Some issues fly under the radar until they trigger an unexpected tax return notice, penalty, or tax bill. What may seem like routine financial activity can quickly turn into a costly mistake if it’s reported incorrectly.
Below are seven commonly misunderstood tax situations that deserve careful attention before filing.
The tax term head of household is one of the more misunderstood tax phrases inside the U.S. tax code.
However, if your situation warrants head of household status, there are two big tax benefits:
First, a higher standard deduction.
Second, lower effective tax rates for virtually every income level.
This is great, but only if you qualify.
The recently passed One Big Beautiful Bill Act (OBBBA) addresses some tax law uncertainty while creating several benefits impacting your 2025 tax return. One of these benefits is a new $6,000 deduction for seniors. Here is what you need to know.
The IRS is penalizing late filers of S corporation and partnership tax returns. This despite the fact that late filing of the tax returns (Forms 1120S and 1065), due March 15th, often does not impact the receipt of the taxes due on April 15th. Those that are getting this penalty are often couples and other small firms who have formed these business entities to provide legal protection for their shareholders.
Before you file away your tax return and all its related records, now is the time to make a final review of the material. This can be in either paper or digital form as long as you know where it is, it's securely stored, and you feel it will meet the requirements of substantiation. Here are some tips: