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*Disclaimer: Additional forms and schedules may be required based on business activity, which entails additional costs. For a free, more detailed quote, sign into Taxfyle and answer our quick onboarding questionnaire.

**Extension included at no additional charge when your taxes are filed through Taxfyle. Extensions are $40, billed on extension deadline for customers who abandon their filing with Taxfyle.
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Frequently Asked Questions

FAQ

How do you file income tax?

Our Pros can handle your taxes. Our Pros are licensed CPAs or EAs that are based in the US. They vary in experience and specialty, but on average, they have approximately 15 years of experience. Our matching algorithm makes sure that your job is picked up by a Pro with the right experience to get the job done correctly.

Can I file multiple years?

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Seven things you should know about the self employment tax

1. Self-Employment Tax Defined
The majority of employees are taxed based on their salaries and wages. Their earnings and taxes are reported on a W-2 prepared by their employer.

But if you own your own business, are a contractor or freelancer, or otherwise work for yourself, you’re responsible for paying self-employment taxes.By IRS standards, self-employment tax only refers to what’s owed to Social Security and Medicare and is collected from individuals who are self-employed.

This has been the standard since 1954 when the Self-Employed Contributions Act (SECA) was formed. It was in response to self-employed taxpayers evading paying Social Security and Medicare after the U.S. government passed the Federal Insurance Contribution Act (FICA), which is where our Social Security and Medicare funds began.

The SECA tax (more commonly called self-employment tax) is the same for all employers and employees, but when you work for someone else, the employer pays half and you pay half. When you work for yourself, you’re responsible for the full amount.

2. The Self-Employment Tax Rate
The SECA tax is worth 15.3 percent of your net earnings; 12.4 percent goes to Social Security and 2.9 percent goes to Medicare. However, not all of your net earnings are taxed for Social Security; there’s a limit to your taxable net earnings.In 2019, the limit for taxable net earnings is $137,000.

Anything you make above that amount is not subject to self-employment tax.So, if you made $200,000 in net earnings for the 2019 tax year, you’ll only owe 12.4 Social Security percent tax on the first $137,000. The remaining $63,000 is not taxable.There is no limit for Medicare tax—all of your net earnings will be taxed at the 2.9 percent rate in 2019.

So, if you make $200,000 in net earnings, you’ll owe 2.9 percent, or $5,800 in Medicare tax for the year. There’s also an additional 0.9 percent tax owed after the Affordable Care Act was instituted in 2003. This applies to the first $200,000 that you make, so at $200,000 net earnings, the entire sum is taxable.

3. Quarterly Payments
For self-employed individuals, the tax liability can be quite overwhelming, especially if the bill must be paid all at once at the end of the year. To help break up your tax payments and help you make payments on time, you can make estimated quarterly payments.

Every quarter, you’ll estimate your tax liability based on your earnings for the last quarter. You’ll fill out a quarterly payment voucher, known as Form 1040-ES, and send a fat check to the IRS on or before the due date. Any overpayment will be refunded when you file your return.

The deadlines for quarterly taxes are:
Quarter 1: April 15
Quarter 2: June 15
Quarter 3: September 15
Quarter 4: January 15

If the deadline falls on a weekend, the deadline will be moved to the next business day.Most self-employed individuals choose to pay quarterly tax, but generally, if you believe you’ll owe $1,000 after withholding and tax credits, you should pay quarterly estimated taxes. As long as the amount paid quarterly covers at least 80-90 percent of your liability, you’ll be penalty-free.

However, you may be penalized if you don’t pay quarterly taxes or if you pay them late. This penalty does not apply to everyone, and it varies according to what you owe and when you pay. Those who have low net earnings will owe a very low penalty, if any at all. Refer to the IRS website to understand your potential tax penalty.

You may be able to waive the penalty altogether if you have an uneven income and make unequal payments throughout the year. Those who are retired and over the age of 62 may avoid penalties for skipping estimated payments. Natural disasters, casualties, and unusual circumstances could eliminate your penalty, too.

