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The deadline to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> is approaching fast, and Sana is perplexed. All of 23, she's just started earning and working at an MNC, earning Rs 7,00,000 per annum, and can't figure out which <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword> would work best for her. If you're having the same concerns and can't seem to wrap your head around the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, here's a ready reckoner for you: When should I choose new tax regime? Think of choosing a tax regime as having to choose a friend in office. The <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword> is that aged, wise senior who has answers and hacks for everything. Want to get over with a boring project quickly? They will certainly have a trick up their sleeve! On the other hand, the new regime is far more chilled out, lax and is a no-nonsense person who wants nothing to do with long documents and longer meetings. The new regime was introduced in budget 2020 to simplify taxation, and offer lower rate of taxes as compared to the old regime. However, there's a catch. You cannot claim the 70+ exemptions and deductions that help bring down your taxable income and hence, reduce your tax liability. This option is exclusively available under the old tax regime. The main USP of this tax regime? Lower tax rates, and fuss of deductions! Consider this. If your income is within the range of Rs 5,00,000-Rs 12,00,000, and you have no investments, <keyword id="99916" type="General" weightage="20" keywordseo="house-rent-allowance" source="Orion">house rent allowance</keyword> (<keyword id="19944588" type="General" weightage="20" keywordseo="hra" source="keywords">HRA</keyword>), health/life insurance premiums or other such deductions to claim, the new tax regime would obviously make more sense to you, given the significant difference in tax liabilities (just 5% under new regime, and a whopping 20% in old regime for those in the Rs 5-6 lakh bracket!) <div type="image" title="Tax rates under old and new regime" msid="111685908" hostid="261"></div> So, if you're someone who hates complex tax calculations, wants minimal tax deductions, the new regime might just be for you! But remember, there are two conditions under which this new regime will be automatically chosen for calculating your taxes: <ul><li>If you keep procrastinating and don't file your <keyword id="6374875" type="General" weightage="20" keywordseo="ITR" source="Orion">ITR</keyword> till July 31, 2024</li><li>If you do not specifically opt for the old tax regime on your employer's HR portal</li></ul>Also, if you earn less than Rs 3,00,000 per annum, you are completely exempted from paying any tax at all. In the old regime, this basic limit is slightly lower at Rs 2,50,000. Also read: <a href="https://www.businessinsider.in/personal-finance/income-tax/all-you-need-to-know-about-the-new-tax-regime/articleshow/111578840.cms" data-type="tilCustomLink">All you need to know about the new tax regime</a> So, what do I get under this regime? Thanks to a rebate under Section 87A, if you earn up to Rs 7 lakh per annum, your tax liability (and Sana's as well) will effectively be zero. This is limited to Rs 5 lakh under the old regime. While a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 is available under both of them (so you can directly deduct Rs 50,000 from your total income before even beginning to calculate your tax liability), there are a lot more deductions and exemptions that this regime DOES NOT allow you to avail: <ul><li>Leave Travel Allowance (LTA)</li><li>House Rent Allowance (HRA) (Comes in handy if you're paying hefty rents in metros)</li><li>Interest on housing loan (on self-occupied property or vacant property)</li><li>Own contribution to NPS (If there's any)</li><li>Interest earned on savings bank A/Cs </li><li>Investments made in ELSS, PPF</li><li>Premiums paid towards life, health insurance policies</li></ul>As for the deductions that are allowed, that makes for a pretty small list: <ul><li>Transport allowances (only if you are specially abled)</li><li>Gifts of up to Rs 50,000</li><li>Employer’s contribution to your NPS account</li><li>Interest paid on home loan only on let-out property</li></ul>But that's the trade-off. You get to pay taxes at low rates, yes, but you also don't get to claim a whole lot other deductions. Notes CA Nitesh Buddhadev, "Which regime is beneficial for you depends upon the allowances and deduction available to you during a relevant financial year. So, if your total income from salary is Rs 10.5 lakh and if the aggregate of any of the deductions / allowances you can claim is less than Rs. 3.15 lakh, you should opt for the new tax regime. If you have not invested in multiple tax-savings scheme, the new regime will work better. So, don't make this decision in any haste. You can choose your tax regime only once in a financial year. And if your income from business or other professions, be even more careful, because this will then become a once in a lifetime choice for you (quite literally!). So, take a good hard look at your finances, and then decide what works best for you!

