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Common Questions About Taxes (Part 2)

Posted in Taxes
March 5th 2015 by
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Here are more common tax questions and answers to help you out this season.

What is the Earned Income Tax Credit?

This credit is designed to help lower income families. Here are the qualifications:

  • $46,997 ($52,427 married filing jointly) with three or more qualifying children
  • $43,756 ($49,186 married filing jointly) with two qualifying children
  • $38,511 ($43,941 married filing jointly) with one qualifying child
  • $14,590 ($20,020 married filing jointly) with no qualifying children

And here are the credits:

  • $6,143 with three or more qualifying children
  • $5,460 with two qualifying children
  • $3,305 with one qualifying child
  • $496 with no qualifying children

Is There a Way to Estimate My Taxes?

There are a number of online calculators you can use to get a rough estimate of what you’ll owe or how much you’ll get back. The efile one is pretty thorough, or you can sign up to use the free version of TurboTax to get an idea of where you’re at.

What’s the Difference Between Deductions, Exemptions and Credits?

Both deductions and exemptions reduce your taxable income. Deductions are for expenses you incurred and are based on your income bracket. Exemptions are granted for people in your family.

Credits are straight up dollar discounts on your tax bill.

Do I Have To File Taxes?

This depends on your income, age and individual situation.

For example, if you’re a single filer under 65 and made less than $10,150, you may not have to file. If you’re over 65, you must have made less than $11,700.  View the complete chart here.

With the Affordable Care Act in place, anyone who received advanced premium credits through the Marketplace will need to file a tax return.

There are other situations which may require you to file, but you can use this tool to figure out what you need to do.

What Happens if I Don’t File in Time?

It’s much better to file early than late. If you use an accountant, you’ll find services get more expensive as you get closer to the deadline.

If you’re running out of time, file for an extension. This will buy you the time you need, especially if you will owe money. If you don’t and know you’ll owe taxes, you will get hit with hefty fines and penalty fees.

If you’re expecting a refund, you will need to file before April 2018 (for 2014 returns) in order to claim that refund.

What if I Can’t Pay My Taxes?

Even if you can’t pay your taxes, you still need to file them. You’ll face many more fines if you owe and don’t file on time.

When you do file, pay what you can. The IRS understands that situations arise that make payments difficult, and they do offer a payment agreement service where you can pay in installments.

What if I Made a Mistake?

Don’t panic if you made a mistake on your return. You will need to file Form 1040x to correct your return, and this form will need to be mailed in.

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