AI Tax Answer Library
Find answers to common tax questions. All answers were generated by HIVE Tax AI agents and verified by a professional CPA.
Latest Tax Questions & Answers
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Are there changes to the pass-through entity tax workaround for SALT under the One Big Beautiful Bill?
The One Big Beautiful Bill does not appear to contain specific provisions that directly modify the existing pass-through entity tax workaround for State and Local Tax (SALT) deductions.
How long will the increased SALT cap remain in effect before reverting under the One Big Beautiful Bill?
The increased State and Local Tax (SALT) deduction cap under the One Big Beautiful Bill represents a temporary enhancement to the current tax limitation structure.
What is the new SALT cap, and how does it phase out for higher-income taxpayers under the One Big Beautiful Bill?
The One Big Beautiful Bill introduces significant changes to the State and Local Tax (SALT) deduction that represent a substantial departure from the current $10,000 limitation established by the Tax Cuts and Jobs Act (TCJA).
Is equipment financed in 2024 still eligible for depreciation?
Yes, equipment financed in 2024 is still eligible for depreciation, including bonus depreciation and Section 179 expensing. The method of financing does not affect the depreciation eligibility of business equipment, as long as the equipment meets the fundamental requirements for depreciation.
How do I depreciate real estate used in my business?
Depreciating real estate used in your business involves specific rules and methods under the Modified Accelerated Cost Recovery System (MACRS). The treatment depends on the type of real property, when it was placed in service, and how it’s used in your business operations.
Can I expense software subscriptions or licenses?
The tax treatment of software subscriptions and licenses depends on several factors, including the type of software, how it’s acquired, and how it’s used in your business. The tax code provides different pathways for expensing or capitalizing these costs, each with specific requirements and benefits.
How does bonus depreciation phase down after 2023?
Bonus depreciation, also known as the additional first year depreciation deduction under Section 168(k), follows a specific phase-down schedule that began after 2023. Understanding this phase-down is crucial for tax planning as it significantly impacts the immediate tax benefits available for qualifying business property investments.
What qualifies for Section 179 expensing in 2024?
Section 179 expensing allows taxpayers to immediately deduct the cost of qualifying business property rather than depreciating it over time. For 2024, there are specific requirements and limitations that determine what qualifies for this valuable tax benefit.
What clean energy credits apply to business vehicles or property?
There are several significant clean energy tax credits available for business vehicles and property in 2024 and beyond. These credits are designed to incentivize businesses to adopt cleaner technologies and reduce their environmental impact.
Can I claim the Work Opportunity Tax Credit?
Yes, you may be eligible to claim the Work Opportunity Tax Credit (WOTC), but eligibility depends on several specific requirements related to your business type, the employees you hire, and proper certification procedures.
Are there tax credits for offering health insurance to employees?
Yes, there are several tax credits available for employers who offer health insurance to their employees. The primary credit is the Small Business Health Care Tax Credit, along with various other considerations and requirements under the Affordable Care Act.
Can I still claim the Employee Retention Credit (ERC) in 2025?
No, you cannot claim the Employee Retention Credit (ERC) in 2025. The Employee Retention Credit (ERC) is only available for eligible employers that paid qualified wages to employees between March 13, 2020, and December 31, 2021
What are the 2024 small business tax credits I should know about?
The Research and Development Credit (IRC Section 41) has been made permanent and offers significant benefits for qualifying small businesses.
Can I pay my children or spouse through the business?
Yes, you can pay your children or spouse through the business, but there are specific rules and requirements that must be followed to ensure the payments are legitimate business expenses and comply with employment tax obligations.
How do I report owner’s compensation?
Reporting owner’s compensation depends significantly on the business structure and the owner’s role within the organization. The treatment varies dramatically between different entity types, and proper reporting is essential for both tax compliance and avoiding penalties.
How do I handle state unemployment and payroll tax filings?
Handling state unemployment and payroll tax filings requires understanding both the federal framework and the specific requirements of each state where you have employees. This process involves multiple components including registration, ongoing filings, tax calculations, and compliance with varying state-specific rules.
