Tax Filing Basics: Do You Have to File a Tax Return?

Not all income earners will have to file a tax return. Several factors could determine if you have to file, including the source of the income, how much you earned, your age and your filing status. For some people this is quite straightforward while for others it is not. For example, tax preparation for small business is sometimes easy and sometimes its quite hectic when there are too many entries to handle.

Check Eligibility

If your gross income is higher than your age threshold and filing status, you have to file a tax return. Provided no other claims arise from someone else.

If you are a dependent on the return of another person, differences exist in the rules. Single dependent under 65 and are not blind, are eligible to file a federal tax return was more than $5950. For the single dependents and are blind, you can file a tax return if your income was more than $7,400.

The under 65 who are married and not blind must file a tax return if their earned income was over $5950. 

Criteria for Self-Employed Persons

There are other reasons to file tax returns. The most frequent reason for undertaking this action if you do not meet the criteria above is for self-employed persons. The self-employed can file a tax return if their net earnings are less than $400. Special taxes, including taxes on retirement accounts, alternative minimum tax (AMT), household employment taxes, Medicare tax are other reasons to file a tax return.

Take a Tax Break

If you have made up your mind not to file a tax, you may have to take advantage of a tax break which is available. Excess with-holdings are an example of refund you might be entitled to. 

A lot of taxpayers may have been part of one of these categories. If you consider your situation to be out of the box, you have to file so that the IRS will not write you saying you should have filed.

Federal Rules

It is also crucial to consider that these are the federal rules. Though state rules might be very different and are quite inconsistent. We have no personal exemption and thus, taxpayers are subject to tax on the first dollar. It is possible, then, that you might have to file a state (or local) income tax return even provided you are exempted from federal income tax.

Or just, Ask For Help!!

As always, if you have questions, ask for help. There are so many resources out there. Most software packages have an interview interface that can walk you through your situation – but remembers that those are only as good as your answers. For the best results, consult with a tax professional or call the taxing authorities.

Top 7 Tips for Tax Return Preparation

The federal government estimates that 60% of individuals use paid preparers to complete and submit their tax returns. Certified Public Accountants have taken the biggest portion of tax preparers.

CPAs in Gaithersburg take almost all small business tax preparation in the United States. The Accountants lias with the IRS and the client to ensure all taxable areas are covered.

Here is the list of top Tax Return Preparation Tips:

1. Choose a Tax Preparer CPA

The IRS should certify the preparer and should have relevant tax return preparation credentials.

2. Gather your information for Tax Returns

In case you choose CPAs in Gaithersburg, MD, Here are the basic forms they will ask for:

• Form W-2
• Form SSA-1099
• New Form 1095-A
• Various 1098s)
• Form W-2Gs for certain gambling winnings
• Schedule K-1s from entities in which you have an ownership interest

3. Get your receipts together

For small business tax preparation, annual tax receipts for deductible expenses. For business incomes and expenses, books and bank records are mandatory.

4. Gather records for charitable contributions

In case you have engaged in any charity work, ensure you file the records in the tax return preparation drafts, for accountability.

5. Brace yourself for tax law changes

CPAs in Gaithersburg keep changing rules depending on the IRS mandate and target. Read through the annual laws and comply to avoid penalties.

6. Make a list of personal information

Write down current and accurate personal information including addresses of vacation homes and rental property; dates you moved; information about property you bought and sold, including dates, what you originally paid, what you received on the sale and expenses you had) needed to complete your return.

This is especially important for small business tax preparation since their records may have not reached the IRS.

7. Find a copy of last year’s return

Every year that you file tax returns, save a copy for reference purposes. In addition, the copy can be used for comparison purposes as it is an indication of taxable income the business has achieved.

Conclusion

Start early doing prep work for your income tax so you will have a successful tax return experience. Whether you are doing your own return, or having a preparer do it, thorough documentation and organized records will reduce the time

Most of all, these 7 tax preparation steps will ensure that you are not missing out on any tax benefits.