Is this your first time filing taxes? Have you made mistakes in the past?
Filing taxes is often unnecessarily difficult, but almost everyone has to do it. If they can do it, so can you. That said, it’s okay to have questions.
We’re here to try to answer some of your pressing tax questions for free before you visit a tax advisor. Read on to learn more.
1. When Do I Need to File a Tax Return?
Many people think that they only (and always) pay taxes on income. It’s a bit more complicated than that.
First, there’s an income threshold for filing taxes. This means that if you make below a certain amount of money, you may not have to file at all.
Check the income threshold for your specific situation to see if you need to file taxes. For example, for single people under the age of 65, this number is $12,400. It goes up from there unless you’re filing individually as a married couple.
Taxable income also includes things like investments, rent money (for landlords), tips, bonuses, and certain types of unearned income. Because this can be complicated, it’s helpful to hire a tax advisor to help you.
2. What Is a Dependent?
When you file your taxes, you’ll be asked about whether or not you have dependents. You may be a dependent yourself.
Dependents are usually children, but there are other qualifying family members. If the person filing taxes has a child under the age of 18 that they provide primary care for, they have a dependent. This is also true for children under the age of 23 who are full-time students and any child who has a disability that requires full-time care.
If you have a relative that you support, and that lives with you, they may also be a dependent if they make below $4,300. Again, this is a nuanced topic so it’s helpful to hire a tax advisor if you’re unsure.
3. Should I Accept The Standard Deduction?
Most of the time, the standard deduction is the best choice. It often provides higher deductions, it’s quicker, and everyone qualifies. It is possible for the deduction to be lower, but for the average person, this isn’t true.
Itemized deductions require more thought and effort on your part. That said, if you think that you have specific deductions (such as mortgages or property taxes), it’s possible that itemized deductions are the better choice.
4. What If I’m Self-Employed?
Self-employed people don’t have anyone to withhold their income tax. For newcomers, this can be problematic. You have to withhold your own taxes.
Self-employed people submit quarterly estimated taxes. Because they’re estimates and the end result for the year may be different from the taxes that you pay, it may be better to overpay rather than underpay if this is your first time filing.
Read more about self-employment and taxes here.
We Hope We Answered Your Tax Questions for Free
Taxes are difficult for everyone. If you get confused, don’t be afraid to ask a professional tax advisor for help. Remember, the government may punish you for incorrect tax returns and you may have to pay extra.
Hopefully, our tax questions for free helped you out.
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