plainlanguagetax

Income Taxes and Your Contribution to the War Effort

Tue, 24 Mar 2026 00:33:30 GMT

What can your tax bill actually purchase for the U.S. Military

It's tax season in the United States.

We also happen to be at war with Iran.

The overlapping of these two mostly unrelated events has resulted in a news stories about the emergence of Iran War tax protestors. Iran War tax protestors are U.S. taxpayers who are planning to not pay their 2025 Federal Income Taxes in protest of the war in Iran.

Consequences of Not Paying Your Income Taxes

Not paying your taxes can result in civil issues with the Internal Revenue Service (penalties and interest) and even criminal charges in some rare cases. Beyond civil and criminal issues, not paying your taxes can make it more difficult to qualify for a loan or pass a background checks so you must carefully consider the consequences.

How Far Do Your Tax Dollars Actually Go

Not paying taxes in protest of the Iran War raises the question of how far one taxpayers dollars actually go in funding the war. CNBC spoke with tax protestor Rachel Cohen. Cohen owes $8,830 in federal income taxes she has intentionally failed to pay in protest of the war. Ms. Cohen's $8,830 is the equivalent of 1/200th of a Tomahawk Cruise Missile or just 1/9,000th of an F-35A fighter jet.

If you're curious as to how your tax dollars can be used to fund the war then try our simple Iran War Income Tax Calculator below. Simply enter the amount of income tax you owe after credits. This amount can be located on your 2025 Form 1040, Line 22.

Do I need a separate business bank account?

Thu, 01 Jan 2026 19:23:04 GMT

In short, yes. If you're an LLC or corporation it's essential for maintaining legal protection. Under the legal theory know as the Alter Ego Doctrine , using the same bank account for individual and business purposes may expose you to personal liability for business obligations.

From a practical purpose, all businesses including sole proprietors should have separate accounts to simplify bookkeeping. To accurately determine the amount of business income and expenses, a business must complete basic bookkeeping including classifying transactions and reconciling accounts. Maintaining a separate business accounts makes that process of classifying and reconciliation significantly simpler. Whenever possible, use a business bank account for business purposes and a personal bank account for personal transactions.

What is the Child Tax Credit?

Tue, 22 Jul 2025 19:54:47 GMT

The Child Tax Credit gives families up to $2,000 per child under age 17. To qualify, your child must have a valid Social Security number and live with you for more than half the year. Part of the credit may be refundable, meaning you can get money back even if you don’t owe taxes. Not all families will qualify for a full credit, however. The credit begins to phase out at $200,000 of modified adjusted gross income for single taxpayers and $400,000 for married couples filing jointly.

What is the standard deduction?

Tue, 22 Jul 2025 19:02:58 GMT

The standard deduction is the set amount the IRS lets you subtract from your income to lower your taxes. In practice, the standard deduction is reduces your adjusted gross income to get to your taxable income. You can think of the standard deduction as a freeby. You don’t need to actually have deductible expenses or keep receipts to claim it. The amount of your standard deduction will depends on your filing status—single, married, or head of household. Finally, to keep up with inflation, the standard deduction generally increases each year. For Tax Year 2024, the income return you file in 2025, the standard deduction amounts are as follows: • Single or Married filing separately, $14,600. • Married filing jointly or Qualifying surviving spouse, $29,200 • Head of household, $21,900.

Read Before Moving... Tax Basics for Those Leaving the Country Post-Election

adam@abtaxlaw.com (Adam Brewer) — Wed, 06 Nov 2024 22:42:41 GMT

Before every election voters on both sides inevitably say, "If [insert other party's candidate] wins, I'm leaving the country." Mostly this is talk, but on this day after the election lets look at the basic tax responsibilities of U.S. Expats. After all, before making the big move you should at a minimum be aware that you can't simply drive, fly, or sail away from your responsibilities as a U.S. taxpayer.

U.S. Taxpayers Pay Taxes on Worldwide Income

Packing up and moving to another country doesn't mean you won't pay taxes to the U.S. The U.S. tax system taxes U.S. persons on their worldwide income. That means even if you earn a living in another country you are still responsible for reporting and possibly paying tax on income earned outside the U.S. To help limit double taxation, that is paying tax in your new home country and in the U.S. on the same income, there are two available remedies.

The first is the Foreign Earned Income Exclusion. This allows U.S. Citizens who have established a tax home in another country and have remained outside the U.S. for 330 full days to exclude up to $120,000 in overseas income.

The second remedy to avoid double taxation is the Foreign Tax Credit . The Foreign Tax Credit allows you to claim a tax credit or itemized deduction on your Federal income tax return for foreign taxes you paid on income also subject to U.S. tax.

Whether you are you use the Foreign Earned Income Exclusion or Foreign Tax Credit it does not waive the requirement to file an income tax return with the IRS.

Report Certain Financial Assets

Beyond payment of taxes, the Federal government through the Department of Treasury has imposed several requirements that U.S. Taxpayers disclose foreign financial assets. Generally, the disclosure of foreign financial assets takes place on three forms:

Schedule B is most commonly used to report interest and dividend income, but the IRS has added three disclosure questions related to foreign financial accounts and foreign trusts.