4. Taking Deductions
It’s very difficult to subsist on a meagre self-employment income with a 15.3 percent tax rate, so the best way to minimize your tax liability is to take qualified deductions. Each deduction lowers your taxable income, lowering what you pay.You might be surprised at how many deductions you can take.

Here are a few deduction suggestions:
Home office
Internet
Phone
Health insurance
Meals
Travel
Vehicle use
Startup costs
Equipment expenses
Advertising
Retirement plan contributions
RentInterest payments

The list could go on and on. Basically, anything you pay for that relates directly to your business can likely be deducted from your taxable income.Some expenses can be deducted for 100 percent of their worth while others can only be partially deducted. For example, only 50 percent of the cost for business meals can be deducted from your taxable income while 100 percent of a phone bill used exclusively for business can be deducted.

Finding all the relevant tax deductions for your business can be difficult if you don’t have experience, so it’s helpful to work with a licensed CPA to make sure you don’t forget anything. They can help you think of expenses that you may have forgotten.It’s always a good idea to keep receipts and write down everything that you deduct from your business in case of an audit.


5. Finding Tax Credits
Tax credits can also reduce your tax liability by directly reducing the amount you owe. Usually, tax credits are given to businesses that hire certain individuals, take energy efficient steps, or participate in certain programs.

There are several tax credits the IRS allows you to take including:
General Business
Credit
Investment
Credit
Work Opportunity
Credit
Disabled Access
Credit
Energy Efficient
Home Credit
Alternative
Motor Vehicle Credit
New Market Credit

The list continues with details as to who qualifies on the IRS website.

6. Incorporating Your Business
Many self-employed individuals don’t realize that incorporating a business, which has added expenses, actual minimizes their self-employment tax liability.

If you incorporate as a sole proprietor, partner, or LLC and pay yourself a reasonable salary, you’ll only pay Social Security and Medicare taxes on the salary you receive.The keyword is reasonable salary. You can’t give yourself a salary of $1 a year and avoid taxes altogether.

7. Filing Self-Employment Taxes Correctly with Taxfyle
To stay in operation, it’s vital that you file your taxes properly at the end of the year as a self-employed business owner. However, it’s not as simple as filing your own personal taxes.

There are dozens of considerations including your employees, deductions, contributions, insurance, and so much more.It’s highly recommended that you use a licensed CPA to file your taxes for you.

At Taxfyle, we have dozens of CPAs, and we can connect you with a tax preparer well-versed in filing self-employment income taxes. We know all the best deductions and credits to lower your tax burden, we can answer all of your questions, and we can help you get a great refund quickly.To try our services, get started today!

Love and taxes: when to file as married filing separately

In the lyrics of a song about marriage by Marques Houston: “Marriage don’t change, nothing but your name, until it’s real love, through the sunshine and rain.” However, for most couples, marriage does mean a change in tax filing status, though that may not be as romantic as the wedding ceremony or the honeymoon.

Filing-Status 101

The IRS created five filing statuses: single, married filing jointly, married filing separately, head of household and qualifying widow(er). Of the 153.8 million federal returns filed in tax year 2019, 54.9 million returns were married filing jointly, and only 3.3 million married people filed separate returns, according to the Internal Revenue Service (IRS). Although married filing jointly is more popular, there are instances where it can be beneficial for couples to file separately.Before tying the knot, most taxpayers’ status was single. Single filers include people who are unmarried on the last day of the year or are legally separated from a spouse under a divorce or separation agreement and do not qualify for another filing status, per the IRS.After the nuptials, most married couples change their filing status to married filing jointly. Under this arrangement, both spouses are equally responsible for the return and the taxes. Trust and communication are crucial because if either one of the spouses understates the tax due, both are equally liable for the penalties, unless the other spouse claims they are ignorant of the mistake and he or she did not benefit from it. When filing a tax return as married filing jointly, a married couple uses the same tax return to report income, deductions, credits and exemptions.With the married filing jointly status, your total combined tax liability is often lower than the sum of spouses' individual tax liabilities, if they were filing separately. This is because of the increased standard deduction allotted to couples, in addition to other tax benefits exclusive to this filing status. You can use the married filing jointly filing status if both of the following statements are true:1. You were married on the last day of the tax year. If you were unmarried, divorced, or legally separated (according to state law) on December 31, then you are considered unmarried for the year. There is an exception to this rule for the death of a spouse.2. You and your spouse both agree to file a joint tax return.