Confused about the new tax regime? Here's when you should opt for it

July's here, and as we inch closer to the budget, which is set to be presented around the latter half of July, there is much talk about how it will affect our pockets. Reports suggest the government is considering raising the <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> threshold from existing Rs 50,000 to Rs 1,00,000, amidst other things. The most common wish for a salaried employee is to reduce the income tax rates across all slabs, but at the moment, this seems unlikely. That aside, we decode the common man's wish list and what they look forward to in terms of <keyword id="22225988" type="General" weightage="20" keywordseo="income-taxes" source="keywords">income taxes</keyword> as the Finance Minister <keyword id="19916618" type="General" weightage="20" keywordseo="nirmala-sitharaman" source="keywords">Nirmala Sitharaman</keyword> drafts the budget. <h2>Wish 1: Raise the standard deduction to Rs 1 lakh</h2>A standard deduction is a fixed amount that you can deduct from your taxable income right away, to reduce your overall tax liability. You do not need to furnish any proofs for this amount. Currently, this stands at Rs 50,000, under both old and new tax regimes. Raising this threshold to Rs 1,00,000 will mean more disposable income in your hands. And as per the policy experts, this is the most likely change that we can expect under the new budget. <h2>Wish 2: Increase the <keyword id="20228341" type="General" weightage="20" keywordseo="basic-exemption-limit" source="keywords">basic exemption limit</keyword> in new tax regime</h2>As per EY's pre-budget expectation report, an increase in the basic exemption limit from the present Rs 3,00,000 to Rs 5,00,000 would immensely benefit the common man. Earlier, this limit was set at Rs 2,50,000. Note that unless you specifically opt for the old regime, the new tax regime is considered as your default choice starting 2023. If your annual income is equal to, or falls below this basic exemption limit, you do not have to pay any income tax. <h2>Wish 3: Increase tax-free limit of LTCG gains </h2>At present, if you sell any equity mutual fund unit or share after more than 12 months of holding it, you'll have to pay a 10% long-term capital gains (LTCG) tax. However, within one financial year, long-term capital gains below Rs 1,00,000 are tax-exempt. As EY's report notes, raising this extant tax-free limit to Rs 2 lakh would be beneficial, especially in boosting long-term investing sentiment in the country. But will this come true? Only Nirmala Sitharaman knows! <h2>Wish 4: Consider some tier-2 cities as metros for HRA exemption </h2>Residents of Gurugram, Noida, Bengaluru, listen up! HRA, or House rent allowance is a crucial component of our salary, and hence, our tax planning as well. You can get HRA exemption on the lowest amount amidst these 3: 1. Actual HRA received 2. 50% of salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) 3. 40% of salary for non-metro cities 4. Rent paid- 10% of salary But its no secret that residents of nearby cities like Noida, Gurugram, Faridabad, or rapidly developing urban hubs like Pune, Ahmedabad, Ghaziabad, Hyderabad, Bengaluru, Thane bear the brunt of sky-high residential rents that takes a huge toll on their monthly income. Yet, they cannot claim 50% of their salary for HRA exemption. Since these cities has been classified as a non-metro, residents can claim a maximum of 40% of their salary as exemption. In case rent exceeds Rs 1,00,000 annually, you are also required to furnish the PAN details of landlord, along with a formal rental agreement. Consider this. You live in Delhi, and have an annual income of Rs 10,00,000. For HRA purposes, you can claim exemption of up to Rs 5,00,000, since Delhi is considered a metro. But, if you live in Ghaziabad, or Noida, the limit available to you sharply falls down to Rs 4,00,000. This budget, as reports note, considering these cities as metros for tax purposes would provide some relief to the common man's pocket. Per a recent report by ANAROCK research, the top 7 cities in the country (Mumbai metropolitan region, Hyderabad, Bengaluru, Pune, Delhi NCR, Chennai and Kolkata) saw an average price rise between 13-39% on a yearly basis. In fact, it was Hyderabad recorded the highest yearly price rise in residential property last quarter, jumping by as much as 39%. <h2>Wish 5 : Enhance exemption limits under the old regime</h2>The list is endless, but so are our wishes! Experts are also suggesting an enhancement in the existing limit for deduction towards interest on housing loan for self-occupied house. From its present limit of Rs 2 lakh, it should be taken to Rs 3 lakh. Also, the Rs 2-lakh cap on set off of house property loss against other heads in the same year should be done away with. For senior citizens, there should also be greater clarity on how funds received from <keyword id="19919089" type="General" weightage="20" keywordseo="nps" source="keywords">NPS</keyword> (National Pension System) via the systematic lumpsum withdrawal plan should be taxed. Well, we can only hope some, if not all of these wishes come true when finance minister presents the union budget in the parliament this month.

Budget 2024: Increase standard deduction, exemptions and more, an aam aadmi's wishlist

<ul class="summary-list"><li>Kamala Harris is aiming for 25 million new business applications in her first term.</li><li>To get there, she's proposing an increased tax deduction and reduced red tape.</li></ul>Vice President Kamala Harris wants you to start a small business.Harris is set to roll out another economic policy, focused on a new goal: boosting small business creation. Harris's goal — which she'll announce on Wednesday — is 25 million new business applications in her first term if elected.That would outpace the <a target="_blank" href="https://www.sba.gov/article/2024/04/11/new-small-business-applications-soar-over-17-million-under-biden-harris-administration">over 18 million new business applications</a> filed so far during the Biden-Harris administration, which comes amid a post-2020 <a target="_blank" href="https://www.uschamber.com/small-business/new-business-applications-a-state-by-state-view">business application boom</a>. Harris aims to hack away at some of the red tape and startup costs new businesses face when they're setting up shop.According to a Harris campaign official, Harris wants to bolster the tax deduction that small businesses can claim for initial startup costs. Some small business owners have to turn to <a target="_blank" href="https://www.businessinsider.com/alternative-business-funding-options-small-companies-2023-9">creative funding measures</a> to get their businesses off the ground, which can come with their own risks.Harris's proposal would increase that startup deduction tenfold, upping it from $5,000 to $50,000; businesses would also be able to defer claiming it until they turn a profit — which is when they'd also likely encounter a larger tax burden.The other aspect of Harris's plan hinges on easing the logistical burden on new entrepreneurs. It's no secret that many small businesses must wade through <a target="_blank" href="https://www.businessinsider.com/jpmorgan-jamie-dimon-says-bureaucracy-is-crippling-us-hindering-progress-2021-4">administrative red tape</a> to finally <a target="_blank" href="https://www.businessinsider.com/something-about-her-sandwich-shop-opening-day-vanderpump-rules-2024-5">get to their opening days</a>.Harris's proposals include incentives for local governments to reduce their own red tape, creating a standard deduction for small businesses to ease the time spent on taxes, and chipping away at barriers in obtaining occupational licenses that can inhibit businesses or workers from crossing state lines.Harris also wants to pour cash into small businesses: She wants to guarantee that a third of federal contract dollars will go to smaller businesses and set up a fund to help community banks cover the cost of interest for small businesses.Harris previously called for a <a target="_blank" href="https://www.businessinsider.com/child-tax-credit-new-parents-cut-taxes-harris-economic-policy-2024-8">restoration of the expanded child tax credit</a> — bringing it back up to $3,600 — and giving middle and lower-income parents a $6,000 credit in their child's first year of life.How far a hypothetical future President Harris could get with major economic proposals will depend on the makeup of Congress. Attempts by President Biden to restore the child tax credit were stymied in the Senate; a gridlocked legislature might mean even more roadblocks for potential President Harris.

