
A tax return calculates what you owe or what the IRS owes you. It also allows you to claim tax breaks, like deductions and credits. Some tax breaks are even refundable.
Self-employed taxpayers
Self-employed individuals are responsible for keeping track of their tax obligations and paying them on time. Since they don’t have the advantage of having taxes automatically deducted from their paychecks, they may need to make quarterly estimated tax payments. These payments are based on a taxpayer’s taxable profit for each quarter, considering the prior quarter’s profits and any estimated tax payments already made for that year. These payments can be filed on IRS Form 1040-ES.
Unlike W-2 employees, self-employed individuals are responsible for paying their Social Security and Medicare taxes (FICA taxes). These taxes can be calculated on Schedule SE, which must be filed with the individual’s income tax return. The rate for self-employment tax is 15.3%, which consists of two parts: 12.4% for Social Security and 2.9% for Medicare.
When filing, taxpayers must consider all their income sources, including wages, tips, and net earnings from self-employment. They can also claim business expenses to offset their SE taxes, such as home office equipment and supplies, meals and entertainment, travel, and membership fees. In addition, taxpayers must keep careful records of all their transactions and business activities, as they will be required to provide them if audited by the IRS.
Self-employed taxpayers should also take advantage of tax credits and deductions, such as the home office deduction. If they don’t, they may lose a lot of money. In addition, they should save a portion of their profits for future taxes. If they are still determining which deductions to claim, they should seek help from a professional.
Use TurboTax coupons as a great strategy to reduce the cost of tax preparation. These limited-time coupons are available online, in newspapers, and sometimes even for free. They often provide a reduction on the filing charge. It’s vital to remember that filing paper returns with coupon codes is not permitted.
Selecting an E-File tax service that provides a money-back guarantee and offers excellent customer support is crucial. The service should be user-friendly and accessible on multiple devices. Lastly, it is essential to remember that the discount you receive will only Be if the coupon code and item description are both listed on the sales receipt or invoice.
Taxpayers who are married
As a newlywed, you and your spouse must decide how to file your taxes. Most couples file jointly, giving them more tax savings and convenience. However, filing separately may be beneficial in certain situations. It’s essential to consult a qualified tax professional to determine the best option based on your circumstances.
Newlyweds should also take time to review their financial status and make necessary changes to their budget. For example, if they received a large tax refund this year, they should consider adjusting their withholdings so they don’t overpay next year. They should also consider if their current deductions and credits are still applicable, especially those that require specific income levels.
Married taxpayers must decide whether to itemize or take the standard deduction. Both spouses must choose one or the other; it is impossible to do both. The decision can significantly impact the size of your tax bill or your refund, so making an informed decision is essential. The best way to determine which option is better for you is to prepare your return both ways and see which results in the lowest net balance.
A few other things to keep in mind are the filing status and taxable income. Married couples who file taxes jointly enjoy a higher standard deduction and broader tax brackets than those who file separately. Additionally, if they have children or pay for the care of an elderly parent, they can claim dependents. In addition, married couples who live in community property states can share assets, such as a home or bank accounts, without paying taxes on them.
In addition, newlyweds should remember that the standard deduction figure is indexed for inflation. If you’re considering filing separately, check the IRS website to see if the standard deduction has changed from the previous year. They are establishing a system for tracking important tax documents, including W-2s and 1099s, medical and childcare expenses, charitable contributions, and capital gains/losses. Locating these documents will be much easier if they’re organized.
Taxpayers who have children
Children are a blessing, but they’re also expensive. Parents are eligible for various tax breaks that help them pay for raising kids. However, most taxpayers need to learn these deductions and credits exist. Whether you have a baby, an adopted teen, or a foster child, it’s essential to understand these tax breaks they’re filing your return.
The first step to maximizing parental tax breaks is to ensure that your child or dependent meets the IRS criteria. You’ll need the child’s Social Security or adoption notification number and tax ID (TIN). The IRS requires this information to verify that you’re eligible for the credit. The IRS will only accept your claim if you have this information.
You’ll also need proof of the child’s care expenses to claim the credit. You can claim the child and receive a receipt from your daycare or a copy of the child’s medical insurance card. Additionally, you can use free software to file for the credit. It helps you record your expenses in one place, so you’ll submit them to the IRS children in a few clicks.
If your child has income above the standard deduction threshold for 2023, they must return. However, they can file a return even if their income is below the threshold. It will allow them to claim any tax withholding and potentially receive a refund. Reminding them that the IRS considers their returns and tax forms confidential is also essential. They shouldn’t share them with anyone or leave them where others could see them.
In addition, it’s essential to explain that they should always sign their returns and forms. They must be honest with them or face penalties, including tax deficiency notices and audits. Also, if they’re under 18, they should be able to file with others. They should have permission from a parent or guardian to do so. Finally, remind your child that they’ll need to provide their full legal name on all documents and that they should never use nicknames.
Taxpayers who are elderly
A tax return filing is a complex process that requires meticulous attention to detail. The IRS recommends that seniors file early and electronically to avoid mistakes, especially if they receive their will or have a taxable amount. In addition, seniors need to use a trusted service provider like TurboTax to ensure they get all the credits and deductions to which they are entitled. It will make the filing process much easier and more accurate.
Many seniors have a variety of sources of income, including Social Security benefits, retirement account distributions, and investments. These sources may have different tax rates, so seniors must understand these differences. For example, they should know that Social Security benefits are partially taxable and check whether their income exceeds the standard deduction threshold.
Older adults should also be wary of scams targeting them, especially when trying to file taxes. These scams can range from phone calls from fake IRS agents to door-to-door visits by unlicensed “tax preparation specialists.” The IRS only communicates with taxpayers via mail; no legitimate agent will call or visit you unexpectedly.
If you or your elderly loved one need help preparing their taxes, several options are available. It’s worth noting that several reliable tax preparation services are free for seniors. Among them are the IRS’s Volunteer Income Tax Assistance (VITA)/Tax Counseling for the Elderly and AARP Foundation Tax-Aide. These services can help seniors navigate the complicated process of preparing their taxes, and they can also provide advice on investment strategies and retirement.
If you want to avoid the hassle of filing your taxes alone, consider hiring a professional tax preparer. It can be a good idea for seniors who are new to the tax filing process or need help with reading and understanding the instructions on the form. In addition to reducing stress, hiring a professional can save you money by ensuring you get all the credits and deductions you’re entitled to. You can find a tax preparer through an online search or by using the telephone book.