Advantages of Filing Jointly

Most couples choose the filling jointly option because of several major tax credits and deductions accessible to them. These include the earned income credit; the child tax credit (for married couples who file a joint return, the tax credit is now phased out over adjusted gross incomes of $400,000 and $200,000 for singles and married filing separately); adoption credit; deductions and credits pertaining to education such as the American Opportunity and Lifetime Learning Credits, the student loan interest deduction and tuition and fees deduction; as well as deductions for your contributions to a Traditional IRA.

Reasons for Couples to File Separately

Suspicious MindsAre there instances where there are advantageous to file separate returns? Married filing separately enables the separation of tax liability from your spouse so this filing status may be wise if one spouse suspects the other may be hiding income.  

A Higher Tax Bracket When Combining Incomes
The primary reason why filing as married filing separately may be beneficial is if both spouses have similar income levels and their combined reported salaries result in climbing to a higher tax bracket. The savings for changing the filing status is contingent on many factors, including the couple's investments and whether they have children, so the devil is in the details.

Large Differences in Income
Another reason couples decide to file separately is if they do not have children and one spouse has a much higher income. For example, if one spouse earns $200,000 and the other $45,000, it will allow the lower-earning spouse to file in a lower tax bracket and potentially claim some tax deductions that were not available with a joint return.

The Method of How Spouses Record Deductions is a Factor
When a couple files their taxes separately, both spouses must select the same approach of recording deductions, even if one spouse would benefit from choosing the opposite method. For example, suppose one spouse decides to itemize deductions. In that case, the other spouse also has to itemize, even if their deductions are much less than the standard deduction, which is $24,800 for a married couple filing jointly for tax year 2020. If one spouse’s itemized deductions are $30,000, and the other itemized deductions equal $5,000, the second spouse has to claim that $5,000 on their 1040, not the higher standard deduction.  As a result, filing separately makes sense as a way to reduce taxes only when one spouse’s deductions are big enough to compensate for the second spouse’s lower itemized deductions.

Filing Separately Due to Large Unreimbursed Health Care Costs
In the past few years, it has become much more difficult to deduct out-of-pocket medical expenses on the tax form’s Schedule A because the threshold to claim these expenses is greater than 7.5% of your adjusted gross income (AGI).  AGI is the total income you report that is subject to income tax, i.e., earnings from your job, self-employment, dividends and interest from a bank account minus specific deductions, or adjustments that you can take.  It is important to note that the source of funds is crucial when deducting medical expenses. The IRS explains that, "if you and your spouse live in a noncommunity property state and file separate returns, each of you can include only the medical expenses each actually paid. Any medical expenses paid out of a joint checking account in which you and your spouse have the same interest are considered to have been paid equally by each of you, unless you can show otherwise."Also, casualty losses must be more than 10% of AGI before you can claim them as deductions. Generally, these are property losses caused by a car accident that was not your fault or due to extreme weather such as tornadoes, hurricanes, floods and fires.The spouse that has incurred large medical bills or property losses must calculate if the expenses reach the level of 7.5% or higher of their AGI for the medical bills or 10% or higher for casualty losses against his or her own lower AGI. Then this spouse must decide if it is advantageous to file separate returns. If one spouse can lower his or her taxable income after this analysis, then individual returns might reduce the couple's overall tax burden.

