Common Questions About Filing Your Taxes

Taxes are due right around the corner and people are pulling together the paperwork to do their taxes themselves or their tax accountants are preparing their return.

Here are several common questions that CPAs around the United States are answering regarding taxes this year:

When are my taxes due?

Your 2018 IRS Income Tax Return is due on Monday, April 15^th. If you file for an extension you will have until October 15th to file your taxes.

What is the minimum income required to file a tax return?

USA Today reports that “there is no cut-and-dry answer to this question — filing status, a source of income, age and other factors all play into the taxpayer threshold. In general, if your gross income (all income from all sources) exceeds $10,000 you will have to pay federal tax. For freelancers, or what the IRS calls “non-employee compensation,” you have to pay taxes on anything over $600. This online IRS tool can help you determine if you owe federal tax or not”.

“You must file a tax return in any of the following circumstances if you’re single, if someone else can claim you as a dependent, and if you’re not age 65 or older or blind:

• Your unearned income was more than $1,050
• Your earned income was more than $12,000
• Your gross income was more than the larger of $1,050 or earned income up to $11,650 plus $350

Single dependents age 65 or older or blind must file a return in any of the following circumstances:

• Unearned income was more than $2,650, or $4,250 if you are both 65 or older and blind
• Earned income was more than $13,600, or $15,200 if you are both 65 or older and blind
• Gross income was more than the larger of $2,650 ($4,250 if both 65 or older and blind) or on earned income up to $11,650 plus $1,950 ($3,550 if 65 or older and blind)

Married dependents who are not age 65 or older or blind must file a return in any of the following circumstances:

• Unearned income was more than $1,050
• Earned income was more than $12,000
• Gross income was at least $5 and your spouse files a separate return and itemizes deductions
• Gross income was more than the larger of $1,050 or on earned income up to $11,650 plus $350

Married dependents age 65 or older or blind must file a return in any of the following circumstances:

• Unearned income was more than $2,350, or $3,650 if you are both 65 or older and blind
• Earned income was more than $13,300, or $14,600 if you are both 65 or older and blind
• Gross income was at least $5 and your spouse files a separate return and itemizes deductions
• Gross income was more than the larger of $2,350 ($3,650 if both 65 or older and blind) or on earned income up to $11,650 plus $1,650 ($2,950 if both 65 or older and blind),” according to TheBalance.com.

How long should I keep tax documents?

The general recommendation is that you keep your tax documents for three years in case you have an IRS audit. If you have a situation of suspected fraud, you’ll need to show several years of records.

Is childcare deductible if I work full time?

The IRS urges people not to overlook the Child and Dependent Care Tax Credit. Eligible taxpayers may be able claim it if they paid for someone to care for a child, dependent or spouse last year.

Taxpayers can use the IRS Interactive Tax Assistant tool, Am I Eligible to Claim the Child and Dependent Care Credit?, to help determine if they are eligible to claim the credit for expenses paid for the care of an individual to allow the taxpayer to work or look for work.

Eight other key points about this credit include:

1. Work-Related Expenses.The care must have been necessary so a person could work or look for work. For those who are married, the care also must have been necessary so a spouse could work or look for work. This rule does not apply if the spouse was disabled or a full-time student.
2. Qualifying Person.The care must have been for “qualifying persons.” A qualifying person can be a child under age 13. A qualifying person can also be a spouse or dependent who lived with the taxpayer for more than half the year and is physically or mentally incapable of self-care.
3. Earned Income. A taxpayer must have earned incomefor the year, such as wages from a job.  For those who are married and file jointly, the spouse must also have earned income. Special rules apply to a spouse who is a student or disabled.
4. Credit Percentage/Expense Limits. The credit is worth between 20 and 35 percent of allowable expenses. The percentage depends on the income amount. Allowable expenses are limited to $3,000 for paid care of one qualifying person. The limit is $6,000 if the taxpayer paid for the care of two or more.
5. Dependent Care Benefits.Special rules apply for people who get dependent care benefits from their employer. Form 2441, Child and Dependent Care Expenses, has more on these rules. File the form with a tax return.
6. Qualifying Person’s SSN. The Social Security number of each qualifying person must be included to claim the credit.
7. Care Provider Information. The name, address and taxpayer identification numberof the care provider must be included on the return.
8. IRS Free File. Taxpayers are encouraged to use IRS Free File to prepare and e-file their federal tax returns, including Form 2441. Free File is easy, fast and available only at gov/freefile.

   If you have any questions about your taxes this year, contact Joshua Wilson, CPA, PC for a consultation at 770-856-1309?

2018 Income Tax Organizer

If you are interested in receiving this complimentary 2018 Income Tax Organizer for your use, just email josh@joshuawilsoncpa.com and put in the subject line “Send a 2018 Income Tax Organizer” and our office will send you a pdf to start getting prepared for your taxes.

Joshua Wilson, CPA, PC is a full-service public accounting firm that specializes in accounting, tax preparation, tax planning, & business development for small businesses in Monroe, GA and the surrounding areas. Give Joshua a call today to set up a consultation at 770-856-1309 or email him at josh@joshuawilsoncpa.com.