New business owners could get a $50,000 tax deduction under Kamala Harris's plan

Inti St Clair/Getty Medical expenses are tax deductible if they exceed 10% of your <keyword id="7531063" type="UNKNOWN" weightage="20" keywordseo="Adjusted-gross-income">adjusted gross income</keyword>. <ul class="summary-list"><li>Some medical expenses are <a href="https://www.businessinsider.com/what-can-i-deduct-on-my-taxes">tax deductible</a>, including payments related to "the diagnosis, cure, mitigation, treatment, or prevention of disease," according to the IRS.</li><li>However, you can only begin to deduct medical expenses once they exceed 10% of your adjusted gross income (AGI) and you must itemize your deductions instead of taking the <keyword id="947001" type="ORGANIZATION" weightage="20" keywordseo="Standard-Deduction">standard deduction</keyword>.</li><li>For example, if your AGI - your gross income less any above-the-line deductions - is $60,000, the first $6,000 in medical expenses are not deductible.</li><li>Non-qualifying medical expenses include cosmetic surgery, gym memberships or health club dues, diet food, and non-prescription drugs (except for insulin). </li><li>This post has been reviewed for accuracy by Thomas C. Corley, CPA.</li><li><a href="https://www.businessinsider.com/yourmoney?utm_source=bullet">Read more personal finance coverage</a>.</li></ul>If you were burdened by sizable medical bills or health expenses during 2019, there may be some financial relief available to you come <a href="https://www.businessinsider.com/category/tax-day-2020">tax</a> season. Some medical expenses are tax deductible, under two general conditions: 1. Your qualifying medical expenses for the year exceed 10% of your adjusted gross income (AGI), which is your gross income less any above-the-line deductions 2. You itemize your deductions instead of taking the standard deduction If you file jointly with your spouse and/or claim dependents, typically everyone's medical expenses can be combined. <a href="https://www.businessinsider.com/what-can-you-deduct-on-taxes-tax-day-2018-11">Tax deductions</a> reduce your taxable income and lower your overall tax liability. While some deductions, like <a href="https://www.businessinsider.com/paying-off-student-loan-debt-mistakes">student loan</a> interest and <a href="https://www.businessinsider.com/how-to-open-an-ira-for-retirement">IRA</a> contributions, can be deducted from your gross income without itemization, medical and dental expenses require that you itemize your deductions on Form 1040, Schedule A. Only medical expenses that were paid out-of-pocket and not reimbursed by your <a href="https://www.businessinsider.com/how-to-get-health-insurance-cobra-medicaid-marketplace">health insurance plan</a> qualify as tax deductible. As far as what qualifies as "medical"? The IRS says "payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or payments for treatments affecting any structure or function of the body." Here's a list of some common qualifying medical expenses (for an exhaustive list, <a href="https://www.irs.gov/publications/p502">see the IRS website</a>): <ul><li>Medications that require a prescription, including drugs to alleviate <keyword id="54964" type="PERSON" weightage="20" keywordseo="nicotine">nicotine</keyword> withdrawal, as well as over-the-counter insulin</li><li>Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and nontraditional medical practitioners</li><li>Inpatient hospital care or residential nursing home care, including the cost of meals and lodging</li><li>Inpatient treatment at a center for alcohol or drug addiction or participation in a smoking-cessation program</li><li>Cost of infertility treatments, including freezing eggs or sperm and in vitro fertilization</li><li>Birth control pills</li><li>Cost of a weight-loss program for a specific disease or diseases diagnosed by a physician, including obesity</li><li>Cost of laser eye surgery</li><li>Cost of reading or prescription eyeglasses, contact lenses, false teeth, hearing aids, crutches, wheelchairs, and for a guide dog or other service animal to assist a person with physical disabilities</li><li>Transportation primarily for and essential to medical care, such as fare for a taxi, bus, train, ambulance, gas used for transportation by personal car, or you can deduct 18 cents per mile for medical use of your car</li><li>Insurance premiums paid by you (not your employer) for policies that cover medical care, or limited amounts paid for a qualified <a href="https://www.businessinsider.com/what-is-long-term-care-insurance">long-term care insurance</a> policy and Medicare premiums</li><li>Fees for treatment at a health institute authorized by a physician to alleviate a physical or mental disability or illness</li><li>Cost of equipment installed in a home or improvements made to a home to accommodate a disability to the extent that they do not increase the value of the home</li></ul>Non-qualifying medical expenses include cosmetic surgery, gym memberships or health club dues, diet food, and non-prescription drugs (except for insulin). If you're self-employed and earned a profit during the tax year, you may be able to deduct premiums paid for medical, dental, or long-term care insurance for yourself, spouse, and any dependents, up to the amount of your net profit. Unlike the standard medical expense deduction, you don't need to itemize to take advantage - it's an adjustment to your gross income. If you aren't self-employed and review the IRS list of qualified medical expenses and determine that what you paid for medical expenses throughout the year exceeds 10% of your AGI, you should then compare the amount over that threshold - i.e. the amount you would itemize - to your standard deduction to decide which will result in the greatest tax liability reduction. For the 2019 tax year, the standard deduction is $12,200 for single filers, $18,350 for heads of household, and $24,400 for married taxpayers filing jointly. For example, let's say your AGI for 2019 is $60,000 and you had medical expenses totaling $12,000. The first $6,000 in medical expenses are not deductible due to the 10% of AGI threshold. With no other itemization, you would only reduce your taxable income by $6,000. If you claimed the standard deduction instead, you would reduce your taxable income by $12,200. If you file your taxes online through a service like <a href="https://linkto.hrblock.com/Rqo6N">H&amp;R Block</a> or <a href="http://www.tkqlhce.com/click-6415797-13149797?sid=bpfi_are-medical-expenses-tax-deductible">TurboTax</a>, it will usually ask whether you had excessive medical expenses throughout the year and guide you through itemization or even help you decide whether it's worth itemizing at all. If you're still unsure about what qualifies or want help with your specific situation, consult a tax professional. <ul class="read-more-links"><li>More <a href="https://www.businessinsider.com/category/tax-day-2020">tax day</a> coverage:</li><li><a href="https://www.businessinsider.com/when-are-taxes-due-tax-filing-deadline-2019-1">When are taxes due?</a></li><li><a href="https://www.businessinsider.com/how-to-file-taxes-tax-return-instructions">How to file taxes for 2019</a></li><li><a href="https://www.businessinsider.com/what-is-a-tax-credit-definition-explainer">What is a tax credit?</a></li><li><a href="https://www.businessinsider.com/hr-block-vs-turbo-tax-2018-1">H&amp;R Block vs. TurboTax</a></li></ul>Editor's note: This story has been updated to reflect the federal government's spending bill that passed in December 2019, which extends the medical expenses deduction threshold of 7.5% of AGI through tax year 2019, instead of increasing it to 10%. Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. <h3>NOW WATCH: <a href="https://www.businessinsider.com/stop-using-champagne-flutes-this-is-the-best-way-to-drink-champagne-2017-12">Stop using champagne flutes - this is the best way to drink champagne</a></h3> <pre style="display: none;">function receiveMessage(event){ console.log(event.data.fullscreen); Android.fullscreen(event.data.fullscreen); }window.addEventListener("message", receiveMessage, false);</pre>