Filing Separately to Protect a Tax Return
If you know that your spouse will have a large tax bill, selecting the married filing separately allows you to keep your tax return. With separate returns, the IRS will not appropriate your refund to settle your spouse's tax bill. Individual returns also make sense to stop the IRS from confiscating a spouse's tax refund when the other is in arrears on child support payments.

Other Reasons for Filing Separately
Couples who have separated and in the process of divorcing may prefer to separate returns to avoid post-divorce issues with the IRS. Similarly, a spouse who does not approve of his or her partner's tax ethics may choose to establish a separate tax life. Thus, the ethical spouse will avoid any liability for the actions of their spouse.

Bottom Line
When couples deliberate on the proper tax filing status to choose, an important step is to calculate the tax return according to filing jointly and separately to ascertain which one provides either the largest refund or lowest tax bill.Overall, couples without dependents or education expenses can benefit from filing separately if one has higher income and the other has significant deductions. Other instances where separate returns may be useful include divorce, separation, or to avoid liability from a spouse who is either not ethical about their taxes or has evaded paying taxes. If you do not know which method to file your taxes is best, it may be prudent to consult a tax advisor.

Seven rules for claiming dependents on taxes

While the most important thing you get from your children is love (and perhaps a carpet covered in glitter), there is a more mundane benefit to starting a family: Taxes. 

You can save thousands of dollars on your taxes by claiming your dependents on your taxes. And this applies not only to the little love bunnies and their glitter bombs, but also to other relatives like Great Aunt Ethel. It’s worthwhile to get familiar with rules that govern who you can claim as a dependent on taxes and how to do so. 

Why You Should Claim Qualifying Dependents on Your Taxes

Why should you bother claiming people on your return? It’s simple: Claiming someone as a dependent on your taxes will save you money.You don’t want to leave the Child Tax Credit, the Additional Child Tax Credit, or the Child and Dependent Care Credit on the table, after all.

For dependents other than children, you’ll want to claim the Credit for Other Dependents. Dependents also have a bearing on your Earned Income Tax Credit and some of the itemized deductions you can claim, such as medical expenses.All those credits and deductions could be the difference between having to pay in April and receiving a nice little refund. 

Who Qualifies as a Dependent?

According to IRS rules, “qualifying dependents” fit into two categories: qualifying child and qualifying relative. The be a qualifying child, an individual must pass five tests:

Relationship: The dependent must be your son, daughter, stepchild, foster child, or a descendant of any of them; your brother, sister, half -brother, half-sister, stepbrother, stepsister, or a descendant of any of them; your adopted child; or your foster child.

Age: The child must be under age 19 (or under 24 if a student) at the end of the tax filing year, as well as younger than you (and your spouse if filing jointly). If the child is permanently and totally disabled at any time during the year, their age does not matter. 

Residency: The child needs to have lived with you for more than half the year, except in some cases such as temporary absences, death, birth, kidnapping, and divorce. In cases of divorce or separation, the custodial parent generally gets to claim the child as a dependent.

Support: The child must have depended on you for at least half of his or her support throughout the year.

Joint return: The child must not file a joint return for the tax year.

A qualifying relative must pass four tests:

Not a qualifying child: The dependent cannot be your qualifying child or the qualifying child of another taxpayer.

Member of household or relationship: The dependent must live with you all year as a member of your household or be related to you in one of various ways if they don’t live with you, but the person cannot have been your spouse at any time during the year. 

Gross income: The dependent’s gross income for the year must fall below $4,300.

Support: The person must have depended on you for at least half of his or her support throughout the year.Still not sure? Use the IRS Interactive Tax Assistant (ITA)  to determine who you can claim as a dependent. Or check our list of rules below. 

7 Rules for Claiming Dependents on Your Tax Return

It can be hard to make sense of all the picky qualifications in the lists above. So check out these seven rules to help you figure out if you have a qualifying dependent on your hands:

A dependent child must be part of your family. It’s simple: The individual needs to be a part of your immediate family or a descendent of your immediate family.

