Faq

Whether you’re required to file a tax return will depend on several factors, including your gross income, filing status, age, and whether you’re a dependent on someone else’s federal income tax return. And you may have to file even if you don’t owe any tax.

To get more specific information on who must file, check out IRS Publication 501. For most people, gross income is the main trigger for filing requirements. For example, in 2020, the filing threshold for single people younger than 65 was $12,400. For married couples filing jointly, it was $24,800 if both spouses were younger than 65.

If you were named as a dependent on someone else’s return and had income, you might also have to file, even if your income was much lower than the general threshold. Publication 501 has more detailed information on when dependents must file.

According to the IRS, income includes money, property or services. Any income is taxable unless the law specifically exempts it, and all taxable income must be reported on your tax return. Some nontaxable income must be reported, too, even though you won’t pay taxes on it.

IRS Publication 525 has details on what counts as taxable income and what doesn’t, and it’s a lengthy list. Not all taxable income is treated the same. Earned income, like your wages, is taxed differently because you pay Social Security tax, Medicare tax, and state and federal income taxes on it.

Unearned income, like child support or Social Security benefits, isn’t subject to payroll taxes, but you do pay federal and sometimes state income tax on it. And some types of unearned income are taxed at a lower capital gains rate, rather than your normal tax rate.

Deductions reduce taxable income. You have a choice between taking a standard deduction or itemizing your deductions. When you itemize, you reduce taxable income by the value of certain expenses deductible under U.S. tax law. For example, if you pay mortgage interest, you can deduct the interest paid — but only if you itemize.

Both tax credits and tax deductions can reduce the amount of tax you must pay. Deductions reduce the amount of income you pay taxes on, which in turn can reduce your tax. Credits are a dollar-for-dollar reduction in the amount of tax you owe.

If you had an income of $30,000 and took a $1,000 deduction, you don’t have to pay tax on that $1,000 of income. The deduction could save you $200 (assuming a 20% tax rate on that $1,000).

By contrast, a $1,000 credit would reduce the actual amount of tax you owe by that $1,000. So if you owed $3,000 in taxes, you’d now owe $2,000 and save $1,000.

Each year, you’re required to file your federal income tax return for the previous calendar year by Tax Day. Usually, the filing deadline is on or around April 15, though if the 15th falls on a weekend or holiday the deadline can be bumped to the next business day.

According to the IRS, most refunds are issued within 21 days for taxpayers who e-filed and who are having their refund directly deposited. Refunds take up to six weeks if you submitted paper returns. Claiming certain credits or deductions might delay your refund. You can check the status of your refund on the IRS “Where’s My Refund” website.

If you can’t afford to pay your taxes, it’s imperative you still file tax a return and make arrangements to pay what you owe. Failing to file and/or pay your taxes on time will result in interest and penalties.

If you can’t afford to pay the full amount you owe by the deadline, the IRS has multiple payment options that could help, including installment agreements. Keep in mind that you’ll still owe interest, and possibly penalties, even if you enter into a payment arrangement.

Costs and fees of payment plans vary depending upon the duration of your plan and whether you apply by mail or online.

Your mortgage company should send you Form 1098 which reports the mortgage interest you paid.

The forms to prove employment may vary depending on individual situations. For most, an employer will provide a W-2 form. The self-employed (i.e. independent contractors, product sales representatives such as Mary Kay, etc.) should receive a 1099-NEC from the company.

If you received unemployment benefits from your state over the past year, you must claim that as income and, therefore, pay taxes on those benefits. The unemployment agency should provide you with a 1099-G form, which explains the amount of benefits you drew during the past year. The Internal Revenue Service (IRS) receives a copy as well and will tax you at the appropriate rate in your tax bracket. Not everyone owes. If you worked a portion of the past year, chances are you paid payroll taxes and may earn a refund if those deductions were overpaid.

Yes, you can opt to pay your tax liability through an installment plan. In addition to paying taxes through an installment payment plan, there may be other options such as the Offer in Compromise (OIC). Under an OIC agreement, the IRS may agree to settle the taxpayer’s liability for less than the full amount of taxes owed. The IRS is not likely to approve an OIC if there’s evidence that the taxpayer could pay the full amount through an installment payment plan or another method. A taxpayer can request consideration for an OIC by filling out Form 656, Offer in Compromise, or Form 656L, Offer in Compromise (Doubt as to Liability), and mail the application package to the IRS.

Below is a list of documents to bring with you to your tax interview. A copy of this list, along with what to expect during your interview.

PERSONAL INFORMATION FOR EACH FAMILY MEMBER:

• Name

• Date of Birth

• Social Security Card /ITIN/ATIN

• Last Year’s Tax Return

• Valid Driver’s License

INCOME AND TAX INFORMATION:

• W-2’s

• Interest (1099-INT or substitute)

• Dividend Slips (1099-DIV or substitute)

• Stock Sales (1099-B or Broker Statement)

• Self-Employment Income and Expenses

• Sale of a Personal Residence

• Rental Income and Expenses

• Sale of any Business Assets

• Gambling or Lottery Winnings (W-2G for some winnings)

• State Income Tax Refund (1099-G)

• Pension Income (1099-R)

• Estimated Taxes Paid

• Social Security or Railroad Retirement (SSA-1099 or RRB-1099)

• IRA or 401(k) Distribution (1099-R)

• Unemployment Compensation (1099-G)

• Miscellaneous Income (1099-MISC)

DEDUCTIONS/ADJUSTMENTS:

• Medical Expenses

• Real Estate or Personal Property Taxes

• Mortgage Interest

• Charitable Contributions (cash and non-cash)

• Employee Business Expenses

• Gambling Losses

• Moving Expenses

• Traditional IRA Contributions

• Higher Education Expenses

• Educator Expenses

• Student Loan Interest

TAX CREDITS:

• Child Care Provider/Address and Employer Identification Number (EIN) or Social Security Number (SSN)

• Adoption Expenses

• American Opportunity Tax credit (Form 1098-T)

Depending on which Chapter you filed for, taxes may not be exempt. With Chapter 7 bankruptcy, federal taxes are exempt from discharge. When filing Chapter 13 bankruptcy, it is very important to file and pay your taxes during the bankruptcy proceedings because the court can dismiss your claim if you fail to meet this requirement. Dismissing the claim leaves you responsible for all of your debts. For further tax information on bankruptcy, read the IRS Publication 908 (10/2012), Bankruptcy Tax Guide.

If your divorce is not final, you may choose to file married filing jointly. Just note, that you and your spouse are responsible for the tax bill and any future audits.

The 'Where’s My Refund' tool on the IRS website provides the most up-to-date information regarding the status of your refund. This tool is updated every 24 hours.

Many factors can contribute to why your refund is less than you expected. You have to consider the three elements that define a refund: your taxable income, the amount withheld from your paycheck for federal and state taxes, and your tax rate. If you aren’t getting as much money back try to look on the bright side – you didn’t give the IRS a zero-interest loan.