Are medical expenses tax deductible? Generally yes, under 2 conditions

For the purpose of collecting taxes, the government takes into account the profession, business or income of a person. When the taxpayers file their <keyword id="104359" type="PERSON" weightage="20" keywordseo="income-tax-return">Income Tax Return</keyword>, they must check which form thy must use to file their ITR. Here we learn who can file ITR 1 which is also known as Sahaj form. What is ITR 1? ITR1 is also popularly known as Sahaj form. This is a simple and easy to fill form for one-page. Individuals who earn an income of less than Rs. 50 lakhs need to use this form to file ITR. The persons earning through the following sources can use ITR 1. <ul><li>Earnings through salary or pension</li><li>Earnings from their own property or house</li><li>Earnings from other kind of sources (this does not include winning from horse race or lottery)</li></ul>How to fill ITR 1 form Part A – General Information In the general information section, the taxpayer must fill in their personal details including name, sex, age, residential status, address, contact number, etc. Part B – Gross Total Income In this section, the details pertaining to the income made from salary or pension as found in Form 16 or the <keyword id="17506" type="ORGANIZATION" weightage="20" keywordseo="TDS">TDS</keyword> certificate issued by the employer need to be furnished. If the tax payer worked for more than one employer in the given year, the details with regard to the total salaries received from different employers need to be entered. If the person has any income through rents or loss due to payment of housing loan interest from a single house or property, such details need to be given in this section. If the individual sustained any losses, the form ITR 2 need to be used. Part C – Deductions and taxable total income In this section, the tax payer has to furnish all the relevant details of the investments that will be counted for tax savings or the expenses that are eligible to claim tax deductions. The total income after all these calculations must be mentioned in this section. Part D – Computation of Tax Payable In this section, the person paying tax needs to club the items including Advance tax, Self-assessment Tax, TDS, TCS under ‘Total Tax Paid’. The details with regard to all kinds of exempt income, like dividend income, agricultural income, and others must be mentioned here. Part E – Other Information This section is meant to provide the details with regard to the savings and current accounts held by the person during the previous year (excluding the dormant accounts that are not operational for over 3 years). The individual must also furnish the details regarding the cash deposited in the accounts other than the current and <keyword id="114757" type="PERSON" weightage="20" keywordseo="Savings-Account">savings account</keyword> like loan accounts and others. If the cash deposited over the year is more than Rs. 2 lakhs, the aggregate amount of cash deposited must be furnished here. Schedule IT – Details of Advance tax and Self-assessment Tax payments If the tax payer has made any advance payment of tax or some self-assessment taxes, such details must be entered with the BSR code of the bank through which the payment was processed, the payment date, challan’s serial number, and the total amount paid through the challan. Schedule TDS – Details of TDS/TCS In this section, the details from Form 16 issued by the employer with regard to <keyword id="2414551" type="PERSON" weightage="20" keywordseo="Salary-income">salary income</keyword> must be given. Also, the details about the TDS or TCS as per Form 27D issued by the tax collector must be furnished. <keyword id="6401487" type="UNKNOWN" weightage="20" keywordseo="verification">Verification</keyword> In this section, the tax payer must enter the date and signature. The form will not be accepted if there is no valid signature.

