Tax Law

5 Things You Should Know Before Filing Federal Taxes

Every April, a major transition takes place between winter and spring throughout the United States. We welcome back the chirping birds that serenade us. Flowers bloom myriad colors and the grass turns lush green. Baseball begins and days grow longer. We kicked Old Man Winter in the butt. However, we still should deal with a not so friendly Uncle Sam.

Overview of Filing Federal Taxes

If you live in the United States, you most likely owe federal taxes. Whether Uncle Sam takes money out of your check or you have to file paperwork to determine what you owe, you’re on the hook to the federal government. Many Americans see taxes taken out of checks, and they still have to file returns by April 15 every year. Federal income tax law exempts some Americans that fall below an income threshold. If you own a limited amount of assets and earn an income that requires few if any deductions, then your best bet is to file the easiest to complete federal tax form, 1040EZ. Complex financial arrangements such as depreciation for small business owners and mortgage subsidies for homeowners require the use of longer and more difficult to understand federal tax forms.

What Does Filing Status Mean?

The term “filing status” can mean two different things. Filing status typically refers to the marriage status of the filer. However, a new litmus test has emerged that determines who the head of a household is. Heads of households are not married, but they are responsible for the financial well being of children and close relatives living in a home. Widows, widowers, and single parents represent heads of households.

File By Paper or Online?

This is a hotly debated question in the legal field. Electronic tax return filings receive much quicker attention from the Internal Revenue Service (IRS). Many tax attorneys advise clients to create hard copiers of their returns to have evidence ready in case the IRS performs an audit. Download the appropriate tax forms from the IRS website and then make copies or keep the originals if you file your return electronically. Moreover, save every receipt and other paperwork that back up your deduction claims.

Timing is Everything

Individual must file federal income taxes on or before April 15. If you apply for a filing extension you have until October 15 of the same year to file federal income taxes. The sooner, the better is the mantra for filing income taxes, especially for Americans that receive refund checks. The IRS grants automatic extensions until June 15 of the same year for Americans who are outside of the country. Remember that an extension for filing federal income taxes does not mean you receive an extension for making a tax payment. The IRS offers payment options that differ from the options for extending the tax return filing date.

Where to Find Tax Returns

In addition to the IRS website, the agency also offers to mail tax forms to your home or business. Many local libraries begin stocking the most requested tax forms about two months before the April 15 deadline. Tax consulting firms such as H & R Block carry every type of personal income tax form available. Some municipal governments also offer basic tax forms at city hall.

Although you may have to pay federal income taxes, the amount you pay might be less than what you calculated after you consult with a licensed tax attorney who specializes in the federal income tax code. Contact a tax attorney today to book an initial free consultation.

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