Did you have a financial interest in or signature authority over a financial account located in a foreign country?
If “Yes,” are you required to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)?
Did you receive a distribution from, or were you the grantor of, or transferor to, foreign trust?

Form 8938 is used to report specified foreign financial assets if the total value of all the specified foreign financial assets exceeds $50,000 on the last day of the tax year or $75,000 at any time during the tax year. The reporting threshold is $100,000/$150,000 if you file a joint tax return with you spouse.

FinCen Form 114 , Report of Foreign Bank and Financial Accounts or more commonly referred to as an FBAR, is used to report a financial interest or signatory authority in a foreign financial account such as bank, brokerage, or mutual fund. An FBAR is required when the combined value of those foreign financial accounts exceeds $10,000 at any time during the calendar year.

Disclose Foreign Corporation or Trust Interests

In addition to individual income tax and foreign financial asset reporting concerns, U.S. expats must also be aware of complex rules surrounding foreign corporations and foreign trusts. U.S. taxpayers who are officers, directors, or shareholders in certain foreign corporations are responsible for filing Form 5471 , Information Return of U.S. Persons With Respect to Certain Foreign Corporations . U.S. owners of a foreign trust are required to file Form 3520-A , Annual Information Return of Foreign Trust.

Conclusion

Becoming a U.S. expat does not exclude a Taxpayer from their U.S. tax responsibilities and in many cases introduces even greater tax compliance requirements. U.S. taxpayers considering leaving the U.S. or who have already left should consult with an experienced tax professional to determine their reporting requirements.

Making Sense of Estimated Tax Payments

adam@abtaxlaw.com (Adam Brewer) — Thu, 24 Oct 2024 04:35:24 GMT

Introduction

Taxpayers with income not subject to withholding are far more likely to file a tax return with a balance due to the Internal Revenue Service (IRS). This can then lead to being charged significant penalty and interest charges, filing with uncertain tax positions in hopes of reducing their tax bill, and eventually lead to Taxpayers not filing altogether. To avoid these serious tax consequences the IRS has established a system for Taxpayers to make voluntary tax payments throughout the year -- Estimated Tax Payments.

Who Should Be Making Estimated Tax Payments?

Estimated Tax Payments is the method used to pay tax on income that isn’t subject to withholding. Most commonly these are earnings from self-employment, but Estimated Tax Deposits may be required for Taxpayers with significant interest, dividend, rent, and alimony income. In addition, if you do not elect voluntary withholding, you should make estimated tax payments on other taxable income, such as unemployment compensation and the taxable part of your Social Security benefits. Individuals expecting to owe at least $1,000 when they file their income tax return and who owed tax in the prior year are required to make estimated tax payments.

When Are Estimated Tax Payments Due?

Estimated Tax Payments are generally paid to the Internal Revenue Service quarterly. The payment dates set by the IRS are as follows:

Quarterly Payment 1: April 15
Quarterly Payment 2: June 15
Quarterly Payment 3: September 15
Quarterly Payment 4: January 15 of the following year.

How Are Estimated Tax Payments Calculated?

Assuming your current year taxes are similar to the prior year, then you can simply use your prior year tax bill to estimate how much money must be deposited in the current year. That amount can then be divided by four and submitted to the IRS consistent with the above quarterly deposit schedule.

If you expect your taxes to be significantly different from the prior year, then you or your tax professional should prepare a mock tax return using your current year tax profile. This is the best method to estimate how much taxes will be owed. That amount can then be divided by four and submitted to the IRS consistent with the above quarterly deposit schedule.

How Are Estimated Tax Payments Submitted?

Traditionally, Estimated Tax Payments were submitted by check along with Form 1040-ES vouchers .

Presently, Estimated Tax Payments may also be submitted electronically through IRS.gov/payments .

Conclusion

Estimated Tax Payments are far from a perfect system, but if you have income not subject to withholding then they are essential to avoiding a big year-end tax bill.

What is a Federal Tax Lien?

adam@abtaxlaw.com (Adam Brewer) — Thu, 24 Oct 2024 00:17:56 GMT

What is Federal Tax Lien?

A Federal Tax Lien is a public notice that you owe money to Internal Revenue Service (IRS). The filing of a lien does not result in the immediate taking of your property, but it may limit the your ability to sell or refinance your assets without the paying the tax due to the IRS.

If a Federal Tax Lien is filed against there are a few negative results:

You will be absolutely hounded by Tax Relief Companies promising to resolve your balance due for less than the full amount owed.
You will be limited in your ability to sell or refinance your home.
If you wish to purchase a home, then your lender will likely require you to pay off the balance due to the IRS before closing on your loan.
You may have to take additional steps to qualify for security clearance for certain government and military jobs.

If a Federal Tax Lien is filed it will not show up on your credit report or reduce your credit score. The three major credit agencies -- Experian, Equifax, and TransUnion -- stopped including tax liens on credit reports in 2018.

If you need to remove a tax lien, then the most common resolution steps are to:

Full pay the balance due,
Request a Federal Tax Lien Release,
Settle the tax debt through an Offer in Compromise, or
Wait out the Collection Statute Expiration Date (CSED) and have the lien self-release.