The Only Book You’ll Ever Need On Small Business Taxes: Tax Secrets, Legal Loopholes, &

When should I itemize deductions instead of taking the standard deduction?

Itemize when your qualifying expenses exceed the standard deduction ($14,600 single / $29,200 married filing jointly for 2024). Common itemized deductions include mortgage interest, state/local taxes (SALT, capped at $10K), charitable donations, and medical expenses exceeding 7.5% of AGI. Most tax software automatically calculates which option saves you more.

What is the penalty for filing taxes late?

If you owe money, the failure-to-file penalty is 5% of unpaid taxes per month, up to 25%. If you're getting a refund, there's no penalty for filing late — but you have 3 years to claim it before the IRS keeps your refund. Always file an extension (Form 4868) if you can't make the April deadline; it gives you until October 15.

What are the tax steps after a family member dies?

The deceased person's final return covers January 1 through the date of death and must be filed by the normal due date. A surviving spouse can file jointly for the year of death. If the estate earns income during settlement, a separate estate return (Form 1041) may be required. Inherited assets generally receive a stepped-up cost basis, eliminating capital gains on pre-death appreciation.

What is the self-employment tax rate?

Self-employment tax is 15.3% on net self-employment earnings up to $168,600 (2024), covering both the employee and employer portions of Social Security (12.4%) and Medicare (2.9%). Above that threshold, only the 2.9% Medicare tax continues with no cap. The good news: you can deduct half of SE tax as an adjustment to income on your 1040, lowering your taxable income.