year 2014.  How does this work?  It’s part of President Obama’s new health care law, which provides a national framework for affordable health care insurance.

First, there’s a nation-wide marketplace for taxpayers to purchase affordable health care.  That qualifies anyone who’s covered for the new tax credit for health insurance premiums.  The Affordable Care Act also writes into law certain regulations on health insurance companies and small businesses, ensuring that they do their part towards the goal of giving every American citizen access to affordable health care.

What Does the Affordable Care Act Mean for Me?

Starting on October 1, 2013 the Health Insurance Marketplace will open.  Open Enrollment means every citizen will have the chance to browse from various health insurance packages available.  They should be affordable and accessible, even with pre-existing conditions and other obstacles previously put up by health insurance companies.

There is a website run by the federal government called healthcare.gov and its sole aim is to educate the public on the new  Insurance Marketplace. There is a step-by-step guide that predicts whether you’ll be able to save money with the new plans.  It’s located here and it asks questions about what kind if health insurance you’ll be seeking, your tax filing status, your annual income etc.  I did the calculator twice: once for me and once for a friend’s self-employed situation and both times the calculator told me I wouldn’t be saving any money in the new Health Insurance Marketplace.  Thanks!  I don’t make much and the calculator didn’t even ask how much he, as a self-employed person, made.

That gave me the idea: why not commission a study to test this questionnaire over and over again, hundreds of times, using all sorts of different scenarios?  Well I got the staff here at Tax-Guide involved and the results were fascinating.

Results of Tax-Guide’s Health Insurance Marketplace Study

Based on 378 different applications of the health care questionnaire, I conclude that the only time the new Marketplace triggered a savings for individuals was when one the following conditions was met:

  • pregnant
  • a veteran status
  • having a disability
  • having children or dependents
  • being an Alaskan Native or an American Indian
  • being self-employed

I guess the new Marketplace means bargains for people with really really dire situations.  Maybe a single mom with multiple kids and only a part time job.  In the past there’s no way in hell she could find affordable health insurance other than Medicaid.  Maybe you have to be very poor to care about the Health Insurance Marketplace.

I make less than $48,000.  But my household income is over that amount.  However, I’m not married: I have a partner.  Does that mean I have to include his income as household income?  If I say my household income is over $48,000 then the healthcare.gov calculator says I won’t benefit from anything the Marketplace has to offer.  However, if I say the household income is less than that amount, I’m told I’ll qualify for Medicaid or something like it.  Does my partner’s income count?  Why should it?  He doesn’t pay for me to live.  I pay all my own bills, half the mortgage, food, utilities, etc.  Who’s to know that he lives with me at all?  Or that he’s just a roommate?