Filing income tax is a daunting task, especially if you do not plan ahead. You have to file the returns once every year. So, to stay on top of taxes isn’t that easy. Whether you are going to hire a professional or file on your own, you need to know what the tax laws are and how your choices can affect your tax liabilities.
In this article, we will share a few things that you should know about taxes:
1. You May Not Need to File Federal Tax Return
You need to keep in mind that not every person has to file an income tax return. Depending on the tax laws, you may or may not have to file the return- it mainly depends on your income source, how much you earned, age, and filing status. To know, whether you need to file a return or not, you can get help from tax lawyers such as https://masamerica.co.il/en/.
2. If You Don’t Need to File a Return, You Can Still take advantage of Tax Credits.
Do you know about tax credits? Well, it is a dollar-for-dollar reduction in the tax. Tax credits are more useful than deductions. Do you know that you can even get tax refunds with credits if you don’t even need to file a return? Yes, you can get your money back with the American Opportunity Credit. If you are in the school, then you can claim AOC for qualified expenses. The maximum credit is $2,500 per student. Working people can get benefit from EITC (Earned Income Tax Credit). Having kids also have its benefits; for example, if you have one kid, then you can claim up to $503, and if you have three or more, then you can claim up to $6,242.
3. Student Loan Interest Deduction
One of the common problems with taxpayers is that they don’t itemize deductions. You need to keep in mind that IRS allows certain deductions that you don’t need to itemize. You can find a handful of them on form 1040.
4. You Should File a Return
You can face penalties if you don’t pay your tax or don’t file the return. So, we will recommend you to file in any case if you don’t owe any tax. There are options available for you to pay the tax. You can use your credit card or set up a payment plan with IRS. If you are not able to pay at once, then a payment plan with IRS is the best option.
5. Due Date
If you are unable to pay by the due date, then you have to face penalties and interest. Believe me! They add up so quickly that after a few months, you will find yourself socked in them. The due dates for employers and financial institutions are different than the individuals. They have a due date to pass on the info to you. If you aren’t able to file the return on time, then IRS can assess and collect at any time. To avoid this, you should file as soon as possible. You can also apply for an extension; there is a form available to apply for an automatic extension.