ITR 1 Filing: Who can file ITR 1

Justin Lambert/DigitalVision/GettyMoving expenses are no longer tax deductible for many Americans.<ul class="summary-list"><li>Moving expenses are no longer <a href="https://www.businessinsider.com/what-can-i-deduct-on-my-taxes">tax deductible</a> for federal <a href="https://www.businessinsider.com/category/tax-day-2020">tax</a> purposes for most Americans.</li><li>In order to deduct any moving expenses on your <a href="https://www.businessinsider.com/how-to-file-taxes-tax-return-instructions">federal tax return</a>, you must be an active member of the United States armed forces (or a dependent or spouse) and the expenses must be related to a permanent change of station.</li><li>Some states still allow moving expense deductions on state tax returns.</li><li>This post has been reviewed for accuracy by Thomas C. Corley, CPA.</li><li><a href="https://www.businessinsider.com/yourmoney?utm_source=bullet">Read more personal finance coverage</a>.</li></ul>Most Americans can no longer deduct moving expenses on their federal tax return. Before <a href="https://www.businessinsider.com/tax-day-2019-trump-gop-tax-cut-law-still-not-popular-2019-4">the Tax Cuts and Jobs Act</a> (TCJA), qualified moving expenses were considered an above-the-line deduction to reduce your taxable income, meaning you didn't have to itemize the deductions on your federal tax return; you could recoup the costs of relocating for work or to look for a new job and still take the standard deduction.Beginning with the 2018 tax year, the moving expense deduction has been suspended until the 2025 tax year, unless you're an active duty military member or their spouse or dependent. However, a handful of states, including California and New York, <a href="https://www.worldwideerc.org/news/most-states-have-now-acted-on-conforming-to-federal-suspension-of-moving-expense-deductionexclusion-an-update/">still allow moving expense deductions</a> on state tax returns.Also, for nonmilitary taxpayers, moving expenses for which you were reimbursed by your employer are now included in your gross income, unless the reimbursement was provided by the government for a permanent relocation. Reimbursements used to be excluded from gross income prior to the TCJA.<h2>Moving expenses may be tax deductible for active duty military</h2>In order to deduct expenses related to a move of residence on your 2019 tax return, you must meet two requirements:1. You are a member of the Armed Forces on active duty2. You relocate due to a permanent change of station The IRS defines "permanent change of station" as a move from your home to your first post of active duty; a move from one permanent post of duty to another; or a move from the last post of duty to home or a closer location in the US, which typically must occur within one year of ending active duty.A spouse or dependent of an imprisoned, deceased, or deserted military member may also qualify to deduct moving expenses.If you're moving to a location within in the US, qualifying expenses include costs of moving household goods and personal property, as well as gas, tolls, and parking if traveling by personal car. The cost of lodging during travel to the new home is also included, but meals and food are not.You can also deduct the cost of shipping your car, disconnecting utilities, and storing your belongings for up to 30 days before they are delivered to your new home in the US. For active duty military members who are moving to a permanent station outside the US, all the aforementioned expenses are deductible, plus the cost of storage for household goods and personal property for the entire time you're at your new location.To compute a moving expense deduction, use <a href="https://www.irs.gov/forms-pubs/about-form-3903">Form 3903</a> and follow the instructions to record it on <a href="https://www.irs.gov/forms-pubs/about-form-1040">Form 1040</a>. If you file your taxes online through a service like <a href="https://oc.brcclx.com/t/?lid=26666206&amp;cr=26186&amp;last_updated=1575340827" rel="nofollow">H&amp;R Block</a> or <a href="http://www.dpbolvw.net/click-6415797-10457934?sid=bipfi_moving-expenses-tax-deductible" rel="nofollow">TurboTax</a>, you should be able to record your expenses easily.<ul class="read-more-links"><li>More <a href="https://www.businessinsider.com/category/tax-day-2020">tax day</a> coverage:</li><li><a href="https://www.businessinsider.com/when-are-taxes-due-tax-filing-deadline-2019-1">When are taxes due?</a></li><li><a href="https://www.businessinsider.com/how-to-file-taxes-tax-return-instructions">How to file taxes for 2019</a></li><li><a href="https://www.businessinsider.com/what-is-a-tax-credit-definition-explainer">What is a tax credit?</a></li><li><a href="https://www.businessinsider.com/hr-block-vs-turbo-tax-2018-1">H&amp;R Block vs. TurboTax</a></li></ul>Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. <h3>NOW WATCH: <a href="https://www.businessinsider.com/how-yule-log-became-christmas-tv-tradition-bizarre-wpix-fire-wood-burning-history-2017-12">The bizarre history of the Yule Log Christmas special</a></h3>

Are moving expenses tax deductible?

