Even if you’ve been filing taxes for years, new laws and changing circumstances can create confusion when it comes time to prepare your next return. As such, it’s natural for a variety of questions to arise. It’s important to gain clarity on anything you’re unsure of to avoid making costly errors. The following information will help answer some of the topics taxpayers are most inquisitive about.
Common Questions People Have Regarding Their Taxes
How do I determine my filing status?
Choosing the right filing status is essential, as it will impact your tax rate and determine your eligibility for a number of credits and deductions. The options are single, head of household, married filing jointly, married filing separately, and qualified widow or widower. In some cases, more than one status may apply. It’s best to seek advice from a tax professional on which will benefit you most.
Who can I claim as a dependent?
Claiming dependents can provide you with tax breaks and help lower your tax bill. A dependent is someone you financially support. This can be a child under the age of 19, or 24 if they’re still in school full time, who doesn’t earn more than half of what it takes to support themselves. They should also live in the same household as you for more than half the year unless there’s a qualifying exception. It can also apply to other family members who live with you and have little to no income.
If I can’t pay, should I still file?
One of the biggest mistakes taxpayers make is not filing a return at all when they realize they can’t afford to pay their tax liability. It’s better to file anyway so you don’t accrue penalties and interest for failure to file, in addition to those for failure to pay. These are calculated as separate charges. You can also consider making an installment agreement with the IRS or applying for an Offer in Compromise to settle your debt for less than the full amount.
What happens if I don’t file?
Should the IRS owe you a refund, you’ll have three years to file and claim it. However, if you owe the IRS and don’t file a return, you’ll receive a failure to file penalty, which is 5% of your unpaid debt up to a 25% maximum. Eventually, your wages may be garnished to help pay off your bill.
If you have additional questions about filing taxes that need to be answered, turn to Donna Sellers CPA in Brownfield, TX. Backed by more than two decades of experience, she has extensive knowledge of the current tax laws and will help ensure your return is accurate. She’ll take the time to carefully assess your situation and strategize ways to maximize your deductions while minimizing your IRS obligations. Call (800) 618-4914 to schedule an appointment. Visit her website to learn more about how she can help you successfully navigate tax season.