FAQs
1. When can I file my personal income tax returns?
Individuals usually start filing their personal income tax preparation between the 3rd week of January through April 15th. The personal income tax returns deadline is usually April 15th for calendar year taxpayers. However, if you need additional time to prepare and file, you can automatically receive a 6-month extension of time to file, not pay, your tax returns. There is no automatic extension of time to pay the taxes due. If you need additional time to pay, you can make a request with the tax authorities for an official payment arrangement. If you need more information, click here for a price quote.
2. How long should you keep tax records?
In most cases, you should keep all tax information and records for three years. However, the IRS has some rules to consider based on different scenarios:
Period of limitations that apply to income tax returns
- Keep records for 3 years if situations (4), (5), and (6) below do not apply to you.
- Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
- Keep records for 7 years if you file a claim for a loss from worthless securities or bad debt deduction.
- Keep records for 6 years if you do not report the income that you should report, and it is more than 25% of the gross income shown on your return.
- Keep records indefinitely if you do not file a return.
- Keep records indefinitely if you file a fraudulent return.
- Keep employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.
- Keep the records used for tax preparation at least three years after filing.
3. What is the Child Tax Credit?
The Child Tax Credit (CTC) maximum is $2,000 per qualifying child subjected to taxpayer income limitations and applies if your child is younger than 17 years old at the end of 2024, is claimed as a dependent, and lives with you for more than six months of the year. The child must also have a Social Security Number issued before the due date of the taxpayer’s tax return.
4. What is the capital gains tax?
Capital gains taxes are owed on profits from the sale of assets like stocks, real estate or other financial assets. Your gain could be taxed at the short-term rate or the long-term rate. The short-term capital gains tax rate is when you own an asset for a year or less, while long-term capital gains tax rates apply when you own the assets for more than a year.
5. What is an amended tax return?
If you made an error on a tax return you filed from the previous year? Then you may want to file an amended tax return to correct the error. If you need assistance with your tax returns, click here for a price quote.
6. How is self-employment tax calculated?
Self-employment taxes are the social security and Medicare taxes that self-employed individuals pay on self-employment certain partnership income. Generally, the self-employment tax applies to 92.35% of your business or trade’s net earnings. The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
7. What business expenses are deductible for my business?
A business is generally an activity carried on to make a profit. The following business expenses are usually deductible if they are ordinarily and necessarily required to do your business. You must keep the receipts, invoices and proof of payments for the expense for at least 3 years after filing your tax returns. The expenses must not violate local, state or federal laws. For example, parking tickets are not tax-deductible expenses—even if they are business-related expenses. If you need help, click here for a price quote.
- Advertising is tax deductible for businesses.
- Automobile based on the proportionate business use percentage rate you may deduct the actual business mileage or actual automobile expense).
- Tolls and parking are tax deductible for businesses.
- Business insurance is tax deductible for businesses.
- Employee or contractor compensation is tax deductible for businesses.
- Dues and subscription are tax deductible for businesses.
- Renting or leasing machinery and equipment are tax deductible for businesses. Rent of building or office space is tax deductible for businesses.
- Telephones are tax deductible for businesses.
- Accounting and business-related legal expenses are tax deductible.
- Home office expense is tax deductible for businesses.
8. How to keep your business records?
Generally, you must keep records and supporting documents for at least three years after you file a return. Your records may be in paper or electronic format, or both. Your records should be kept separate by tax period, usually by year. Your should keep the physical paper receipts, invoices, contracts, all agreements, notes, employee payroll records, minutes of board meetings, business related bank and credit statements, calculations of business income and expenses, and more. Some businesses use software like Quickbooks, Xero, FreshBooks, Sage Intacct or Sage 50 to calculate business income and expenses. Keep records for at least three years after filing.
9. How to find an accountant, and how much do they charge?
To find an accountant for your business or personal tax preparation, you can: ask for referrals from friends, colleagues, and other business owners in your area, search online directories, check local listings and review their experience in your industry before scheduling an interview to discuss your needs and fees; prioritize those with relevant experience to your business type and size. Accountants can help with bookkeeping, tax filings, payroll processing, and special reports to run your business, Some sources state that the average cost of personal tax preparation services ranges from $120 to $500, while the annual cost of small business accounting services ranges from $1,000 to $5,000, with smaller monthly payments available. It all depends on the details, volume and frequency of work the accountant needs to do. Click here for a price quote and also receive free consultation to discuss your needs.
10. I don’t know or have the time to use Quickbooks, Xero, FreshBooks, or Sage 50. What should I do?
If you lack the time or knowledge to use complex accounting software like QuickBooks, Xero, FreshBooks, or Sage 50, consider opting for a simpler solution like Wave, Zoho Books, or Kashoo which offers basic bookkeeping features like invoicing and expense tracking, or look into hiring our bookkeeping service to manage your business accounts for you. Click here for a price quote.
Do I need to file Taxes?
Yes, everyone needs to file taxes.
Do I need to report Tips?
Yes.