A dependent relative doesn’t have to be part of your family. Someone who isn’t related to you can qualify as a dependent if they live with you as part of your household throughout the tax year. 

Age only matters for non-disabled dependent children. Kids below 19 can qualify whether they’re a student or not, and they can keep qualifying until 24 if they’re a student. A totally disabled child can qualify regardless of age. Age also doesn’t matter for dependent relatives who are not your children.

The dependent might have to live with you. This rule has a lot of exceptions. A qualifying child must live with you for at least half the year except in a variety of circumstances, such as if the kid was born in November or spent time at college. A qualifying relative dependent must live with you unless they are a member of your immediate family such as your brother, niece, or son-in-law.

You must provide the majority of the person’s support. Whether the dependent is a child or another relative, you have to be responsible for at least 50 percent of their support in the tax year, including not only housing but also food, medical and dental care, clothing, recreation, and other necessities. 

They may have some income. The income of a dependent relative for the tax year must be below $4,300. Dependent children can make income that constitutes up to half of their support, but may need to file their own tax return and pay taxes on it.  

They are your dependent and yours only. You can only claim someone as a dependent if no one else is claiming them on their taxes as well. This rule can be tricky in cases of divorce or separation, and can take some negotiating when spouses file separately, since only one of you can claim your child. 

Examples of Qualifying Relatives

The rules about who is and isn’t a “qualifying relative” can get confusing. After all, they don’t technically have to be your relative. Here are few examples to bring some clarity to the issue:

Your adult child: Your adult daughter, 25, is single, unemployed, and has lived with you all year. While she’s too old to qualify as a child, the fact that her income is below $4,200 and you provided more than half of her support makes her a qualifying relative.

Your significant other: Your boyfriend lived with you all year and earned $3,500 from a few odd jobs. Since his income was below $4,300 and you provided more than half his support, you can claim him as a dependent.

Your boyfriend’s child: The boyfriend’s two-year-old son lived in your house throughout the year while you fully supported him. You can claim the child as your qualifying relative even though he’s not related to you because he lived in your household and you paid for everything he needed.

Can’t I Just Give It the Smell Test?

The last thing you want to see when looking at IRS rules is to “run your info through these five tests.” So it may seem daunting to assess the legitimacy of your potential dependents. But while “test” is the word the IRS uses, maybe you can think of the rules as “signposts on the way to a bigger return.” 

And if you would prefer to get a little help, there’s nothing to worry about: Taxfyle can connect you with an experienced and licensed tax professional to file your taxes. We’re a one-stop online tax service with a deep network of U.S.-based CPAs and EAs who are ready to assist.

The most overlooked tax deductions you need to know

If you view taxes as a game, it makes the entire process of filing a tax return more enjoyable. However, make no mistake about it – this is a game with high stakes.If you want to win the tax game, you need to maximize every tax deduction so that you can save the most money possible.

Unfortunately, most taxpayers have a tendency to overlook or forget about certain deductions. As a result, they end up losers, while the IRS takes the victory.To help you avoid a similar outcome, we’re providing a handy list of some of the most commonly overlooked tax deductions.

1.Charitable Donations and Gifts
Let’s start with charitable donations. While most people are aware of the fact that major contributions can be deducted on a tax return, it’s the smaller donations and gifts that typically slip between the cracks.Little expenses might not seem like very much when viewed in isolation, but they add up.

Whether it’s food purchased for a charity’s benefit concert, clothes donated to Goodwill, or a small gift to a missionary from your church, all of these small amounts count. Keep receipts and be meticulous about recording these expenses.(Note: With the introduction of the Tax Cuts and Jobs Act (TCJA) last year, the standard deduction has increased from $6,500 to $12,000 for individuals (and from $13,000 to $24,000 for married couple filing jointly).

Your accountant can help you determine whether you should take the standard deduction or itemized deductions. Until you know, it’s best to keep all records on hand.)

