Whether you run your own business or earn a salary, filing your tax return is an obligation every American citizen must fulfill. Note that you can file tax returns independently or hire an income tax professional to help you with the required forms.
Also, make sure the forms are properly completed according to federal standards. But, before that, there are five critical things you need to know about taxes.
1. Not All People File a Federal Income Tax Return
Not everyone is required to file for a federal tax return due to various factors, which include the amount and source of income you receive, your filing status, and age. Even though you may not be required to file a return, it may be advantageous to do so.
To allow you to take advantage of tax breaks and credits, we suggest using a certified public accountant (CPA) like Tax Preparation Washington DC. They can help you determine whether you should or should not file a return.
For regular filing involving everyone else, you can quickly do the task by using the “cheat sheet” formula. This requires you to find your standard deduction and add exceptions to the number.
2. Regardless of your Employment Status, you should File a Return
Whether you’re employed or not, filing a return is a must. This helps you avoid getting IRS penalties. You’ll be penalized for failure to file a return and, if taxes are owed, failure to pay the taxes.
3. Make sure to submit for taxes on the right date.
Aside from getting penalized for failing to file and pay your taxes, you can also get penalized for failing to do all these activities on the stipulated date. The IRS discloses this information regarding the deadline time that they take to collect the federal income taxes.
Even if you fail to file at the right time, ensure you still register for your returns within the same week to avoid getting higher penalties since they sometimes extend the filing and payment time.
4. There’s a Difference between the Extended Time to File and the Extended Time to Pay.
If you are not prepared to file for the tax on the due date, you can contact the IRS offices and request an extension of time to submit, unlike with payment. There is a considerable difference between the added time to file and the added time to pay since fling time is added with no extra cost, while the extension comes with interest.
5. There can be significant consequences for failing to pay your taxes.
We have seen cases where individuals who fail to pay their taxes get punished by the IRS. Some penalties include applying your refund to back taxes, levying your wages or bank account, and even revoking your passport.
If you don’t have enough knowledge or time to file your tax returns, hire a CPA to help you file to avoid the substantial penalties and consequences of tax filing processes.
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Infographic Provided By individual tax services company, Mowery & Schoenfeld
