1. When is my tax return due?

April 15 following the end of the tax year. If April 15 falls on a weekend or holiday, the due date for filing your tax return is the next business day.

2. Who must file a tax return?

The minimum income amount depends on your filing status and age. In 2022, for example, the minimum single filing status if under age 65 is $12,950. If your income is below that threshold, you generally do not need to file a federal tax unless you file to claim a refund of federal taxes paid.

3. I need more time to file my taxes. What should I do?

You should file for a federal and/or state extension of time to file prior to the tax deadline. This form only allows you to file your tax return after the original due date. Requesting an extension of time to file does not extend the deadline for paying any tax due. Any payment made when you file your tax return is subject to interest and penalties.

4. How can I reduce my tax bill?

The tax code provides several ways to control your tax bill through deductions and credits. Tax deductions allow you to reduce your taxable income, and tax credits allow you to directly reduce your tax liability. When you make income from a job, you can often reduce your taxable income by contributing to an employer-sponsored retirement plan or your own individual retirement account (IRA). You may also have a high deductible health plan through your employer with access to a health savings account (HSA) or flexible spending account (FSA).
All of these accounts allow you to contribute pretax dollars to invest or hold in cash for savings or for certain expenses. As a result, these contributions lower your taxable income and save you money on your tax bill.

5. Which is better: a tax credit or a tax deduction?

All things being equal, a tax credit is often preferable to a tax deduction. Tax credits reduce your tax liability dollar for dollar, while your tax deductions lower your taxable income. For example, if you prepare your taxes and have a total tax bill of $10,000, a $1,000 tax credit would reduce your bill by that amount.

If you had a $1,000 tax deduction and earned $50,000 in taxable income, your income tax liability wouldn’t decrease by $1,000. Instead, your taxable income would now be $49,000. Depending on your tax bracket, that means you would save anywhere from $0 to $370 as compared to $1,000 from a tax credit

6. Can I deduct medical expenses?

Each year, the IRS allows you to deduct unreimbursed expenses for qualifying medical expenses if they exceed.

Preventative care
Medical treatments
Surgeries
Dental and vision care
Psychologist and psychiatrist visits
Prescription medications
Prescription appliances (glasses or contacts, false teeth, hearing aids, etc.)
Travel expenses paid to receive this medical care (mileage, bus fare, and parking fees)

How much you can deduct depends on your income and whether you itemize your deductions. For example, if your AGI is $100,000 and you itemize your deductions, you can deduct any unreimbursed medical expenses in excess of 7.5% of your AGI, or $7,500 (7.5% of 100,000). If you had $10,000 in unreimbursed qualifying expenses, you can deduct $2,500 ($10,000- $ 7,500).

7. Should I itemize or claim the standard deduction?

Before the tax reform in 2018, you may have wondered whether you should itemize your deductions or simply claim the standard deduction. The decision got a lot easier after the 2017 Tax Cuts and Jobs Act passed. You typically don’t itemize if the standard deduction saves you more on your tax bill.

The standard deduction nearly doubled from 2017 to 2018, making it harder to justify itemizing your deductions itemized deductions. In 2022, the standard deduction comes to $12,950 for single tax payers, and $25,900 for married taxpayers filing jointly. Even so, you should calculate your itemized deductions and compare them to the standard deduction each year to get the most out of the tax savings available to you.

8. I am behind on filing my tax returns. Shouldn’t I just wait for the IRS to find me?

No! Penalties and interest accrue on tax debts, even if you have not filed. The longer you wait to file – the more you will owe! Also, if you are due a refund, IRS allows only 3 years from original due to file for a refund so don’t delay!

9. I owe more than I can afford to pay, what can I do?

Through the Fresh Start Program, the IRS offers installment payment plans if you find yourself with a tax bill too big to pay. You may also try to settle your IRS debt for less than what you owe via the IRS offer in compromise program. Contact us to see if you qualify.

10. I received a letter in the mail from the IRS. What should I do?

If the IRS sends you a letter, you must open it. Find out what they are looking for. There are several reasons for an IRS letter and not all of them are so scary. It could be as simple as requesting additional information before they release your refund. Sometimes, they want documentation for something you claimed on your return. Contact us if you need any help with the letter

11. The IRS assessed a penalty on my account. Is there anything I can do?

Yes, often times we work with our clients and the IRS or state to get penalties abated. Call us about your situation.