<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">Ty Wright/Getty Images</div></div></div>In selling their soon-to-be-released tax plan, Republicans have been leaning hard on what they say is a provision to cut and simplify taxes for the middle class: <a href="http://www.businessinsider.com/trump-tax-plan-raise-lowest-bottom-tax-rate-from-10-to-12-2017-9" target="_blank" rel="noopener noreferrer">Doubling the standard deduction</a> that income tax payers may take."You have to look at the plan in its entirety. It doubles the standard deduction, so in the end, even the lowest rates get a tax cut," <a href="https://www.reuters.com/article/us-usa-tax/trumps-tax-plan-to-propose-deep-u-s-rate-cuts-lacks-revenue-details-idUSKCN1C213M?il=0">Rep. Jim Renacci</a>, a Republican who sits on the tax-writing Ways and Means Committee, told Reuters.But a document <a href="https://www.axios.com/heres-the-gop-tax-reform-plan-2490159611.html" target="_blank" rel="noopener noreferrer">published by Jonathan Swan of Axios</a> shows this is badly misleading. The plan would increase the standardized deductions available to taxpayers by 15% or less.Meanwhile, taxpayers who still wouldn't take the standard deduction under the Republican plan - those who would instead deduct things like mortgage interest - would pay tax on more of their income than they do now.Here's the important fine print: "To simplify the tax rules, the additional standard deduction and the personal exemptions for taxpayer and spouse are consolidated into this larger standard deduction."Here's how that math works. Let's say you are single with no dependents, and you have a moderate income. Currently, you get to take the standard deduction ($6,350) and one personal exemption ($4,050). If you are 65 or older, you also get to take an additional standard deduction ($1,250). That adds to $10,400, or $11,650 if you're a senior citizen.The Republican plan would replace all these provisions with a single deduction of $12,000 ($24,000 for married couples.) That's a 15% increase - except for seniors, who get a 3% increase.And then your first dollar of taxable income would be subjected to a 12% tax rate, instead of the current 10%. But don't worry, the framework says "additional tax relief," as yet unspecified, will emerge for you during the committee process.For married couples, all the relevant amounts are doubled, under the current tax code and under the Republican proposal, so the percent changes would be the same.Meanwhile, taxpayers who itemize their tax deductions for things like mortgage interest and state and local taxes would pay tax on more of their income on the Republican plan. The Republican proposal says "most" itemized deductions would be abolished anyway, but those for mortgage interest and charitable giving would be retained.Currently, you get to take the personal exemption even if you also itemize deductions, but you only get to take the standard deduction if you forego itemize deductions. Combining these provisions into a single, standard deduction would mean itemizers lose their personal exemption and get nothing back - meaning they'll typically pay tax on an extra $4,050 of income if they're single, or $8,100 if they're married.Sad! <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/major-changes-apple-ios-iphone-11-2017-6">Here are all the major changes coming to your iPhone September 19</a></h3> <div> </div> </div>

The 'doubled standard deduction' in the GOP tax plan is a lie

In spite of major concessions announced by way of an ordinance in October 2019, the Indian economy continued to dwindle in the backdrop of the global economic meltdown. The current economic situation necessitated bold steps from our Hon’ble Finance Minister (‘FM’) to present a simplified budget that would result in a quick economic turnaround. However, whether such a ‘Simplified’ budget really unlocked potential for an economic turnaround, remains a question. Some key amendments coupled with their challenges are listed below: Some key amendments: Personal Tax Regime (‘PTR’): In line with the Concessional Tax Regime (‘CTR’) introduced by the Hon’ble FM in October 2019 which focused solely on corporates, a PTR has been introduced which focuses on providing alternative lower tax rates to individuals/HUF. The aforesaid concessional tax rate is applicable subject to the following conditions: <ol><li>The Individuals and HUFs having various incomes would not be allowed to claim any deductions/incentives, them being - <ul><li>Certain business <keyword id="891931" type="PERSON" weightage="20" keywordseo="deductions">deductions</keyword> and deductions from other incomes</li><li>House property deduction</li><li>Salary deductions including standard deduction and professional tax</li><li>Major deductions under Chapter VI-A (i.e. deductions under section 80C, 80D, etc) and</li><li>Set-off/carry forward of losses in relation to the above </li></ul></li></ol><ol><li>Further, <keyword id="1064766" type="ORGANIZATION" weightage="20" keywordseo="alternative-minimum-tax">Alternative Minimum Tax</keyword> (‘AMT’) shall not be applicable to an individual/HUF opting for PTR. Consequently, carry forward and set off of AMT credit shall not be allowed.</li></ol>In view of the above amendments, an individual having salary income as a major source of income and making investments in various schemes/instruments (For example, LIC premiums, PPF, ELSS, etc.) may not consider opting for PTR. It needs to be seen whether such a scheme is welcomed by the taxpayers at large or not. Dividend Distribution Tax (‘DDT’) Abolition: The Finance Bill proposes to abolish DDT in the hands of domestic companies and tax the same in the hands of the recipient. Accordingly, domestic companies declaring dividends shall be required to deduct TDS @ 10% on dividends exceeding INR 5,000 per shareholder. Further, it has been proposed to provide a deduction of interest expense of upto 20% of dividend income received in the hands of the shareholders under income from other sources. Lastly, in order to remove the cascading effect of taxes, dividend distributed by companies for a particular year (subject to conditions) shall be allowed as a deduction from dividend income. The benefit of deduction has also been extended to companies opting for CTR. However, the amendment leaves certain areas which need to be addressed: <ul><li>No scientific mechanism exists to allow deduction of expenses to the shareholders and only an ad-hoc deduction of interest expense capped at 20% of dividend income is allowed</li><li>In view of the above, the Company vs LLP structure needs to be re-evaluated</li><li>In case of banks and NBFCs where dividend income is a major source of business income, no separate provisions have been carved out</li></ul>Though the above is in line with the longstanding demand of the corporate world, only time will be able to tell whether the objective of earning higher taxes is achieved by these amendments. The above amendments also open-up the question of selection of an offshore jurisdiction for investing in Indian companies. Other Key Amendments A. Start-ups – Rationalising tax provisions and ESOP Taxation With a view to rationalise the tax deduction provisions for start-ups, the following amendments are proposed: <ul><li>100% profit deduction for an eligible start-up for any 3 consecutive years out of 10 years; and </li><li>Threshold of turnover for an entity, to be eligible as a start-up, has been increased to INR 100 Crores </li></ul> Further, in order to ease the burden of tax payment for employees of eligible start-ups, it is proposed to defer the timing of taxation of ESOPs perquisites. The amendment proposes to tax ESOP at the earliest of the following event: <ul><li>Expiry of 5 tears from the end of the relevant financial year; or</li><li>Date of sale by individual taxpayer; or</li><li>Date of cessation of employment</li></ul>These are welcome steps that would go a long way in providing ease of doing business for start-ups. Existing companies in the technology space must evaluate the possibility of obtaining necessary approval to claim exemption. B. Tax withholding on e-commerce transactions TDS @ 1% shall be made applicable on payments by e-commerce operators (who own/operate a digital e-commerce platform) to e-commerce participants (who sell goods/providing services/both). Further, exception is provided for payments to such a participant who is an individual/HUF if the transaction value during a particular AY is less than INR 500,000 This amendment will not only add compliance obligation on the e-commerce platforms but would also bring larger population of service providers and goods suppliers under the tax net. C. Increasing Tax Audit Turnover Threshold The FM proposes to increase the turnover threshold for tax audit applicability to INR 5 Crores, provided that the aggregate cash receipts/cash payments by such taxpayer do not exceed 5% of the total receipts/payments respectively during the financial year. This move is again intended with a view to move towards a cashless economy. D. Stay by the Hon’ble Income-tax Appellate Tribunal (‘ITAT’) ITAT may grant a stay of demand for upto a maximum of 365 days on a condition that the taxpayer deposits not less than 20% of the amount of tax, interest, fee, penalty, etc. Though the law seems to have been proposed, it would need to be seen whether condition can be applied to the judicial power of adjudicating authority. Since taxpayers at various levels are now being provided alternative tax regimes, the same may lead to complication of the tax regime with minimal benefits. TDS levied on dividend payments to shareholders/payments by e-commerce operators shall only increase the TDS compliance burden of large companies and e-commerce MNCs respectively. The impact of such complications and compliances on ease of doing business need to be evaluated. 
 <div type="image" title="Pranay Bhatia" msid="73984955" hostid="261"></div> Disclaimer: This article is written by Pranay Bhatia, a Partner and Leader of Tax &amp; <keyword id="344310" type="COMPANY" weightage="20" keywordseo="Regulatory-Services">Regulatory Services</keyword> at BDO India. The opinions expressed are entirely that of the author.

