Whether you opt to hire a tax professional will depend on your comfort level with the tax-filing process and the complexity of your tax return. If you're looking for a tax preparer with a greater level of expertise, consider a certified public accountant or enrolled agent. Both professionals must pass certain exams and gain licensing.
The standard deduction is a designated amount of money on which you are not taxed. The amount of the standard deduction you claim depends on your tax status and the year in which you're filing taxes.
When your tax refund will arrive depends on when and how you filed your tax return. The IRS reports that 90 percent of federal tax refunds are issued within 21 days, and information is typically available within 24 hours after the IRS receives an e-filed tax return or four weeks after receiving a paper return. Use the IRS Where's My Refund? tool and the IRS2Go app to track your refund.
Before you file taxes as a college student, consider your income and whether your parents will claim you as a dependent this year. Students who earn less than $12,000 aren't required to file a tax return but may still benefit from filing if they had taxes withheld from their paycheck or wish to claim certain tax benefits such as the American opportunity tax credit.
Dependents can include qualifying children, relatives and other individuals whom you support. Dependents must meet certain age, income and housing requirements.
Yes, you may need to report income from a side hustle such as driving for a ride-hailing service or delivering groceries through a task-management platform. In fact, you may owe more than you expect since taxes won't be automatically withheld like they are in your paycheck. The good news is that many of these digital side gigs will provide you with a 1099 form that logs income. You may also be able to deduct qualified business expenses incurred during your side gig.
Avoid common IRS tax scams by treating suspicious or out-of-the-blue communications from purported IRS officials with a healthy skepticism. The IRS will typically reach out by snail mail first, so be wary of emails, texts or phone calls claiming to be from the IRS. Also be on the lookout for bad grammar, threats to call the police and requests for payments via gift card or wire transfer.
Yes, if you want to get your refund as quickly as possible, selecting direct deposit should be faster than, for example, requesting a check to be mailed.
You can make your tax professional's life easier by being organized, communicating throughout the year, providing necessary paperwork and passing along communications from the IRS promptly. These steps will help your tax preparer score you the largest refund or smallest tax bill.
To reduce your chances of a tax audit, avoid making errors, report all your income, keep proper records and avoid illegal or inappropriate tax moves such as overstating charitable donations.
To reduce your tax bill, take advantage of available tax credits, contribute to your retirement account, consider opening a 529 college savings account, claim eligible dependents and track deductions.