The start of a new year signals the time to begin planning for tax filing. Timely, accurate filing ensures a smooth process.
Understandably, tax filing can be confusing at times, but understanding the primary guidelines will help set you up for seamless filing.
Do I Need to File Taxes?
Most adults will need to file taxes, but there are some exceptions. The IRS outlines income thresholds for who needs to file 2020 taxes. Your taxpayer status and income are used to determine if you must file taxes. For example, single adults who make over $12,200 (or $13,850 if over the age of 65) must file taxes. Head to the IRS website to learn more about who must file taxes.
Information Needed to File Taxes
Here’s the information you’ll need on hand to file your taxes:
- Filing status
- Federal income tax withheld
- Information on gross income
- Personal details including your full name, address, and social security number
- Personal details for your spouse
- Personal details for your dependents
- Documents that show your eligibility for Child Tax Credit or Earned Income Tax Credit if applicable
- Work-related, individual income tax documents (W2 or 1099s)
- A 1099-G if you received unemployment
- Documents for social security income or a pension
- Receipts and records of expenses to claim deductions
- Bank account information for a tax refund
- Copy of tax return from the previous year
When Are Taxes Due?
Taxes are officially due on April 15th, 2021. However, you can file your taxes online sooner. The IRS typically accepts electronic returns between January 15th and February 1st, but they will announce the exact date on its website when filing is open. Ideally, you should begin preparing to file your taxes as soon as possible, as it will ensure you have the time you need to collect all of the required information for accurate filing.
Consequences of Late or Inaccurate Filing
It’s imperative to ensure that your income tax filing is done on time and accurately. If your taxes are late or found to be inaccurate, you could face penalties such as:
- Interest charges on the taxes you did not pay by the due date.
- Late payment of tax. This tax is .5% of the unpaid amount for each month the tax is not paid. The penalty can be up to 25% of the unpaid balance and would be an addition to the interest charged on late payments.
- Late filing penalty. You will owe 5% of the tax required to be reported, charged each month the return is late up to 5 months.
The penalties for not filing taxes often result in fines and penalties, but it can lead to jail time. Tax evasion or failing to report your earnings to the IRS may result in jail time, as tax evasion is a felony that’s punishable by up to five years in prison.
While tax season is fast-approaching, it is not something you have to navigate on your own. Miod and Company LLP is here to help you with your filing. Contact our experienced team for tax planning and tax preparation services.