Are payroll taxes deductible as a business expense?
Payroll taxes are indeed deductible as business expenses, but the specific treatment depends on which type of payroll taxes you’re referring to and your role as either an employer or self-employed individual.
When do I need to issue W-2s to employees?
The requirement to issue Form W-2 to employees is governed by specific statutory and regulatory provisions that establish both the circumstances requiring issuance and the timing for providing these critical tax documents.
What forms do I issue to contractors (1099-NEC)?
When issuing forms to independent contractors, you primarily use Form 1099-NEC (Nonemployee Compensation), which replaced the use of Form 1099-MISC for reporting nonemployee compensation starting in tax year 2020.
What’s the difference between an employee and independent contractor?
The distinction between an employee and an independent contractor is one of the most fundamental and complex issues in tax law, with significant implications for both the worker and the entity paying for services. This classification affects tax withholding obligations, employment tax responsibilities, benefit eligibility, and various deduction opportunities.
What is bonus depreciation for vehicles in 2024?
Bonus depreciation for vehicles in 2024 is 60% of the adjusted basis for most qualified property placed in service during the year T.D. 9874 . This represents a continuation of the phaseout schedule established by the Tax Cuts and Jobs Act.
How do I write off a vehicle used partially for personal use?
Deduct only the business-use percentage of expenses, based on accurate mileage tracking.
Is Section 179 applicable for SUVs or trucks?
Yes, Section 179 is applicable to SUVs and trucks, but with important limitations and restrictions that you must understand to properly claim these deductions.
Can I deduct lease payments on a business car?
Yes, lease payments are deductible if the vehicle is used for business and records are maintained.
How do I track business mileage for tax purposes?
Track each trip with date, miles, destination, and business purpose. Keep accurate, timely records.
Should I use the standard mileage rate or actual expenses for my vehicle?
Choose the method that offers a higher deduction. You must stick with one method per year.
Can I deduct dues, subscriptions, and memberships?
Yes, you can deduct certain dues, subscriptions, and memberships as business expenses, but there are important limitations and restrictions that you must understand to properly claim these deductions while maintaining compliance with federal tax law.
What portion of my phone/internet bills is deductible?
You can deduct the business-use percentage of your phone and internet bills with proper documentation.
Can I deduct professional services like legal and accounting fees?
Yes, fees for legal, accounting, and other professional services are deductible if they’re business-related.
How do I write off office equipment and furniture?
Office equipment and furniture can be depreciated or expensed under Section 179 if used for business.
Can I deduct business gifts, and what’s the limit?
Yes, business gifts are deductible up to $25 per recipient per year, if properly documented and business-related.
How do I deduct startup costs and organizational expenses?
Deduct up to $5,000 in startup and organizational costs, with the rest amortized over 15 years under IRS rules.
What’s the limit on business travel deductions?
Business travel is deductible if properly documented. Meals are 50% deductible, with strict IRS substantiation required.
Can I deduct meals and entertainment expenses?
Business meals are 50% deductible if conditions are met. Entertainment expenses are generally not allowed under current IRS rules.
What are the most common business deductions I can take?
Claim deductions like operating costs, travel, home office, and more if they’re ordinary and necessary for your business.
What’s the best way to track personal vs. business expenses?
Track personal and business expenses by keeping separate bank accounts, using dedicated business credit cards, documenting each expense’s purpose, and allocating mixed-use costs proportionally. Use accounting software to automate categorization and maintain compliance.
How do I handle cash transactions in my records?
Record all cash transactions daily, including date, amount, purpose, and customer info. Keep receipts, use a cash log, reconcile regularly, and report large payments over $10,000 using Form 8300.
What is the best method for organizing business receipts?
Organize business receipts using digital tools like QuickBooks or physical filing by year and category. Keep records for at least 3 years, separate personal/business finances, and back up all data for audit readiness.
What is the best method for organizing business receipts?
Organize business receipts using digital tools like QuickBooks, categorize by expense type, and keep records for at least 3 years. Separate personal and business finances for clarity and audit readiness.