2. Mileage for Work, Medical, and Charity
If you use your car for business purposes, have driven for moving or medical purposes, and/or volunteer for a church or charitable organization and operate your own motor vehicle, you can deduct mileage driven.

For the 2019 tax year, standard mileage rates are as follows:58 cents per mile for business miles driven20 cents per mile for medical or moving purposes14 cents per mile for charitable organizations or service workThe easiest way to track these miles is to use a mileage app that records your driving logs and produces a simple spreadsheet that you can use to support your deduction

3. Gambling Losses
As gambling becomes increasingly legalized throughout the United States, it’s important that more Americans realize they can deduct certain gambling losses (with restrictions).The first key is that you can only take gambling loss deductions if you itemize. Secondly, your deduction is limited to the amount of gambling winnings you report on your taxable income.

Currently, deductible gambling losses include losses suffered at casinos and racetracks, as well as non-winning lottery, bingo, and raffle tickets.For those planning to take this deduction, the IRS requires some pretty extensive documentation – including receipts and names and locations of the gambling establishments.

4. Childcare Credit
This one is technically a credit – which actually reduces your tax bill dollar for dollar – but we’ll throw it on the list anyway. After all, it’s one of the most commonly forgotten tax breaks.

On top of getting an automatic $2,000 tax credit per child, parents can also claim a childcare tax credit if they paid for childcare during the tax year. Depending on your income status, you can get between 20 percent to 35 percent (up to $3,000) for a child under the age of 13, an incapacitated parent or spouse, or another dependent – provided you used the care to work or pursue employment.

5. Home-Related Expenses
Owning a home can get expensive. Thankfully, there are situations in which you can lower your taxable income through home-related expense deductions. Examples include:Any expenses incurred in making your house more energy efficient can be deducted (up to $500). Similarly, 30 percent of the cost of new energy efficient appliances can be deducted from taxes.

If you paid to make your home safer – like removing lead paint or asbestos – these expenses are tax deductible.If you refinanced, you can deduct the cost of points, as well as the expenses related to the refinancing process. If you qualified for a mortgage credit certificate from a state or local government, you can deduct up to $2,000.These are just a few illustrations. Your accountant can help you figure out if any of your home-related expenses qualify for a deduction.

6. Student Loan Interest
If you’re one of the millions of young Americans saddled with student loan debt, you do get one tiny break. The interest paid on these student loans is tax deductible.It’s also worth noting that it doesn’t matter who pays off the student loans.

If, for example, your parents paid down some of your student loans in the previous year, the IRS treats this money as a gift. You can claim the interest they paid on your taxes! (In order to be eligible, you can’t be claimed as your parents’ dependent. Additionally, the deduction is capped at $2,500.)

7. Job-Related Moving Expenses
Did you incur expenses looking for a job? Any money spent on transportation, food, lodging, resume printing, etc. can be deducted from your taxes. Did you have to move because of a transfer or change in employment?

Any out-of-pocket expenses involved in these situations is also tax deductible. Just make sure you keep meticulous records and receipts. (If your employer covered some of the costs, the portion they paid or reimbursed you for is not deductible on your tax return.)

8. Jury Payments Paid to Employer
When jury duty calls, you have no choice but to show up and await your fate. And if you were selected to actually serve on a jury, you should’ve received a small stipend.Today, it’s common practice for employers to continue paying an employee’s full salary while they serve on the jury.

However, there’s a catch: The employee typically has to turn over their measly jury pay. Despite this, the IRS still views the jury pay as your taxable income. To help offset this, you can deduct 100 percent of the amount you gave to your employer.

9. Losses Due to Theft or Casualty
Any losses caused by vandalism, theft, fire, storm, or other natural disasters, as well as boat and car accidents, may be tax deductible. There are a lot of caveats and requirements, but it’s worth looking into.

Generally speaking, the total amount of these losses must be greater than 10 percent of your adjusted gross income (AGI). In other words, if your AGI is $100,000, your total losses for the year will need to be greater than $10,000.