A top tax expert decodes the new Income Tax regime changes announced in the Budget

Johner Images/GettyGarden-variety home improvements are not tax deductible.<ul class="summary-list"><li>Home improvements on a personal residence are generally not <a href="https://www.businessinsider.com/category/tax-day-2020">tax</a> deductible for <a href="https://www.businessinsider.com/what-tax-bracket-am-i-in-federal-income-tax">federal income taxes</a>.</li><li>However, installing energy efficient equipment on your property may qualify you for a <a href="https://www.businessinsider.com/what-is-a-tax-credit-definition-explainer">tax credit</a>, and renovations to a home for medical purposes may qualify as a <a href="https://www.businessinsider.com/are-medical-expenses-tax-deductible">tax deductible medical expense</a>.</li><li>In addition, renovating your home can increase your basis, or total financial investment, in the property. This reduces your taxable capital gain if and when you sell the home.</li><li>This post was reviewed for accuracy by Thomas C. Corley, CPA.</li><li><a href="https://www.businessinsider.com/yourmoney?utm_source=bullet">Read more personal finance coverage</a>.</li></ul>If you're building a new patio in your backyard or revamping the kitchen in your home, don't expect to get a <a href="https://www.businessinsider.com/tax-breaks-only-america-tax-day-2019-2">tax break</a>.Under America's current federal tax code, home improvements are generally not tax deductible. However, there are two instances in which you may qualify for a tax break for making specific additions or improvements to your home, but they're not all that common.<h2>You may be able to claim a tax credit for installing energy efficient property</h2>If you installed <a href="https://www.energystar.gov/about/federal_tax_credits/2017_renewable_energy_tax_credits">energy efficient equipment</a> at your home last year, including solar panels, solar water heaters, geothermal heat pumps, small wind turbines, or fuel cell property, you may be able to claim a <a href="https://www.businessinsider.com/what-is-a-tax-credit-definition-explainer">tax credit</a> on your 2019 tax return.A tax credit is a dollar-for-dollar reduction of your tax bill. Some tax credits are even refundable, meaning that if what you owe in federal taxes is less than your credit amount, you'll receive the remainder as a refund.When it comes to the Renewable Energy Tax Credit, <a href="https://www.irs.gov/newsroom/energy-incentives-for-individuals-residential-property-updated-questions-and-answers">the IRS says</a> "energy saving improvements" made to a personal residence before January 1, 2020 qualify for the credit, which is equal to 30% of the cost of the property installed. Your personal residence can include your primary home and a vacation home.Fuel cell equipment is subject to limits, however. The maximum credit that can be claimed for fuel cell property is $500 per half kilowatt of power capacity and it must be installed at your primary residence.Unfortunately, the tax credit is not refundable regardless of the property it's claimed for.<h2>Home renovations made for medical purposes may be tax deductible</h2><a href="https://www.businessinsider.com/what-can-you-deduct-on-taxes-tax-day-2018-11">Tax deductions</a> reduce your taxable income and lower your overall tax liability. The IRS allows <a href="https://www.businessinsider.com/are-medical-expenses-tax-deductible">tax deductions on medical expenses</a> related to "the diagnosis, cure, mitigation, treatment, or prevention of disease" - but not until the expenses exceed 7.5% of your adjusted gross income.Only medical expenses that were paid out-of-pocket and not reimbursed by your <a href="https://www.businessinsider.com/how-to-get-health-insurance-cobra-medicaid-marketplace">health insurance plan</a> qualify as tax deductible. Unless you have sizable medical bills or other itemizations, it's usually not worth forgoing the large standard deduction to write off your health-related costs.That said, if you made substantial improvements to your home to aid a physically disabled person - yourself, a spouse, or a dependent - or installed special equipment, those costs could be considered medical expenses.For example, construction of ramps, widening doorways or hallways for wheelchair access, and installing modifications to bathrooms or stairways, including lifts and handrails, will qualify for a full medical deduction as long as their addition does not increase the value of the property. If it does, a partial deduction is allowed.You can find a full list of home improvements that qualify for the medical deduction on <a href="https://www.irs.gov/publications/p502#en_US_2018_publink1000178902">the IRS website</a>.<h2>Home improvements can help you save money on taxes when you sell</h2>Although garden-variety home improvements won't score you a tax deduction right now, they could be helpful in reducing taxes if and when you sell your home. A homeowner who sells their property for a profit is eligible to <a href="https://www.irs.gov/taxtopics/tc701">exclude up to $250,000 of the gain</a> from taxes, or up to $500,000 if married filing jointly (contingent upon meeting ownership test and the use test). The gain is calculated using the homeowner's basis, or their total financial investment in the property on the date of sale, which includes the price paid for the home and any improvements you made over the years you owned your home.The <a href="https://www.irs.gov/publications/p523">IRS says</a> improvements that qualify to be added to your basis are ones that "add to the value of your home, prolong its useful life, or adapt it to new uses," including interior and exterior modifications, heating and plumbing systems, landscaping, and insulation. Generally, the higher your basis in the home, the lower your taxable gain on the sale.<ul class="read-more-links"><li>More <a href="https://www.businessinsider.com/category/tax-day-2020">tax day</a> coverage:</li><li><a href="https://www.businessinsider.com/when-are-taxes-due-tax-filing-deadline-2019-1">When are taxes due?</a></li><li><a href="https://www.businessinsider.com/how-to-file-taxes-tax-return-instructions">How to file taxes for 2019</a></li><li><a href="https://www.businessinsider.com/what-is-a-tax-credit-definition-explainer">What is a tax credit?</a></li><li><a href="https://www.businessinsider.com/hr-block-vs-turbo-tax-2018-1">H&amp;R Block vs. TurboTax</a></li></ul>Disclosure: This post is brought to you by the Personal Finance Insider team. We occasionally highlight financial products and services that can help you make smarter decisions with your money. We do not give investment advice or encourage you to adopt a certain investment strategy. What you decide to do with your money is up to you. If you take action based on one of our recommendations, we get a small share of the revenue from our commerce partners. This does not influence whether we feature a financial product or service. We operate independently from our advertising sales team. <h3>NOW WATCH: <a href="https://www.businessinsider.com/new-years-eve-ball-drop-tradition-sailors-times-square-2016-12">The surprising reason Americans drop a ball on New Year's Eve</a></h3>