How long do I need to retain business tax records?
Keep business tax records for at least 3 years from filing or due date. Employment taxes: 4 years. Property records: as long as owned, plus 3 years. Some cases require 6+ years or indefinite retention.
What records must I keep for business deductions?
Keep detailed records for all business deductions: receipts, invoices, mileage logs, and documentation showing amount, date, purpose, and business relationship. Retain for at least 3 years.
How do I report cryptocurrency received as payment?
Report cryptocurrency received as payment as ordinary income at its fair market value in USD. Use Schedule C or W-2 depending on employment status. Track gains/losses when sold.
Is foreign income from business activities taxable?
Foreign business income is generally taxable in the U.S. U.S. citizens report worldwide income; foreign persons pay tax only on U.S.-source or effectively connected income.
What do I do with a 1099-K received for business income?
Report Form 1099-K income on Schedule C as part of your gross receipts. Reconcile with records, deduct expenses and refunds, and pay tax on net profit. Keep documentation to support your return.
How do I report income from online platforms (Etsy, Amazon, Stripe, PayPal)?
Income from Etsy, Amazon, PayPal, or Stripe is taxable. Report all earnings on Schedule C, track expenses, and pay self-employment tax. Even without a 1099-K, you must report income.
Is advance payment or deposits taxable in the year received?
Advance payments are generally taxable in the year received. Deposits aren’t taxed until earned or conditions are met. Accrual basis taxpayers may defer some payments under IRS rules.
Do I report income on a cash or accrual basis?
Most individuals use the cash method, reporting income when received. Accrual basis reports income when earned. Choose based on IRS rules and your business needs.
How do I report business income and expenses on my personal return?
Learn how to report business income and expenses on your personal tax return using Schedule C. Understand deductions, record-keeping, and common mistakes to avoid.
What are the penalties for late filing or late payment for businesses?
Learn about penalties for late filing or payment for businesses, including failure-to-file fees, late payment charges, and exceptions for reasonable cause.
Can I file an extension for my business tax return, and how?
Yes, you can file an extension for your business tax return using Form 7004. Learn how to request an extension, payment requirements, and deadlines by business type.
What forms do I need to file as an LLC/S Corp/C Corp/Sole Proprietor?
Learn the tax forms required for LLCs, S Corps, C Corps, and Sole Proprietors. Ensure compliance with federal filing requirements for your business entity.
How do I determine my business entity’s filing status?
Determine your business entity’s filing status and tax obligations. Learn about default classifications, Form 8832 elections, and filing requirements for LLCs, corporations, and more.
Do I need to file quarterly estimated taxes in 2025?
Generally, the tax code requires taxpayers to pay federal income taxes as they earn income. To the extent these taxes are not withheld, a taxpayer must pay estimated income tax on a quarterly basis.
What are the 2024 tax filing deadlines for my business entity?
Discover the 2024 tax filing deadlines for your business entity, including C Corporations, S Corporations, Partnerships, and more. Stay compliant and avoid penalties.
Can I claim moving expenses if I relocated for a new job in 2025?
Moving expenses for a new job in 2025 are not deductible unless you’re an active-duty military member. Learn about exceptions, record-keeping, and future eligibility.
How does adoption affect my tax return?
Adopting a child can provide tax benefits like the Adoption Tax Credit and dependency exemptions. Learn how adoption impacts your tax return and maximize your savings.
How do I file taxes if my spouse passed away in 2025?
If your spouse passed away in 2025, learn how to file taxes, including joint filing for 2024 and qualifying as a surviving spouse for future tax benefits.
How does getting divorced affect my filing status and deductions this year?
Divorce impacts tax filing status and deductions. Learn how to determine your status, claim deductions, and plan for tax changes post-divorce.
Why Is My Refund Smaller Than Expected This Year?
There are several common reasons why your tax refund might be smaller than you expected this year. Understanding these factors can help you make sense of the difference between your anticipated and actual refund amount.
How Can I Track the Status of My Refund?
