Filing Information For Individual Income Tax
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How Can I Reduce My Taxable Income
If youre looking to reduce your taxable income to the point where youre not required to file taxes, there are a number of steps you can take.
One way to reduce taxable income is by topping up your retirement savings with traditional IRAs and 401s, up to the maximum allowable contribution. Contributions to Health Savings Accounts and Flexible Spending Accounts are another way to shrink your taxable income. As a business owner, qualified expenses can also help you reduce your taxable income.
You could potentially earn thousands of dollars before paying taxes. However, even when your income falls below the cut-off level and you do not have to pay taxes, you need to file taxes to get a refund check.
Resident Individual Income Tax
Resident taxpayers who are required to file a federal individual income tax return are required to file a Louisiana income tax return,IT-540, reporting all of their income. If a Louisiana resident earns income in another state, that income is also taxable by Louisiana. A temporary absence from Louisiana does not automatically change your domicile for individual income tax purposes. As a resident taxpayer, you are allowed a credit on Schedule G for the net tax liability paid to another state if that income is included on the Louisiana return.
Residents may be allowed a deduction from taxable income of certain income items considered exempt by Louisiana law. For example, Louisiana residents who are members of the armed services and who were stationed outside the state on active duty for 120 or more consecutive days are entitled to a deduction of up to $30,000. In each case, the amount of income subject to a deduction must be included on the Louisiana resident return before the deduction can be allowed.
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Filing Requirements Chart For Tax Year 2021
G.S. 105-153.8 requires a married couple to file a joint State income tax return if:
Generally, all other individuals may file separate returns.
On joint returns, both spouses are jointly and severally liable for the tax due. A spouse will be allowed relief from a joint State income tax liability if the spouse qualifies for innocent spouse relief of the joint federal tax liability under Code section 6105.
A married couple who files a joint federal income tax return may file a joint State return even if one spouse is a nonresident and had no North Carolina income. However, the spouse required to file a North Carolina return has the option of filing the State return as married filing separately. Once a married couple files a joint return, they cannot choose to file separate returns for that year after the due date of the return. If an individual chooses to file a separate North Carolina return, the individual must complete either a federal return as married filing separately, reporting only that individual’s income and deductions, or a schedule showing the computation of that individual’s separate income and deductions and attach it to the North Carolina return. In addition, a copy of the complete joint federal return must be included unless the federal return reflects a North Carolina address.
The Child And Dependent Care Tax Credit
The Child and Dependent Care Credit, which helps parents pay for child care, was boosted under the American Rescue Plan, which raised the credit to up to $8,000 per family.
But that tax credit has also reverted to its pre-pandemic level. Under the current law, parents can receive a credit on their 2022 taxes for up to 35% of up to $6,000 in qualifying child care expenses for two or more children. That means the maximum credit is $2,100 for the current year.
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What Are Some Other Must
Self-employment is a common reason for filing a return even if you dont meet the basic income criteria. If you had net earnings from self-employment of $400 or more, youre required to file a return. Basically, if you owe any self-employment tax, youre required to file Form 1040.
Here are some other reasons youll need to file.
- Owing special taxes. These can include the alternative minimum tax, additional taxes for nonqualified distributions from tax-favored accounts such as IRAs and HSAs, Social Security or Medicare tax on tips not reported to your employer, or employment taxes for a household employee
- You received distributions from a medical savings account or health savings account.
- You received wages of at least $108.28 from a church or organization that is exempt from employer Social Security and Medicare taxes.
- You, your spouse or your dependent received advanced payments of the premium tax credit by enrolling in coverage through the Health Insurance Marketplace.
Example 1 83 Election
In this example you timely file a Section 83 election within30 days of the restricted stock grant, when your shares are worth$1,000. You pay ordinary income tax of $370 .Because you filed a Section 83 election, you do not have to paytax when the stock vests, only on the sale. On the sale you recognize ataxable gain of $4.99 per share , and payadditional tax of $99,800 . Your economicgain after tax? $399,830 .
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Or You Can Use Independent Computer Software Products
You can file both your Maryland and federal tax returns online using approved software on your personal computer. To use this method, you’ll need to know the correct county abbreviation for the Maryland county in which you live. You may need to enter the correct subdivision code for the city in Maryland in which you live.
