A Few Things to Know As Tax Day Approaches - InvestingChannel

A Few Things to Know As Tax Day Approaches

Proprietary Data Insights

Top Personal Services Stock Searches This Month

#1WW International4,072
#2H&R Block2,179
#4Service Corporation International1,499
#5Franchise Group831
#ad Cryptos… NFTs… Real Estate… Startups…

A Few Things to Know As Tax Day Approaches

Tax Day is this coming Tuesday, April 18. 

Fitting that H&R Block (HRB) ranks second among personal services stocks in our proprietary sentiment indicator, Trackstar. Darkly funny that Service Corporation International (SCI), a company that deals in funeral, cremation, and cemetery services, comes in a close fourth. 

As we approach the IRS’ filing deadline, The Juice has a few things we think you should know. 

It Finally Pays to Be in California

The Juice newsletter emanates from Los Angeles. In three independent conversations with otherwise financially aware friends over the weekend, we were shocked to learn not one knew that…

  • The IRS extended the deadline to file your taxes to October 16, 2023, throughout most of California due to the torrential rain we experienced in recent months. The extension applies to 55 of the state’s 58 counties, including all of the San Francisco Bay Area and Southern California. 
  • Californians don’t have to prove the storms impacted them. 
  • If you live in Lassen, Modoc, or Shasta County in California, get on it. Your taxes are still due next month. 
  • The same extension applies to parts of Alabama and Georgia due to storms that hit those areas. The IRS has the particulars here

Taxes on Dividends

We love dividend growth investing. We talk about it a lot. 

Earlier this year, we devoted an entire installment to the tax ramifications of collecting dividends. Complete details here, but a few key points to remember:

  • A potentially great way to avoid dividend taxes is to hold your dividend stocks in a Roth IRA, where you contribute after-tax income (unlike a traditional IRA, where you make tax-deferred contributions). The IRS doesn’t tax qualified withdrawals from a Roth, even on capital gains and income, such as dividend income. 
  • If you’re single with taxable income of $41,675 or less, or if you’re married and filing jointly and had taxable income of $83,350 or less, you’ll pay no taxes on dividend income. (Taxes on higher earnings are either 15% or 20%.)

Damn. We’re making the IRS sound like your friendly neighborhood bureaucracy here. 

Except… The IRS is implementing a change pertaining to income that apps such as Venmo and PayPal pay out. 

The IRS currently requires them to send 1099-K tax forms to people whose gross incomes on these apps exceed $20,000 or who have more than 200 separate app transactions a year. The IRS is lowering that limit to $600. 

While you’ve always had to report this income, the IRS will soon be able to better scrutinize money these middlemen pay out. 

The IRS was set to implement the change for the 2022 tax year. But after outcry mainly from Republicans, the crackdown won’t start until the 2023 tax year. 

The Bottom Line: While we can’t give you specific tax advice, like whether or not you should take advantage of any applicable filing extensions, we can suggest not trying to pull a fast one on Uncle Sam. 

So if you’re crushing the game as a freelancer or via self-employment, get in the habit of not only reporting all your income, but also deducting allowable expenses.

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