| name | tax-assistant |
| description | Tax preparation support covering common deductions, tax bracket explanations, W-2 vs 1099 differences, estimated tax payments, tax-advantaged accounts (HSA, FSA, 529), filing status optimization, record-keeping requirements, and deadline calendars.
Use when the user asks about tax assistant, or needs help with tax preparation support covering common deductions, tax bracket explanations, w-2 vs 1099 differences, estimated tax payments, tax-advantaged accounts (hsa, fsa, 529), filing status optimization, record-keeping requirements, and deadline calendars.
Do NOT use when the request requires professional financial advice or falls outside the scope of tax assistant.
|
| license | Apache-2.0 |
| metadata | {"author":"foundry-skills","version":"1.0.0","tags":"personal-finance tax-planning guide","category":"personal-finance","subcategory":"tax-planning","depends":"","disclaimer":"educational-finance","difficulty":"intermediate"} |
Tax Assistant
Disclaimer: This skill provides educational information about financial concepts and general guidance for personal financial planning. It does NOT constitute financial advice, investment recommendations, or tax guidance. Individual financial circumstances vary significantly, and the information provided should not be relied upon as a substitute for professional counsel. Always consult a qualified financial advisor, tax professional, or licensed financial planner before making financial decisions.
When to Use
Use this skill when:
- User has questions about tax concepts, deductions, or filing basics
- User wants to understand how a financial decision affects their taxes
- User needs help organizing documents for tax preparation
- User wants to understand tax brackets, credits, or withholding
Do NOT use this skill when:
- User needs specific tax filing or preparation -- refer to CPA or tax professional
- User has a complex tax situation (business, international, estate) -- refer to tax specialist
- User needs legal tax dispute resolution -- refer to tax attorney
Process
- Step 1: Identify the specific tax question and relevant filing status
- Step 2: Explain applicable tax concepts in plain language with examples
- Step 3: Walk through relevant deductions, credits, or calculations
- Step 4: Provide document checklist or organizational framework
- Step 5: Clarify when professional tax help is needed
Purpose
This skill helps users understand their tax obligations, identify potential deductions and credits, choose optimal filing strategies, and maintain proper records. It educates users on tax concepts so they can have more informed conversations with their tax professionals.
Questions to Ask the User First
- Filing status: Single, Married Filing Jointly, Married Filing Separately, Head of Household, or Qualifying Surviving Spouse?
- Income types: W-2 employment, 1099 freelance/contract, business income, investment income, rental income, retirement distributions?
- Dependents: Any children or other dependents? Ages?
- Major life events this year: Marriage, divorce, home purchase, baby, job change, retirement, inheritance?
- Homeownership: Own or rent? Mortgage interest amount?
- State of residence: Which state(s) did you live/work in? (State tax implications vary enormously)
- Retirement contributions: 401k, IRA, HSA contributions this year?
- Charitable giving: Did you make charitable donations (cash, goods, stock)?
- Health insurance: Employer-provided, marketplace, or other?
- Previous year: Did you owe taxes or get a refund last year? Roughly how much?
Tax Bracket Explanation (2024 Federal)
How Marginal Tax Brackets Work
Tax brackets are marginal, meaning only the income within each bracket is taxed at that rate. Your effective (average) tax rate is always lower than your marginal rate.
2024 FEDERAL TAX BRACKETS -- SINGLE
====================================
Income Range Tax Rate Tax on Bracket
$0 - $11,600 10% $1,160
$11,601 - $47,150 12% $4,266
$47,151 - $100,525 22% $11,742
$100,526 - $191,950 24% $21,942
$191,951 - $243,725 32% $16,568
$243,726 - $609,350 35% $127,969
$609,351+ 37% --
2024 FEDERAL TAX BRACKETS -- MARRIED FILING JOINTLY
====================================================
Income Range Tax Rate Tax on Bracket
$0 - $23,200 10% $2,320
$23,201 - $94,300 12% $8,532
$94,301 - $201,050 22% $23,486
$201,051 - $383,900 24% $43,884
$383,901 - $487,450 32% $33,136
$487,451 - $731,200 35% $85,313
$731,201+ 37% --
QUICK TAX CALCULATION
=====================
Gross income: $__________
Pre-tax deductions (401k, HSA): -$__________
Adjusted Gross Income (AGI): $__________
Deduction (standard or itemized): -$__________
Taxable income: $__________
Apply brackets above to calculate federal tax: $__________
Effective tax rate: tax / gross income x 100 = ____%
Marginal tax rate: the bracket your last dollar falls in = ____%
W-2 vs 1099 Differences
| Factor | W-2 Employee | 1099 Independent Contractor |
|---|
| Tax withholding | Employer withholds | You pay estimated taxes quarterly |
| Social Security/Medicare | Split 50/50 with employer (7.65% each) | You pay both halves (15.3% self-employment tax) |
| Deductions | Limited (standard deduction) | Business expenses deductible on Schedule C |
| Benefits | Often provided (health, retirement) | You provide your own |
| Tax forms | Receive W-2 by Jan 31 | Receive 1099-NEC by Jan 31 |
| Estimated payments | Generally not needed | Required quarterly (Apr 15, Jun 15, Sep 15, Jan 15) |
| QBI deduction | Not applicable | May qualify for 20% Qualified Business Income deduction |
Self-Employment Tax Calculation (1099)
SELF-EMPLOYMENT TAX WORKSHEET
==============================
Net self-employment income (Schedule C): $__________
Multiply by 92.35% (adjustment factor): x 0.9235
Self-employment tax base: $__________
Self-employment tax (15.3%): x 0.153
TOTAL SE TAX: $__________
Note: You deduct HALF of SE tax from AGI as an adjustment
Deductible portion: SE tax / 2 = $__________
Estimated Tax Payments
Who Must Pay Estimated Taxes
You generally must make estimated payments if:
- You expect to owe $1,000 or more when you file
- Your withholding is less than 90% of current year tax OR 100% of prior year tax (110% if AGI > $150,000)
Quarterly Deadlines
ESTIMATED TAX CALENDAR
======================
Quarter Income Period Due Date
Q1 Jan 1 - Mar 31 April 15
Q2 Apr 1 - May 31 June 15
Q3 Jun 1 - Aug 31 September 15
Q4 Sep 1 - Dec 31 January 15 (following year)
Payment methods:
- IRS Direct Pay (irs.gov/payments)
- EFTPS (Electronic Federal Tax Payment System)
- IRS2Go app
- Check mailed with Form 1040-ES voucher
Safe Harbor Calculation
ESTIMATED PAYMENT CALCULATOR
=============================
Method 1: 90% of current year tax
Estimated total tax this year: $__________
x 90%: $__________
Divided by 4: $__________ per quarter
Method 2: 100% of prior year tax (110% if AGI > $150k)
Total tax from last year's return: $__________
x 100% (or 110%): $__________
Divided by 4: $__________ per quarter
USE THE LOWER of Method 1 or Method 2 to determine safe harbor.
Common Deductions Checklist
Standard Deduction (2024)
- Single: $14,600
- Married Filing Jointly: $29,200
- Head of Household: $21,900
- Additional $1,550 if 65+ or blind (single); $1,300 (married)
Itemized Deductions (only if total exceeds standard deduction)
ITEMIZED DEDUCTIONS WORKSHEET
==============================
Amount
Medical expenses (only amount exceeding
7.5% of AGI): $__________
State and local taxes (SALT) -- capped at
$10,000 total:
State income tax or sales tax: $__________
Property tax: $__________
SALT TOTAL (max $10,000): $__________
Mortgage interest (on up to $750k of debt): $__________
Charitable contributions:
Cash donations: $__________
Non-cash donations (fair market value): $__________
Charitable mileage (14 cents/mile): $__________
Casualty and theft losses (federally
declared disasters only): $__________
TOTAL ITEMIZED DEDUCTIONS: $__________
Compare to standard deduction: $__________
USE THE HIGHER AMOUNT
Above-the-Line Deductions (Available Even with Standard Deduction)
- Traditional IRA contributions (up to $7,000; $8,000 if 50+)
- Student loan interest (up to $2,500)
- HSA contributions
- Self-employment tax (50%)
- Self-employed health insurance premiums
- Educator expenses (up to $300)
- Alimony (for agreements before 2019)
Tax-Advantaged Accounts
HSA (Health Savings Account)
- Requirements: Must have a High Deductible Health Plan (HDHP)
- 2024 limits: $4,150 individual / $8,300 family (+$1,000 catch-up if 55+)
- Triple tax advantage: Tax-deductible contribution, tax-free growth, tax-free withdrawals for qualified medical expenses
- Strategy: Contribute the max, invest it, pay medical expenses out of pocket, let HSA grow for retirement
FSA (Flexible Spending Account)
- 2024 limit: $3,200 (health); $5,000 (dependent care)
- Use-it-or-lose-it: Must spend by plan deadline (some plans allow $640 rollover)
- Pre-tax: Reduces taxable income
529 College Savings Plan
- State tax deduction: Many states offer deductions for contributions (check your state)
- Tax-free growth: No federal tax on earnings
- Tax-free withdrawals: For qualified education expenses
- Superfunding: Can contribute up to 5 years of gift tax exclusion at once ($90,000 in 2024)
- New rule (2024+): Unused 529 funds can be rolled to a Roth IRA (up to $35,000 lifetime, subject to conditions)
Filing Status Optimization
Head of Household vs. Single
If you are unmarried with a qualifying dependent, Head of Household gives you:
- Higher standard deduction ($21,900 vs $14,600)
- More favorable tax brackets
- Requirements: Unmarried on Dec 31, paid >50% of household costs, qualifying person lived with you >6 months
Married Filing Jointly vs. Separately
- Jointly is almost always better (lower rates, more deductions, more credits)
- Separately may help when: one spouse has high medical expenses, income-driven student loan payments, or one spouse has tax liability concerns
- Warning: Filing separately disqualifies many credits (Child Tax Credit, EITC, education credits) and limits IRA deductions
Record-Keeping Requirements
What to Keep and How Long
| Document | Retention Period |
|---|
| Tax returns | Permanently |
| W-2s, 1099s | 7 years |
| Receipts for deductions | 7 years |
| Investment purchase records | Until sold + 7 years |
| Home purchase/improvement records | Until sold + 7 years |
| Business records | 7 years |
| Property tax records | Until property sold + 7 years |
Organization System
RECOMMENDED FOLDER STRUCTURE (physical or digital)
===================================================
/Tax Year 20XX/
/Income/
- W-2s
- 1099s (NEC, INT, DIV, B, R, etc.)
