Here is expert advice from tax professionals and CPAs as they answer some of the most urgent questions taxpayers have each year, with the latest updates for 2023.
The most urgent tax questions
Here is a list of the 10 most common and urgent questions taxpayers asked from a variety of sources and answered by various tax experts.
1. Do I have to file taxes?
It all depends on your income for the tax year 2022.
According to the IRS, these are the breakdowns of who has to pay according to filing status, age, and minimum income requirements. In other words, if you earn less than these thresholds, you do not have to file a tax return. However, you still may want to if you paid in more than you should have because you might be entitled to a tax refund.
Single filers: Under 65/$12,950; 65 or older/$14,700.
Head of household filers: Under 65/$19,400; 65 or older/$21,150.
Married filing jointly: Under 65 (both spouses)/$25,900; 65 or older (one spouse)/$27,300; 65 or older (both spouses)/$28,700.
Married filing separately: Any age/$5.
Qualifying surviving spouse: Under 65/$25,900; 65 or older/$27,300.
Self-employed: Any self-employed individuals with earnings from self-employment of $400 or more.
Status as a dependent. A person who can be claimed as a dependent may still have to file a return depending on their gross income.
2. What are the standard tax deductions this year?
The standard deduction is a specific dollar amount you can subtract from your adjusted gross income (AGI) to reduce how much of your income is taxed by the federal government. Depending on your income and the type of business you are in, some taxpayers itemize all their expenses rather than take the standard deduction.
For those filing in 2023 for the tax year 2022, here are the standard deductions:
Married, filing separately: $12,950.
Married, filing jointly; qualifying widow/er: $25,900.
Head of household: $19,400.
Taxpayers who are blind or over the age of 65, can add an additional $1,400 to their standard deduction. It increases to $1,750 if also unmarried or not a surviving spouse, according to Nerdwallet.
3. What filing status should I choose?
There are 5 different tax filing statuses and they are based on household status, and depending upon which one you choose, your tax obligations (the rate/amount you pay) and deductions you are entitled to can vary. The 5 tax statuses are single, married filing jointly, married filing separately, head of household, or qualifying widow(er) with a dependent child. The IRS provides an interactive tool for determining your status, but you should also speak to a tax professional. For example, some married couples may have an advantage in filing separately, rather than jointly, depending on their situation.
4. What is the last day for filing taxes?
Traditionally it was April 15, but it varies year-to-year depending on what date April 15 falls on. This year the filing deadline is electronically or postmarked before midnight on April 18, 2023.
5. Can I file late?
If you think you are going to be late when filing your taxes, you can request a 6-month extension (until October 15) to file for free from the IRS. If you do this, you won’t be penalized for late filing. You can also use IRS Free File to electronically request an automatic tax filing extension.
6. Will I be penalized if I pay late? How much?
Filing late and paying late are two different things. You MUST pay what you owe by the tax filing deadline (this year it’s April 18, 2023).
An IRS late payment penalty accrues at 0.5% per month, or a fraction thereof, until the tax is paid, according to TurboTax.
You will also be charged a late filing penalty of 5% of the unpaid tax per month, plus interest, with the maximum late filing penalty capped at 25% of the amount due.
7. What do I do if I can’t pay my taxes?
If you don’t think you can pay, there are three options available to you:
1. Use a credit card to pay off what you owe.
2. Make an agreement with the IRS to pay a certain amount each month in installments. You can set up an installment plan with the IRS online. If you owe a larger amount, you will have to call the IRS to make arrangements.
3. Make an “offer in compromise” with the IRS. Essentially, you negotiate with the IRS to accept less than what you owe, provided you’ve exhausted all other options first.
8. I need help filing my taxes and can’t afford to hire someone
You can use IRS Free File using guided tax preparation software.
9. How do I know if someone I support is a dependent?
If you are responsible for financially supporting someone, you may be able to claim them as a dependent on your taxes, which would shift your status to head of household, as well as make you eligible for certain tax breaks.
Generally speaking, a dependent is defined as a qualifying child that is younger than 19, if they live with you more than half the year; or under 24 if they are attending school full time; or a relative that shares a specific family relationship with you and lives with you all year long, and you provide more than half of their support. They must earn very little and they cannot be claimed as a dependent by anyone else. Use this interactive tax assessment tool from the IRS to determine if you have a dependent.
10. Is there special Tax filing help for military, National Guard, reserve, and military family members?
You can file your taxes through MilTax if you meet the following requirements:
Active-duty service members, spouses, independent children; members of the National Guard and Reserve regardless of activation status; retired and honorably discharged service members or Coast Guard veterans within 365 days of their discharge; family members managing the affairs of an eligible service member who is deployed; eligible survivors of severely injured service members who are incapable of handling their own affairs; eligible survivors of active duty, National Guard and reserve deceased service members regardless of conflict or activation status; some members of the Defense Department civilian expeditionary workforce.