Tax Refund

The words taxes and fun rarely go together in the same sentence, but here are a few fun state tax facts and federal scenarios…we promise they’re fun!

Within your own state there are plenty of interesting tax rules that you might not know existed — below, we’ve rounded up some of our favorite fun tax facts that states use to generate tax income in some unusual and entertaining ways. 

While we hope you enjoy these tax facts, remember that you don’t need to worry about remembering all of this come tax time. If you have questions about these facts or even an interesting scenario about your own taxes, you can connect live via one-way video with a TurboTax Live tax expert to get your tax questions answered. Our TurboTax Live tax experts are available in English and Spanish, year round and can review, sign, and file your tax return. Meet with a TurboTax Expert who can prepare, sign and file your taxes, so you can be 100% confident your taxes are done right. Start TurboTax Live Full Service today, in English or Spanish, and get your taxes done and off your mind.

State Tax Facts From Across The Land

  1. Colorado: Who doesn’t love a cup of coffee? Well in Colorado you’ll get the coffee cup tax-free, but you’ll pay a bit more for the coffee lid as that will be taxed.
  2. Nevada: You don’t have to go to Las Vegas to get dealt a hand in Nevada. When you file your tax return the state of Nevada gives out a free deck of cards.
  3. New Jersey: Choose wisely at Halloween time. In New Jersey, the pumpkins you eat are tax free, but the ones you decorate are not.
  4. Rhode Island: There are emojis on Rhode Island’s official income tax forms. Expect a sad face if the taxpayer has an amount due or a happy face for a refund.
  5. Texas: No horsing around, in Texas, big belt buckles are taxed, but cowboy boots are tax free.
  6. Hawaii: This one may have you stumped but in Hawaii, if the tree is deemed exceptional you can get a tax credit for maintaining it. 

With these fun state tax facts in mind, let’s take a look at some broader federal tax scenarios! While the federal tax code can be complicated it is also interesting how some scenarios are taxed or can be deducted. Check out this list of scenarios from fur babies to personal grooming to scratch-off winnings, and see if any apply to you.  

Federal Tax Scenarios You May Not Have Known 

Q: I had cosmetic surgery; can I claim it as a medical expense?

A: In general, cosmetic surgery is not deductible as a medical expense unless you require it to improve a deformity caused by an abnormality, injury, or a disease.

Q: My son decided to take a gap year from school and he’s 19. Can he still be my dependent?

A: It depends on when your son finished high school. If he finished in May or June of 2022, he can still be considered a full time student under age 24 and be claimed as dependent on your return. 

Q: Is my personal grooming a deductible expense?

A: For the general population, the answer is probably no, but if you happen to do hair or hand modeling for a living it’s possible that your expenses could be considered a business expense. 

Q: My doctor thinks I should exercise and lose about 15 pounds. Can I claim my gym membership as a deduction?

A: You may be able to deduct fees for membership to a weight reduction program if the weight loss is necessary for the treatment or mitigation of a specific disease diagnosed by a physician. You cannot, however deduct the gym membership

Q: I drive my car to and from work every day, can I deduct the cost of my gas and car payment?

A: Employees cannot deduct expenses for commuting to work or any car related expenses. If you are self-employed, you can deduct your car expenses directly related to your business use.  

Q: I don’t have any children, but I have three fur babies and one of them needed surgery this year and I spent $2500 out of pocket. Is that expense deductible?

A: As much as we love our fur babies, the IRS does not recognize their medical or living expenses as qualified deductions. 

Q: I have a job that requires me to work away from home. I paid $5,000 for doggy day care this year. Can I claim the childcare credit for the day care cost?

A: Even though you’re a pet parent, the Child and Dependent Care Credit is a benefit if you pay for childcare for your dependent children under 13. Also, in order to claim the Child and dependent care credit you must have a social security number for your dependent and Congress has yet to allow social security numbers for pets. 

Q: My dog is an influencer on Instagram. Can I deduct his pet expenses?

A: If your furbaby is making money as an influencer, it could be viewed by the IRS as your own self-employed business if your pet is generating income for you in the dog modeling/acting category on a regular basis. In some cases, pet-related expenses could be considered business expenses and offset against your pet’s earnings.

Q: I have a disability and get assistance from a service animal. Am I qualified for a deduction for expenses for my service animal?

A: Yes, since your service animal is necessary due to your disability you may be able to deduct the expenses for your service animal as a medical expense deduction. 

Q: I was pregnant during most of 2022 and my child was born in early January 2023 and I have their social security number. Can I claim that child on my 2022 return?

A: If the child was not born by 11:59pm on December 31, 2022 you will not be able to claim them as a dependent on your 2022 taxes. You can claim them on your 2023 taxes in 2024.

Q: In 2022, I was working less hours at work and started a side-gig. People paid me electronically using apps like CashApp and Zelle. Is that money I have to report as income? 

A: Yes since you are working a side-gig you are considered self-employed and need to report your income received through payment apps. Beginning with tax year 2023 (the taxes you will file in 2024) if someone receives payment for goods and services through a third-party payment network, their income will be reported on Form 1099-K if the amount processed exceeds $600 as opposed to the old Form 1099-K reporting requirement of 200 transactions and $20,000. 

Q: I purchased cryptocurrency this year through an app. Does the IRS have to know?

A: As part of filing your tax return you will be asked about your virtual currency transactions during the tax year. Moreover, you will have to report any sales of cryptocurrency during the tax year.

Q: I won a scratch-off lottery of $1000. Do I have to report that winning on my taxes?

A: Yes. Lottery winnings and gambling winnings over $600 are reportable to the IRS and you should receive a Form W2-G to report those winnings. Even if you don’t receive a form W2-G you have to report the income.

Q: I built a pool to help with a medical condition. Can I deduct the expenses related to building my pool?

A: If you were diagnosed with a medical condition that requires exercise and you built a pool specifically for the exercise the doctor prescribed, you may be able to deduct the cost of installing the pool.  

We’ve Got You Covered

With all of the new tax facts and scenarios you learned about, get started on your taxes today. TurboTax will ask you simple questions about you and give you the tax deductions and credits you are eligible for based on your entries. If you have questions, you can connect live via a one-way video to a TurboTax Live tax expert with an average 12 years experience to get your tax questions answered. You can even connect virtually with a dedicated tax expert who will prepare and file your tax return in entirety with TurboTax Live Full Service. TurboTax Live tax experts are available in Spanish and English, year round and can even review, sign, and file your tax return.

  • Previous Post

    Don’t Let Filing Multiple W-2s Scare You

Katharina Reekmans
Katharina Reekmans

Katharina Reekmans is an Enrolled Agent and a contributor to the TurboTax Blog team. Katharina has years of experience in tax preparation and representation before the IRS. Her passions surround financial literary and tax law interpretation. She has a strong commitment to using all resources and knowledge to best serve the interest of clients. Katharina has worked as a senior tax accountant, operations manager, and controller. Katharina prides herself on unraveling tax laws so that the average person can understand them. More from Katharina Reekmans

Comments are closed.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *