When are taxes do for 2020?
Your typical tax day in America will usually fall on April 15. However, if that date just so happens to fall on a weekend or on Emancipation Day, which is observed in the district of Colombia, then the tax date may be pushed back to April 16, April 17, or even April 18. Make sure that you are not putting this off till the very last minute to ensure that no paperwork or important forms are lost in the shuffle. Additionally, filling your taxes early also helps prevent the untimely identity theft where savvy tech criminals use your name to steal your refund.
When can you file taxes?
You can file your taxes really anytime after January 1 as long as you have all the relevant information and documents needed to file your taxes. However, keep in mind that your employer has up until January 31 to send out W-2’s for that year along with any 1099 forms. Additionally, even if you did receive all your documents early, there is no guarantee that the IRS will immediately process your return if you file as soon as possible. On the flip side, technically you have up until 11:59:59 p.m. on the day that taxes are due for that year. Again, the date itself can vary from April 15 to April 18 and that’s only if your planning to file your taxes online. However, waiting till the last day can cost you dearly as mistakes are more prone to happen.
Wont be able to file your taxes on time? File for an extension
Whatever the reason may be, if you find yourself unable to complete your taxes by the set IRS date, then you’ll need to file an extension with the IRS first to avoid any late-filing or late payment penalties. Once you’ve filled for an extension you will have up until October 15 (six months later) to submit your final tax documents. Keep in mind that filling an extension simply pushes back the due date for the filling of your tax documents. It does not provide any additional time for any taxes that you’ve previously owed.
How long should you keep tax records?
The IRS states that you should keep your records for three years as this gives them a general look-back period. This is also the time you can file for an amended return. Before you go throwing things away, the IRS has an exception to this three-year rule. The IRS can go back as far as six years when more than 25% of income was omitted from your tax return. The second exception is that there is no statute of limitation when the IRS is trying to prove you filed a fraudulent return. Our recommendation is to hold onto your tax records for at least seven years. If an audit were to ever happen, you will be glad that you put up with the inconvenience of keeping those old tax returns.
How long does it take to get your tax refund back?
Your tax refund will depend heavily on how you chose to file your tax return. E-filing is one of the quickest and most effective ways to submit your tax return and along with choosing to receive your refund via direct deposit. If you chose this option, the turnaround time usually takes about 21 days. Once the IRS has accepted your tax return, your bank account should show that you have received your tax refund within three weeks. If you chose to file via paper return and opted to receive a paper check, then the process will end up taking even longer (about two months or more). Do you still have questions? Make sure to stop by or call one of our professionals for additional advice.
What forms do I need to file my taxes?
Before meeting with your tax professional to file your taxes, make sure that you have all the necessary forms in your possession. It is up to you to bring them with you when you your tax representative. Having everything ready to go will ensure that you file your taxes right the first time so that you don’t have to repay to amend your taxes after filling. Your W-2 will be the first form to file your taxes, which breaks down the wages you’ve earned and the taxes you paid over the last tax year. Any other income that was made outside your employer over the last tax year will have to be filed under a 1099 form. Finally, if you plan on claiming a deduction because of your mortgage interest, then you are going to need a 1098 from your mortgage company.
Can I do my taxes on my own?
That’s going to depend on whether or not you are filling a simple return or one that’s a bit more complex. There are certain circumstances when you should hire a professional to prepare your taxes. If you have only one employer, don’t have any dependents, and you have no additional investments or source of income, then you have a fairly simple return, which gives you the opportunity to file on your own. However, if your situation is a bit more complicated to the point where you feel that you might be leaving money on the table, then it might ease your mind to hire a professional. This is where your tax professional applies any hidden tax breaks that you might have overlooked on your own.
What happens if I miss the tax deadline?
Depending on what kind of financial situation you are in, this could either mean you had a minor blunder or it could mean that you need to take immediate action to avoid owing any additional money to the IRS. When you know that you are getting a tax return but missed the deadline there is no penalty. The IRS is more than willing to hold on to your money for however long it takes you to file your taxes. Just don’t go over 3 years from the filing deadline. If you owe taxes there is bad news and even more bad news. Filling for an extension is no longer an option and you will be charged a failure to file penalty and a failure to pay penalty. Additionally, you still have to file your taxes over to the IRS. The IRS will be charging you on a monthly basis, but they also have the option to prorate a portion every month.
What options do I have for paying my taxes?
Are you having difficulty paying your taxes this year? If you know that you can’t pay by the tax deadline, don’t throw in the towel just yet. File anyways even if you know that you can’t pay. After filling, don’t forget about your tax liability – it’s not going anywhere. Consider taking on one of these six options: Putting the balance on your credit card, refinancing your home, entering into an installment agreement, consider an offer in compromise (OIC), request additional time to acquire the money, or you could submit a partial payment now which is better than nothing. If you really can’t pay at all due to financial hardship (Ex: unemployment), then contact the IRS. They are more than willing to work with you. If you still have questions, contact one of our tax professionals today.
What is the minimum income level required to file taxes?
Not everyone needs to file their income tax return every year. The general rule is, if your total income for the year doesn’t exceed a certain threshold for your age and filing status, then you don’t need to file a federal tax return. For example, in 2018, if you were single under the age of 65 and made less than $12,000 for the whole year, then you do not need to file. $12,000 is currently the standard deduction for a single taxpayer. There are multiple scenarios to consider such as being over 65, married or not married, filing separately, and whether or not you are head of household. Furthermore, if you are receiving unemployment income, self-employment income, or social security income you will need to file your taxes. To find out whether or not you need to file, please contact one of our tax specialists.
Can a tax audit negatively affect my credit?
Getting audited by the IRS can cause anxiety, especially if you feel that you made a mistake with your tax return. Wile the process of being audited doesn’t necessarily affect your credit score, the final outcome can affect your FICO score. If you underpaid in your taxes and have an outstanding balance, then your ability to repay is what will ultimately affect your credit. However, if you pay your debt immediately to the point where they can close the case in a timely manner, then it should not affect your credit rating. If you owe the IRS a lot of money, avoid repayment, or take too long to pay your debt back, then the IRS can choose to file a tax lien against you on your public record which will then show on your official credit record. Talk to your tax professional account as they can provide invaluable advice in this area.
Are unemployment benefits taxable?
Having to file for unemployment benefits definitely comes with a myriad of emotions and circumstances. However, dealing with your finances is still important, whether it comes from your employer or government assistance. Yes unemployment benefits are counted as income and are taxable under your federal tax return. However, state tax will be based on where you currently reside. There is no fixed pattern, however. In fact, you may not even have to file your taxes if your gross income doesn’t meet the federal income limit of $10,350 ($20,700 if your married and filing jointly). If you had tax withheld from your previous job, then you should still file since there is a chance of seeing a tax refund. If you are receiving unemployment income then you will receive a 1099-G form which outlines the amount of income you’ve received from the government as well as taxes that were taken out.
What filing status should I choose?
When it comes to taxes, your filing status will be a big factor on whether or not you see a significant tax refund and how long the filling process will take. It will help you determine which form you will need to fill out and which deductions and credits you are able to claim. The five tax filling statutes are: single, married and filing jointly, married and filing separately, head of household, and qualified widow(er) with dependent child. Generally speaking, from these five you can file under two categories: Married or Unmarried. This will be your first step to narrowing down your filing status. Generally speaking, whatever your marital status is on December 31 that will be your marital status for the whole tax year. To learn more on each of these, give our tax preparation experts a call.
I started a home business; What can I deduct?
Entrepreneurs and small business owners that work out of their home have an opportunity to earn money on their taxes by taking a home office deduction. You just need to make sure that you are meeting the IRS’s requirements and are keeping a good record of all your expenses. If you regularly use a part of your home to perform business activities, the IRS will let you write off a percentage of your rent, utilities, real estate taxes, repairs, maintenance work, and a few other expenses. You are able to claim this deduction if the location is a single-home, an apartment, condo, or a houseboat. Temporary lodgings such as hotels will not count. The space you are using for business must be exclusively used to conduct business matters. To see if you qualify or to find out more about home office deductions, please contact one of our tax preparation experts.
Married but we keep our finances separately. Do I file Single or married?
You can technically file separately, but why would you want to miss out on all the tax advantages that come with being married? Those who file jointly will get a higher standard deduction; you will qualify for two more exemptions, and could possibly qualify for two tax credits. If you absolutely must file separately for financial reasons then it is possible to file your taxes under single, but it is worth noting the benefits of filing jointly. Talk to one of our tax preparation professionals to learn more or if you have any other tax relating questions.
Difference between tax credit and tax deduction?
When it comes to tax credit and tax deduction, the essential difference is that a tax deduction lowers your overall taxable income while a tax credit directly decreases the amount of taxes you owe. Think of a tax credit as a dollar-for-dollar reduction where if you owe 5,000 in taxes but get a credit of $500, then you own $4,500. A tax credit is worth the same for everyone regardless of the rate. Tax deductions should be seen more as a percentage deduction where if you are in the 25% bracket, a $1,000 deduction lowers your taxes about $250. To learn more about this and how you might be able to use this to your advantage, talk to one of our tax preparation specialists.
What are the advantages of filing electronically?
While there are some of us who are more comfortable using paper, there are considerable benefits when it comes to filing your taxes electronically. The first and most obvious advantage is that when you file electronically, you will get your refund faster as opposed to mailing it. Filling electronically means that you can also sign up for direct deposit, which leads to quicker refunds. The second benefit is that the IRS doesn’t have to re-enter your information which helps lower any data-entry errors. Last but not least when you file electronically you’ll get the peace of mind of knowing that the IRS no only received your sensitive information through confirmation, but that it landed on the right hands of a federal official. You can’t really get that from mailing your taxes when you also have to worry that it might get lost in the mail.
I found a mistake in my taxes. What should I do?
We are all human so there is always a chance that a mistake will be made when filing your taxes on your own. This usually occurs after the person has submitted there tax information that they might have forgotten to include a crucial piece of information, which could have significantly altered their tax refund. The good news is that all hope is not lost just as long as you take immediate action. Your next move will be to file an amended tax return which means you will need to use a form called a 1040X to correct any previously filed 1040, 1040-A, and 1040-EZ forms. This form is used to amend tax files that either had something incomplete, incorrect or omitted from the original tax return. To learn more, speak with one of our tax professionals today.