4 Things You Should Know About Your Taxes

Nov 03

4 Things You Should Know About Your Taxes

April 15 has become a dreaded day for many Americans. This frequently rainy spring day is the deadline for having your taxes submitted for the previous year. Are you feeling overwhelmed with the process of filing? Can’t tell the difference between cost segregation and energy tax credits? Fortunately, the process of filing taxes can be far simpler when you understand the basics. Included here are a few things to know about your taxes.

Whether Filing is Necessary

Do you believe that if you earned any income in the previous year you are held liable for paying taxes? Fortunately this is not the case! There are a variety of income levels that delegate when you should report. This means you could be making under a certain amount and keep the full earnings. For a full list of income levels and filing, head to the IRS website.

Which Form To Fill Out

For citizens and resident aliens, there are three separate tax forms that you could fill out. If you do not have any dependents, you are not blind and you are single or married, you can likely file the 1040EZ form. For the elderly, disabled or those with children, you may need to file on a 1040A form. If neither of those forms will work for you, you will likely need to file on a 1040 form; but keep in mind the 1040EZ is the simplest to fill out and should be preferred.

What Is Your Health Care Penalty

Thanks to Obamacare enacted in 2014, people without health insurance are being fined for failure to participate in the program. Regardless of your financial status, if you do not have insurance, you will be penalized with a percentage of your income. This fine is paid to the IRS each year and started at the amount of 1% but has since risen to 2% of your income.

Keep in mind, if you are not able to afford any help, you may be eligible for some tax credits. These can help decrease what you have to pay each month on health insurance, and if your income is especially low you may qualify for Medicaid. If your income is over $30,000, however, you will likely be facing a minimum of $200 out-of-pocket each month. Look into what option works best for you, but be aware the penalty will come due on April 15.

Eligibility for a Tax Refund

While everyone seems to get excited over tax-returns, they simply mean that the IRS has had your money all year interest-free! Tax refunds come to people who have overpaid on their taxes throughout the year and so get some of their income back to them. While it can be wise to pay a little extra each pay period to avoid owing at the end of the year, you will have less cash on a monthly basis.