Qualifying Rules If You Can Be Claimed As A Dependent
You must file a tax return for 2020 under any of the following circumstances if youre single, someone else can claim you as a dependent, and youre not age 65 or older or blind:
- Your unearned income was more than $1,100.
- Your earned income was more than $12,400.
- Your gross income was more than $1,100, or $350 plus your earned income up to $12,050, whichever is greater.
Married dependents who are not age 65 or older or blind are subject to these filing requirements plus one more: They must file if their gross income was at least $5, and their spouse files a separate return and itemizes deductions.
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When Dependents Might Be Required To File
Individualschildren or adultswho are claimed as dependents on another taxpayers return are governed by different income tax filing regulations. As with other taxpayers, they must file a tax return when the income they earn income exceeds their standard deduction. However, their standard deduction is calculated differently.
For single dependents who are not blind and are under age 65, the standard deduction is the larger of:
· $1,100 in 2019, or
· The sum of $350 plus the individuals earned income, up to the standard tax deduction for a single person .
Income that a dependent receives from dividends and interest is considered to be unearned income. If a dependent’s unearned income exceeds $1,100 , the individual is required to file a tax return.
Who Does Not Need To File Taxes
The very basic and general answer is this: as a filing single or married filing separate person, if your 2020 income did not not equal or exceed the standard deduction limit of $12,400 and you do not owe any special taxes or have any special tax situations that require you to file, you do not need to file.
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Do Not Risk Having Your Benefits And Credits Interrupted
Doing taxes on time is the best way to ensure your entitlement to benefits and credits, like the Canada child benefit , the Old Age Security pension payments, and the goods and services tax/harmonized sales tax credit, are not interrupted. Even if you owe tax, dont risk having your benefits and credits interrupted by not filing. If you cannot pay your balance owing, the CRA can work with you on a payment arrangement.
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Changes To Income Thresholds
It is important to note that these income thresholds are subject to change each year. The Internal Revenue Service may adjust the thresholds based on changes in the cost of living.
Be sure to check the IRS website or consult with a tax professional to determine how much of your Social Security Disability Insurance may be subject to tax.
Your Social Security Benefit Statement will be useful for evaluating your tax liability.
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Choose The Right Income Tax Form
Your residency status largely determines which form you will need to file for your personal income tax return.
If you are a Maryland resident, you can file long Form 502 and 502B if your federal adjusted gross income is less than $100,000.
If you lived in Maryland only part of the year, you must file Form 502.
If you are a nonresident and need to amend your return, you must file Form 505X.
If you are a nonresident employed in Maryland but living in a jurisdiction that levies a local income or earnings tax on Maryland residents, you must file Form 515.
If you are self-employed or do not have Maryland income taxes withheld by an employer, you can make quarterly estimated tax payments as part of a pay-as-you-go plan, using Form PV. Please refer to Payment Voucher Worksheet for estimated tax and extension payments instructions.
If you owe additional Maryland tax and are seeking an automatic six-month filing extension, you must file Form PV along with your payment by April 15, 2020. You should file Form PV only if you are making a payment with your extension request.
If you need to make certain changes to your original Maryland return that has already been filed and processed, you must file Form 502X for 2019 to amend your original tax return.
How Much Do You Have To Make To File Taxes
In general, you should always file taxes. Even if your income was so low you weren’t required to file taxes, you may be able to get a refund or some benefits from the government. If you made at least $12,950 in 2022, or at least $13,850 in 2023, you’ll likely need to file taxes. The threshold is higher for heads of household and married couples filing jointly.
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Do You Have To File An Income Tax Return
Believe it or not, there may be years when you dont have to file an income tax return with the Internal Revenue Service. To make this determination, you need to evaluate a number of factors, such as the amount of income you earn and your filing status. It also depends on whether youre the dependent of another taxpayer, and a number of special circumstances that require the filing of a tax return regardless of other factors.
Choosing A Paid Preparer
Some individuals become enrolled agents through experienceas a former IRS employee instead of passing the three-parttest. These individuals may be limited in their practicerights to only the matters they have expertise in as aformer employee. Both Certified Public Accountants alsoknown as CPAs and attorneys have their own professionalrequirements for continuing education. Both groups haveunlimited practice rights before the IRS.