You can track the status of your tax refund through several official IRS methods. Here’s a comprehensive guide on how to check your refund status:
How Long Does It Take to Receive My Tax Refund After Filing Electronically?
When you file your tax return electronically, you can generally expect to receive your refund within 21 days, though the exact timing can vary based on several factors.
What Are the Penalties for Withdrawing Early from a 401(k) or IRA in 2025?
Early withdrawals from retirement accounts in 2025 will generally be subject to both income tax and additional penalties, with certain exceptions. Here’s a comprehensive breakdown of the penalties and tax implications:
Are Roth IRA Contributions Deductible on My Taxes?
No, Roth IRA contributions are not deductible on your taxes. This is one of the fundamental differences between Roth IRAs and traditional IRAs.
Can contributions to an IRA reduce my taxable income?
Yes, contributions to an IRA can reduce your taxable income, but the deductibility depends on the type of IRA, your income level, and whether you or your spouse are covered by a retirement plan at work.
Are Distributions from Retirement Accounts Taxable in 2025?
Yes, distributions from retirement accounts will generally be taxable in 2025, with specific tax treatment depending on the type of retirement account, the nature of the distribution, and your individual circumstances.
What Tax Forms Do Freelancers Need to File?
Freelancers, as self-employed individuals, have specific tax filing requirements that differ from traditional employees. Here’s a comprehensive guide to the tax forms freelancers need to file:
Can I Deduct Home Office Expenses If I’m Self-Employed?
Yes, as a self-employed individual, you can deduct home office expenses on your tax return, but there are specific requirements you must meet to qualify for this deduction.
What Expenses Can Self-Employed Individuals Deduct on Their Returns?
Self-employed individuals can deduct a wide range of business expenses on their tax returns. These deductions help reduce taxable income and the overall tax burden. Here’s a comprehensive breakdown of deductible expenses for self-employed individuals:
Do Self-Employed Individuals Need to Pay Estimated Taxes Quarterly?
Yes, self-employed individuals generally need to pay federal income taxes as they earn income throughout the year. To the extent these taxes are not withheld, a taxpayer must pay estimated income tax on a quarterly basis.
Am I eligible for the Earned Income Tax Credit (EITC)?
You may qualify for the Earned Income Tax Credit (EITC) if you have earned income, meet income limits, and fulfill other requirements like filing status and residency.
What is the Saver’s Credit, and am I eligible for it?
The Saver’s Credit is a tax credit for low- to moderate-income taxpayers who contribute to retirement plans, with credits up to $1,000 per person.
Am I eligible for the Premium Tax Credit for health insurance?
You may qualify for the Premium Tax Credit if you buy insurance through the Marketplace, earn 100-400% of the Federal Poverty Line, and meet other requirements.
Is there a tax credit for purchasing an electric vehicle in 2025?
Yes, a $7,500 tax credit is available for new electric vehicles in 2025 under the Clean Vehicle Credit, subject to battery and mineral sourcing rules.
Is there a credit for installing energy-efficient appliances or solar panels in my home?
Yes! You can claim a 30% federal tax credit for energy-efficient appliances (up to $1,200/year) and 30% for solar panels (no annual limit) under IRS credits 25C and 25D.
How does the Adoption Tax Credit work, and what is the maximum amount?
The Adoption Tax Credit allows adoptive parents to claim up to $16,810 per child in 2024 for qualified expenses like legal fees and travel; it’s nonrefundable but can be carried forward for up to five years.
Can I claim the Lifetime Learning Credit for continuing education courses?
Yes, you can claim the Lifetime Learning Credit for continuing education courses—including non-degree, part-time, or professional development classes—at eligible institutions, with a maximum annual credit of $2,000 per tax return.
How do education tax credits like the American Opportunity Credit work?
The American Opportunity Tax Credit (AOTC) offers up to $2,500 per eligible student for qualified college expenses, with up to $1,000 refundable—even if you owe no tax.
Can I claim the Child and Dependent Care Credit for daycare costs?
Yes, you can claim the Child and Dependent Care Credit for daycare costs if the care enables you to work or look for work and meets IRS eligibility rules.