Are home improvements tax deductible? Generally only in 2 cases

Individuals having an annual salary income of over Rs 13 lakh and availing deductions of up to Rs 2 lakh will save on their tax outgo if they opt for the new tax regime proposed in the Budget, government sources said on Sunday.
For those earning a salary of Rs 12 lakh and less and availing deductions of up to Rs 2 lakh, the old tax system will be beneficial as the tax outgo will be less compared to the proposed new structure.
 As per data, as many as 5.3 crore taxpayers out of 5.78 crore claimed deductions of less than Rs 2 lakh (standard deduction, <keyword id="45028" type="ORGANIZATION" weightage="20" keywordseo="Provident-Fund">provident fund</keyword>, home loan interest, contribution to national pension scheme, life insurance, medical insurance etc.) while filing income tax returns. This means that about 90 per cent of taxpayers actually claim deduction of less than Rs 2 lakh.
 Offering an optional lower rate of income tax to individuals, Finance Minister Nirmala Sitharaman in the Budget 2020-21 proposed new tax slabs of 15 per cent and 25 per cent in addition to the existing 10 per cent, 20 per cent and 30 per cent.
 Under the proposed tax slab, annual income up to Rs 2.5 lakh is exempt from tax. Those individuals earning a salary between Rs 2.5 lakh and Rs 5 lakh will pay 5 per cent tax. Income between Rs 5 and 7.5 lakh will be taxed at 10 per cent, while earning of Rs 7.5 and 10 lakh to attract 15 per cent tax.
 Those earning a salary between Rs 10 and 12.5 lakh will pay tax at the rate of 20 per cent, while income between Rs 12.5 and Rs 15 lakh will be liable to pay 25 per cent tax. Income above Rs 15 lakh will be taxed at 30 per cent.
 The new slabs would be for individuals not availing certain specified deductions or exemptions.
 While individuals with an annual salary income of Rs 13 lakh and above will pay Rs 1.43 lakh tax under the proposed tax structure; in the old regime, they would have paid a tax of Rs 1.48 lakh, thereby saving Rs 5,200, a source said.
 On salary of Rs 14 lakh a year, savings would be Rs 10,400; and for those with income of Rs 15 lakh and above, savings would be Rs 15,600, provided the deductions claimed are up to Rs 2 lakh.
 In case of non-salary earners, who do not get standard deduction of Rs 50,000, the new tax structure is beneficial for those earning Rs 9.5 lakh annually and availing deductions up to Rs 1.5 lakh. They would save Rs 5,200 in their annual income tax outgoing. JD MKJ

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