Frequently Ask Question
What is the difference between tax deductions and tax credits?
A tax deduction reduces your taxable income, which can lower the amount of tax you owe. A tax credit, however, directly reduces the amount of tax you owe, dollar for dollar, making it often more beneficial.
How do I know which tax bracket I fall into?
Tax brackets are based on your taxable income and filing status (e.g., single, married filing jointly). The IRS publishes tax rate schedules each year, showing income ranges and the corresponding tax rates for each bracket.
What is the deadline for filing my income tax return?
For most individuals, the federal tax filing deadline is April 15. If April 15 falls on a weekend or holiday, the deadline is moved to the next business day.
What happens if I miss the tax filing deadline?
If you miss the deadline, you may face a failure-to-file penalty. However, if you’re due a refund, you generally won’t be penalized. Filing for an extension by the deadline can help you avoid penalties, giving you until October 15 to file your return.
Can I file my taxes online, and if so, which platforms are recommended?
Yes, you can file taxes online using platforms like IRS Free File, TurboTax, H&R Block, and TaxAct. Many are free for simple tax returns, and they offer guided steps to help you file.
How does self-employment affect my tax obligations?
Self-employed individuals are responsible for both income and self-employment taxes (covering Social Security and Medicare). Self-employed individuals typically file quarterly estimated tax payments to avoid underpayment penalties.
What is the standard deduction, and who is eligible to claim it?
The standard deduction is a fixed amount that reduces taxable income, available to most taxpayers. It varies by filing status (single, married, etc.). You can take it if you don’t itemize deductions, and the amount is updated annually.
How can I check the status of my tax refund?
You can check your refund status on the IRS website using the “Where’s My Refund?” tool, or by downloading the IRS2Go mobile app. You’ll need your Social Security number, filing status, and refund amount.
What documents do I need to keep for tax filing?
Keep W-2s, 1099 forms, receipts for deductible expenses, records of charitable contributions, and records of medical expenses if you’re itemizing. Self-employed individuals should also keep records of business income and expenses.
What expenses are tax-deductible for individuals?
Common deductions include mortgage interest, state and local taxes, charitable contributions, and certain medical expenses. Deductions vary, and eligibility depends on whether you itemize deductions or take the standard deduction.
How can I reduce my taxable income?
Contributing to retirement accounts (like IRAs or 401(k)s), using Health Savings Accounts (HSAs), and making charitable donations can reduce your taxable income. You can also consider tax-loss harvesting if you have investment losses.
What is an IRS audit, and how can I avoid it?
An IRS audit reviews your tax return for accuracy. To avoid triggering an audit, file accurate returns, report all income, and avoid excessive deductions. High-income earners or those with unusual deductions may be more likely to face an audit.
