While many people are required to file a tax return, it’s a good idea for everyone to determine if they should file. Some people with low income are not required to file, but will need to do so if they can get a tax refund.
Here are five tips for taxpayers who are deciding whether to file a tax return:
Find out the general reasons to file
In most cases, income, filing status and age determine if a taxpayer must file a tax return. Other rules may apply if the taxpayer is self-employed or can be claimed as a dependent of someone else. There are other reasons when a taxpayer must file. The Interactive Tax Assistant can help someone determine if they the need to file a return.
Look at tax withheld or paid
Here are a few questions for taxpayers to ask themselves:
Did the taxpayer’s employer withhold federal income tax from their pay?
Did the taxpayer make estimated tax payments?
Did they overpay last year and have it applied to this year’s tax?
If the answer is “yes” to any of these questions, they could be due a refund. They must file a tax return to get their money.
Look into whether they can claim the earned income tax credit
A working taxpayer who earned less than $55,592 last year could receive the EITC as a tax refund. They must qualify and may do so with or without a qualifying child. They can check eligibility by using the 2019 EITC Assistant on IRS.gov. Taxpayers need to file a tax return to claim the EITC.
Child tax credit or credit for other dependents
Taxpayers can claim the child tax credit if they have a qualifying child under the age of 17 and meet other qualifications. Other taxpayers may be eligible for the credit for other dependents. This includes people who have:
Dependent children who are age 17 or older at the end of 2019
Parents or other qualifying individuals they support
The Child-Related Tax Benefits tool can help people determine if they qualify for these two credits.
There are two higher education credits that reduce the amount of tax someone owes on their tax return. One is the American opportunity tax credit and the other is the lifetime learning credit. The taxpayer, their spouse or their dependent must have been a student enrolled at least half time for one academic period to qualify. The taxpayer may qualify for one of these credits even if they don’t owe any taxes. Form 8863, Education Credits is used to claim the credit when filing the tax return.
Schedule 8812 (Form 1040), Child Tax Credit
Publication 972, Child Tax Credit
Free Tax Return Preparation for Qualifying Taxpayers
Choosing a tax professional
Let Us Help You
A small business owner oftentimes have to wear many hats. They might have to wear their boss hat one day, and the employee hat the next day. When tax season comes around, they may think of doing their taxes as just another item to quickly cross off their to-do list.
However, this approach could leave taxpayers open to mistakes when filing and paying taxes.
Accidentally failing to comply with tax laws, violating tax codes, or filling out forms incorrectly can leave taxpayers and their businesses open to possible penalties. The IRS encourages small businesses to explore using a reputable tax preparer – including Certified Public Accountants (CPA), Enrolled Agents or other knowledgeable tax professionals – to help with their tax situation. Filing electronically can also help avoid common errors.
Being aware of common mistakes can also help tame the stress of tax time. Here are a few mistakes small business owners should avoid:
Underpaying estimated taxes
Business owners should generally make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed. If they don’t pay enough tax through withholding and estimated tax payments, they may be charged a penalty.
Depositing employment taxes
Business owners with employees are expected to deposit taxes they withhold, plus the employer’s share of those taxes, through electronic fund transfers. If those taxes are not deposited correctly and on time, the business owner may be charged a penalty.
Just like individual returns, business tax returns must be filed in a timely manner. To avoid late filing penalties, taxpayers should be aware of all tax requirements for their type of business the filing deadlines.
Not separating business and personal expenses
It can be tempting to use one credit card for all expenses especially if the business is a sole proprietorship. Doing so can make it very hard to tell legitimate business expenses from personal ones. This could cause errors when claiming deductions and become a problem if the taxpayer or their business is ever audited.
That’s why partnering with Premier Financial Tax & Accounting Services all year round can help prevent inaccurate filing. We will do the necessary tax research and make sure that your business is always in compliance with the tax laws.
We believe you should itemize your expenses on your tax return. Why? Because you are most likely to increase your tax refund amount. However there is a catch. Like all tax laws and regulations adopted by the Internal Revenue Service (IRS), there is always a catch. The catch is you must qualify before you can take itemize deductions. Qualifications is based on your filing status and standard deductions.
We can help qualify you to itemize on your tax return. How? By partnering with us in keeping good records all year round. We use intuit quickbooks online (qbo) or qb online to keep track of your expenses. By year end, we are perfectly ready to help get you the maximum return you deserve.
IF your filing status is…
YOUR standard deduction is…
Single or Married filing separately
Married filing jointly or Qualifying widow(er)
Head of household
*Don’t use this chart if you were born before January 2, 1954, or are blind, or if someone else can claim you (or your spouse if filing jointly) as a dependent. Use Table 7 or 8 instead.
Most Uber and Lyft drivers i.e. gig economy workers such as DoorDash Driver, InstaCart, UberEats, Postmate, or eveb Airbnb people prepare for tax filingby waking up and gathering receipts laying around or pulling out receipts they may have stuck away some where to file their tax return.
Next, they began price hunting googling and calling tax preparation services. The other option is to walk into a tax store such as Jackson Hewitt or H&R BLOCK ready to file their tax returns with the papers they gathered.
Alternatively, others choose the easier and simple way to file their tax return using intuit Turbotax. The Do-It-Yourself method.
These approaches are cavalier. This is the lazy man approach. This rob you of the Tax Deductions and Tax Credits you are entitle to if you keep good records.
At PREMIER Financial Tax & Accounting Services dba FRIENDLY Tax Services, we like to help you benefits from these tax deductions and credits tax by partnering wiith you all year round. We are gig economy experts; Uber and Lyft Income Tax Preparer Expert serving the Glendale, Burbank, Pasadena and the greater Los Angeles area. We will help you throughout the year in keeping good records so at tax time, we will prepare and file your tax return for half the cost you will pay a CPA.
Friendly Tax Services is the premier income tax preparation firm for individuals, families, small business owners and the self-employed; Uber, Lyft, Taxi, and Limousine drivers; Actors, Independent Contractors and Entrepreneurs. We have empathy and understand the toll driving takes on Uber, Lyft, Taxi, and Truck drivers. That driving is time consuming. Uber drivers just don’t have the time it takes time to keep track of those business-related expenses.