What is the Child Tax Credit amount for 2025?
For 2025, the Child Tax Credit is $2,000 per qualifying child under 17, with up to $1,700 refundable as the Additional Child Tax Credit.
Are commuting costs deductible for remote workers returning to the office?
Commuting costs for remote workers returning to the office are not tax-deductible, as they are considered personal expenses under IRS rules.
Can I deduct expenses for caring for an elderly parent at home?
You may be able to deduct expenses for caring for an elderly parent at home if they qualify as your dependent and the expenses exceed 7.5% of your adjusted gross income; you might also qualify for the Dependent Care Credit or claim your parent as a dependent under certain conditions.
Is mortgage insurance premium (PMI) deductible this year?
Mortgage insurance premiums (PMI) are not deductible for the 2024 tax year, as the deduction expired at the end of 2021. It is not available for subsequent tax years.
Can I deduct expenses for adopting a child in 2025?
In 2025, adoption expenses can be claimed through the adoption tax credit, offering up to $17,280 per child, subject to income limitations. This credit reduces your tax liability dollar-for-dollar.
Are legal fees deductible on my taxes?
Legal fees may be deductible if they are business-related, tax-related, or tied to rental properties. Personal legal fees, including divorce costs, are typically not deductible.
Can teachers still deduct classroom expenses, and what is the limit?
Teachers can deduct up to $300 in classroom expenses in 2024, including supplies and professional development costs. Married educators can claim up to $600 jointly.
Are union dues deductible this year?
Union dues are not deductible on federal income tax returns for 2024 due to the TCJA suspension, lasting through 2025. Deductions may resume in 2026.
Can I deduct moving expenses in 2025?
In 2025, most taxpayers cannot deduct moving expenses, except for active-duty military members moving under military orders.
Can I deduct home office expenses if I work remotely?
Yes, you can deduct home office expenses if you work remotely, but you must meet IRS criteria like exclusive use and regular business activity.
How do I deduct charitable donations on my taxes?
To deduct charitable donations, itemize on Schedule A and give to qualified charities. Keep receipts and follow IRS rules for documentation.
Can I claim medical expenses as a deduction, and what qualifies?
You can deduct medical expenses that exceed 7.5% of your AGI if you itemize deductions—qualified costs include insurance, treatments, supplies, and more.
Can I deduct student loan interest in 2025?
Yes, you can deduct up to $2,500 in student loan interest for 2025, subject to income limits and other eligibility rules—even if you take the standard deduction.
What is the standard deduction amount for 2025?
The standard deduction for 2025 is $15,000 (single), $30,000 (joint), and $22,500 (head of household), with additional amounts for age or blindness.
How are capital gains taxed in 2025?
In 2025, long-term capital gains are taxed at 0%, 15%, or 20% based on income, while short-term gains are taxed as ordinary income up to 37%.
How do I report rental income on my tax return?
Report rental income and expenses on Schedule E (Form 1040). Include rent, deposits kept, and deductible costs like mortgage interest and depreciation.
How do I report stock options or restricted stock units (RSUs)?
Report RSU and stock option income on Form W-2; sales go on Form 8949 and Schedule D. ISOs may also require AMT reporting on Form 6251.
How do I report cryptocurrency transactions on my tax return?
Report cryptocurrency sales, trades, or income on IRS Form 8949 and Schedule D; mining and staking rewards go on Schedule 1 or Schedule C as income.
Do I need to pay taxes on an inheritance received in 2025?
No, you don’t pay federal tax on an inheritance in 2025, but income from inherited assets or state-level taxes may apply depending on your location.
Do I need to report income from foreign countries?
Yes, U.S. citizens and resident aliens must report all worldwide income, including foreign income, on their U.S. tax return, unless legally exempt.
Are life insurance payouts taxable?
Life insurance payouts are generally not taxable, but interest, installment payments, employer-owned policies, and some transfers may trigger taxes.
Do I need to report interest earned on savings accounts?
Yes, you must report all interest earned on savings accounts as income on your tax return, even if you don’t receive a 1099-INT.
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