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How Much Can A Small Business Make Before Filing Taxes
All corporations are required to file a tax returneven if the business doesnt generate any income for the tax year. This includes LLCs that elect to be taxed as a C-Corp or S-Corp. If your business is a partnership, LLC, or sole proprietorship , the self-employment threshold appliesand you must file a federal income return and pay self-employment tax on any income above $400.
The type of tax return you file will depend on your business structure:
- Sole proprietorship: Form 1040 and Schedule C
- Partnership: Form 1065
- C Corp or S Corp: Form 1120
- LLC: Dependent on tax election
What Happens If You Haven’t Filed Taxes In 15 Years
If you fail to file your tax returns on time you could be charged with a crime. The IRS recognizes several crimes related to evading the assessment and payment of taxes. Penalties can be as high as five years in prison and $250,000 in fines. However, the government has a time limit to file criminal charges against you.
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Penalty For Failure To Pay Or Underpayment Of Estimated Tax
Revised Statute 47:118authorizes a penalty for failure to pay or underpayment of estimated income tax. The penalty is 12 percent annually of the underpayment amount for the period of the underpayment.
Determination of the Underpayment Amount
Determination of the Underpayment PeriodThe underpayment period is from the date the installment was required to be paid to whichever of the following dates is earlier:
Notification of Underpayment of Estimated Tax Penalty
Sharing Or Gig Economy
If you earn incomeas a rideshare driver,rental host,or online seller,your business is part of the gig economy.
The gig economy, also called sharing economy,or access economy,is any activity where people earn incomeproviding on-demand work,services, or goods.
Often, it’s through a digital platformlike an app or website.
Visit the irs.govGig Economy Tax Center,where you will find general information abouttax issues that arise in the gig economyand how to file your taxes.
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You Can Get A Refund Of Withheld Or Estimated Taxes
If your employer withheld federal income taxes from your pay or you made estimated tax payments, filing a tax return may allow you to receive some or all of those overpayments back in the form of a tax refund.
Keep in mind, if you regularly file a tax return just to get a refund of the tax your employer withheld, you might want to decrease your withholding.
File a new Form W-4 with your employer to reduce your withholding and increase your take-home pay, and you wont have to worry about filing a return unnecessarily.
What If I Only Receive Social Security Benefits
In most cases, if you only receive Social Security benefits you wouldn’t have any taxable income and wouldn’t need to file a tax return.
One catch with Social Security benefits is if you are married but file a separate tax return from your spouse who you lived with during the year. Then you will always have to include at least some of your Social Security benefits in your taxable income to see if it is greater than your standard deduction. If your taxable income is greater than you standard deduction, you would need to file a return.
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Calculating Your Threshold Amount
Youre only required to file federal taxes if your gross income exceeds the standard deduction amount that youre allowed. The standard deduction amount can vary, depending on your filing status, your age, and whether or not you are blind. The size of the standard deduction is greater for people who are age 65 or older, blind, or both.
The standard deduction for people under age 65 is:
- $12,200 for single taxpayers and married taxpayers filing separate returns
- $24,400 for married couples filing jointly
- $18,350 for taxpayers filing as “head of household”
Like other deductions, the standard deduction reduces your gross income. In general, youre not required to file a tax return if your gross income is smaller than the standard deduction.
Exception: If you earn money from self-employment, you are generally required to file a tax return, regardless of how much you earn.
Filing Requirements For Dependents
The IRS has different tax filing requirements for people claimed as dependents on another persons return. For dependents, filing status and age are factors, but so is the type of income received, whether earned or unearned.
- Earned income includes salaries, wages, tips, professional fees, and taxable scholarships and fellowship grants.
- Unearned income includes taxable interest, ordinary dividends, capital gain distributions, unemployment compensation, taxable social security benefits, pensions, annuities, and distributions from a trust.
Here are the minimum income limits from the Draft 2021 Form 1040 Instructions:
|Gross income of at least $5 and your spouse files a return and itemizes deductions|
Dependent children can avoid filing a tax return if they have only interest and dividend income and a parent elects to report the childs income on their own return. To make this election, you have to meet all of the following requirements:
If you meet all the requirements outlined above, youll report the childs income on Form 8814 and file it with your Form 1040.
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