10. Certain Medical Expenses
In certain cases, you can deduct out-of-pocket medical expenses. Most of the time, these expenses have to exceed 7.5 percent of your adjusted gross income on the year. You’re even able to deduct home improvements that are completed for medical reasons. (Examples include wheelchair ramps, support bars, or lowering cabinets.)

How much do I have to earn to file taxes?

Not everyone has to file a tax return. It depends on your age, tax filing status, how much income you earn, and where that income comes from. If you have very little income, chances are you don’t need to file. However, a few circumstances may require tax filing or make filing a good idea even though it’s not required.Here’s what you need to know about how much you have to make to file taxes.

Filing Requirements for Most Taxpayers

Each year, the IRS publishes a table with the filing requirements for people who aren’t claimed as a dependent on someone else’s return. Here are those numbers from the 2020 Form 1040 Instructions.

Most people don’t have to file a tax return if their income was less than the standard deduction available for their filing status and age. One glaring exception is people who are married filing separately, who have to file if they make $5 or more. Age is a key factor in determining whether you need to file a tax return because people age 65 or older get a higher standard deduction.Income is the final factor in figuring out whether you need to file.

The IRS defines income as all income you received in the form of money, goods, property and services, including income from outside of the U.S., from sales of stock, and from a business. It also includes proceeds from the sale of your home, even if the sale isn’t taxable.

Filing Requirements for Dependents

If someone else claims you as a dependent, the IRS has different filing requirements. Your marital status, age, and income still matter, but the kind of income you receive also matters.The IRS generally breaks income out into two categories: earned and unearned income. Earned income includes salaries, wages, tips, income from a business, taxable scholarships, and fellowship grants.Unearned income includes interest, dividends, capital gains, unemployment benefits, social security benefits, pensions, annuity payments, and trust distributions.

Here are the 2020 filing requirements for dependents.Married dependents also have to file a tax return if they had at least $5 of income and their spouse files a separate tax return and itemizes deductions.Reporting a child’s income on the parent’s tax returnIf a dependent child has only interest, dividend, and capital gain distribution income, the child’s parent(s) can choose to report the child’s income on their own tax return. To qualify for this option, your child has to meet all of the following requirements:Under age 19, or under age 24 and a studentIncome only from interest, dividends, and capital gain distributionsIncome was less than $11,000Doesn’t file a joint tax return with their spouseDidn’t make any estimated tax payments, have federal income tax withheld, or have an overpayment applied from a previous tax yearIf your child meets all these requirements, use Form 8814 to report their income on your tax return.

Why You Might Have to File a Tax Return Anyway

Here are a few situations that may require you to file a tax return even if your income falls below the amounts noted above.You owe special taxes, including:

Alternative minimum tax (AMT)Additional tax on a qualified plan. For example, on early withdrawals from an IRA or non-qualified distributions from a health savings account (HSA).

Social Security or Medicare on tips you didn’t report to your employer or on wages you received from an employer who didn’t withhold taxes

You received distributions from a medical savings account (MSA) or HSA

You had at least $400 of earnings from self-employmentYou had at least $108.28 of wages from a church

You received an advance on the premium tax credit or the health coverage tax creditYou have untaxed earnings from a foreign corporation

You Might Benefit from Filing a Tax Return

In some cases, it might be in your best interest to file a tax return, even if it’s not required. Here are a few situations where that may be the case:

You can get a refund of federal income tax withheld

You qualify for refundable tax credits, such as the Earned Income Tax Credit, the Additional Child Tax Credit, or the American Opportunity Tax Credit

You qualified for an Economic Impact Payment (aka a stimulus check) but didn’t receive one. You can get that payment by claiming the Recovery Rebate Credit on a 2020 Form 1040 or 1040-SR.

You want to file as a precaution to start the clock on the statute of limitations for an IRS audit

You want to file a tax return to avoid having a fraudulent return filed using your Social Security number

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