Tax season is a season some taxpayers look forward to every year. The reason being, they will get a refund from the IRS of their weekly withholdings. Despite this refund, there are many taxpayers who have questions about their taxes. For a CPA, it is the busiest time of the year. Here are a few frequently asked questions an accountant gets about personal taxes.
CPA Answer: This is an excellent question to ask. The answer will vary depending on your age, filing status, and whether you are blind. Also, if you are someone’s dependent, it will impact whether you should file a tax return.
If you are single-You should file a tax return if you have more then $12,000 in earned income, or if your passive income is more than $1,050. This is of course if you are single and under age 65. These are the IRS guidelines for those who are not blind.
If you are married and filing together-If you are married and filing jointly, you can double the income of a single filer. This is of course if you are both under 65, and neither of you is blind.
If you are married and filing separately-You should file a tax return if you are under 65 and not blind if your income exceeds $5.
CPA Answer: Every year, the Federal Government collects tax from the American workers. These are usually collected throughout the year from your paycheck. The IRS usually withholds too much and then sends you the difference in the form of a refund check. This has been going on since 1943 when the first tax laws were signed.
CPA Answer: Usually, those who collect Social Security do not pay taxes on this income. However, if you take all your other income, including tax-exempt income, and add it to half your Social Security benefits it should be under a certain amount to be tax-exempt. So, if your combined income is less than $25,000 for single, qualifying widow or widower with a dependent child, or head of household you will owe no tax. The amount for a married couple is $32,000.
CPA Answer: What you are charged for us to do your taxes will depend on your filing status, the type of work you did throughout the year, and the complexity of the tax return to be filed. It will also depend on where you live. Here, we are qualified Certified Public Accountants. You are getting your taxes done by qualified professionals. Don’t ask a family friend to do it, have it done by an accountant.
It seems cynical that you should be charged more depending on where you live. It is true, though. If you live in the Northeast part of the US, it can cost nearly $400 to get your return done.
CPA Answer: The question most people ask. How much will my tax refund be and when will I get it back. If you e-file your tax return, you can expect to see your refund hit your bank account within 21 days of filing. However, most people who e-file and ask for direct deposit receive their refund within 2 weeks of filing.
If you did not ask for direct deposit, you can expect to see your refund check in your mailbox within 4 weeks of filing. Again, this is if you e-file your taxes.
To mail your tax return and ask for direct deposit, it can take 4 to 6 weeks to receive the deposit. It can take up to 8 weeks from the date you mail your taxes to receive a check from the IRS.
CPA Answer: If you cannot afford to pay your tax bill in full every April, the IRS does take installment payments. The minimum monthly payment will depend on what you owe the IRS. In a sense, you do get to choose how much you can afford to pay the IRS every month.
However, if you choose a payment that is too low, the IRS will select the payment for you. The IRS will take the amount you owe and divide it by 72. This is the maximum number of months you can make an installment plan. Just call the IRS and ask about a plan that works best for you.
CPA Answer: This year tax refunds have shrunk. It is no surprise that many are asking why. The result is due to the 2018 tax cuts.
These tax cuts include the loss of the $4,100 personal exemption that was allowed in previous tax seasons. It also includes a limit on the number of deductions taxpayers can take state and property taxes. This limit is now capped at $10,000.
Also, you might have noticed your paycheck got bigger in 2018. If so, it is a result of the IRS cutting the withholding allowance.