Tax season is, without a doubt, the most dreadful time of the year for a lot of people. Having to do your taxes is a major chore in itself as it’s pretty complicated for many. Add to this the fear of making a mistake that can cost you either your freedom or a significant amount of money and it’s easy to see why the days leading up to the last day of filing can be very distressing to many.
Unfortunately, it’s not something you can really put off and just do at the last possible minute, even though many always try. Doing so can only cause you more troubles so it’s better to give yourself enough time to prepare. Luckily, tools like TurboTax and Liberty Tax are available to help simplify the process somehow so you don’t have to fret too much about this task.
To help make things simpler and less scary for you, we’ve looked up the answers to the most frequently asked questions about tax filing. They might just help ease the anxiety that comes with this tedious task, so make sure to check them out below.
When is the deadline for filing tax returns?
The exact date can vary from year to year, so it’s best to check the calendar for the exact day. It’s usually around April 15 to 18 in the past couple of years, except for 2020 when it was pushed to July 15 due to the lockdowns.
How can I file my tax returns?
You can file by mailing your tax return or by sending it electronically. Nowadays, the IRS is encouraging the public to file electronically due to staffing issues.
What is my tax bracket?
This should be rather straightforward since it’s based on your income but with deductions also coming into play, it can be a bit tricky. It’s best to check your salary and deductions yourself to determine what your tax bracket is.
Should you and your spouse file taxes jointly or separately?
The fact that married people are allowed to file either jointly or separately pretty much says that you should decide depending on how it can benefit you. In many cases, filing jointly will allow couples to save quite a lot of money as the IRS offers tax breaks to those who wish to do so. This is greatly encouraged by the government, so you should take a closer look into it.
On the other hand, there are also some occasions where filing separately will be more beneficial. This usually applies to couples who are making about the same amount of money. Those who are married to someone struggling with a massive student loan debt would also find it beneficial to file separately. Experts also recommend that couples with medical expenses will be able to apply claims on both incomes by filing separately.
It’s best to assess things based on your specific situation. If you have the time to make computations for both setups, you’ll be able to make a better decision.
Who can you claim as dependents?
There has been quite a number of changes when it comes to dependent deductions over the years. The latest, however, still allows people to claim a “qualifying child” or a “qualifying relative” for their dependents. These categories have specific qualifications that you have to take note of.
The most basic qualification is that they should be related to you or living with you for specific periods of time. For qualifying children, they should be your biological child, adopted or foster child, sibling, or a descendant of your siblings who are living with you for longer than half a year that are under 19 years of age or under 24 years of age if they’re registered as full-time students. Persons with disabilities, however, can be claimed as a dependent in this category whatever their age may be.
For qualifying relatives, they can be someone blood-related or not who is living with you for more than a year already and earns less than a specific amount as dictated by the IRS for the specific year you’re in. This means that even friends or domestic partners can be claimed as dependents as long as they meet specific qualifications.
What should you do if you can’t afford to pay taxes?
With everything that happened lately, it should be easier to see that people can find themselves unable to pay their taxes. If you end up in this position, don’t fret too much as you still have options to make what you owe.
The IRS may seem like the most rigid and unforgiving agency in the country but they can still compromise if you really have nothing to give. Besides, it’s better for them to still get something from you instead of just locking you up and not getting anything at all. You can apply for a payment plan or get into a settlement agreement with the agency. Balance transfers are also possible. No matter what you choose, make sure to weigh your options carefully as they all come with strings attached.
Should you opt for the standard deductions or itemize?
Again, the fact that you have options available means that the best move can vary on a case to case basis. Standard deductions are offered so many can opt out of the long and tedious process of itemizing every deduction. However, it might not be as big as what you can save from itemizing, so others prefer to take the harder route.
It should be noted, though, that new tax laws are passed on a regular basis so sometimes, one is definitely better than the other. This is why you should always stay abreast with the latest in tax news so you won’t miss out on opportunities to save money and avoid making costly mistakes.