- K-1s
/Deductions/
- Mortgage interest (Form 1098)
- Property tax bills
- Charitable receipts
- Medical receipts
- Business expenses
/Payments/
- Estimated tax payment confirmations
- Extension filing confirmation
/Filed Return/
- Federal return (signed copy)
- State return (signed copy)
- E-file confirmation
Tax Deadline Calendar
KEY TAX DATES
=============
January 15 Q4 estimated tax payment due
January 31 Employers must send W-2s; payers must send 1099s
February 15 Deadline to submit new W-4 to claim exemption
March 15 S-Corp and Partnership returns due (Form 1065, 1120-S)
April 15 Individual tax returns due (Form 1040)
Q1 estimated tax payment due
Last day for prior-year IRA contributions
Last day to file extension (Form 4868) -- extends to Oct 15
June 15 Q2 estimated tax payment due
Expat filing deadline (automatic 2-month extension)
September 15 Q3 estimated tax payment due
October 15 Extended individual returns due
Common Tax Credits
| Credit | Amount | Who Qualifies |
|---|
| Child Tax Credit | Up to $2,000/child | Children under 17, income limits |
| Earned Income Tax Credit | Up to $7,430 (2024) | Low-to-moderate income, varies by dependents |
| Child and Dependent Care Credit | Up to $3,000 (1 child) / $6,000 (2+) | Childcare costs to enable work |
| American Opportunity Credit | Up to $2,500/student | First 4 years of higher education |
| Lifetime Learning Credit | Up to $2,000/return | Any post-secondary education |
| Saver's Credit | Up to $1,000 ($2,000 MFJ) | Low-income retirement savers |
| EV Tax Credit | Up to $7,500 | New qualifying electric vehicle purchase |
Output Format
When providing tax guidance, deliver:
- Situation summary -- Filing status, income types, key factors
- Standard vs. itemized analysis -- Which deduction method saves more
- Deductions and credits identified -- Complete list with estimated values
- Tax-advantaged account recommendations -- What to contribute and where
- Estimated tax liability -- Rough calculation with effective rate
- Action items -- Specific steps and deadlines
- Records to gather -- Documents needed for filing
- Professional referral note -- Recommend CPA/EA for complex situations
Example
Input: "I started freelancing this year in addition to my full-time job. I have made $12,000 from freelance work. What do I need to know about taxes?"
Output:
Tax Guide: Freelance Side Income
Situation: W-2 employee + $12,000 freelance income
Key change: You now have self-employment income, which has different tax rules
What You Owe (Framework)
| Tax | Rate | On $12,000 |
|---|
| Federal income tax | Your marginal rate (22-24% typical) | ~$2,640-$2,880 |
| Self-employment tax | 15.3% (Social Security + Medicare) | ~$1,696 |
| State income tax | [JURISDICTION: varies by state] | Varies |
| Estimated total | ~37-40% | ~$4,400-$4,800 |
Critical Action Items
-
Quarterly estimated taxes: You likely owe quarterly payments (due Jan 15, Apr 15, Jun 15, Sep 15). Underpayment penalty applies if you owe more than $1,000 at filing. Use IRS Form 1040-ES.
-
Deductible expenses: Track ALL business expenses to reduce taxable income:
- Software and tools used for freelance work
- Home office (if dedicated space): simplified method = $5/sqft up to 300 sqft
- Internet (business-use percentage)
- Professional development and courses
- Health insurance premiums (if not covered by employer)
-
Document everything: Save all receipts. Use a separate bank account or credit card for freelance transactions.
Tax Forms You Will Need
- Schedule C (business profit/loss)
- Schedule SE (self-employment tax)
- Form 1040-ES (quarterly estimated payments)
- 1099-NEC from each client paying you $600+
Edge Cases
- Incomplete information: Ask clarifying questions before proceeding. Do not assume details the user has not provided.
- Out of scope requests: Redirect to appropriate professional resources when the request exceeds educational guidance.
- Conflicting requirements: Present trade-offs clearly and let the user decide priorities.
