Frequent Tax Questions

 Tax Avoidance vs. Tax Evasion
Tax avoidance is legal and uses tax laws to lower liability. Tax evasion is illegal and involves not paying taxes owed. Tax evasion can lead to fines and jail time.

Tax Filing Deadline & Extension
The tax filing deadline is April 15th. Miss it, and you could face penalties unless you're due a refund. You can request a six-month extension, but still must pay taxes owed by April 15th to avoid penalties.

W-2 vs. 1099 Forms
A W-2 is for employees, with taxes withheld. A 1099 is for independent contractors, who must pay their own taxes.

Standard Deduction
The standard deduction reduces your taxable income. For 2023, it's $13,850 for singles, $27,700 for married couples, and $20,800 for heads of household.

Standard vs. Itemized Deductions
You can't claim both. Most choose the standard deduction, but itemizing can lower taxes more if your deductions exceed the standard amount.

Tax Credits vs. Deductions
Tax credits reduce your tax bill directly. Deductions lower your taxable income. Credits are generally more valuable.

Who Files a 1040?
Anyone earning above a certain amount must file a 1040. Filing requirements depend on income, age, and filing status.

Adjusted Gross Income (AGI)
AGI is your total income minus certain adjustments like retirement contributions or student loan interest. It determines eligibility for credits and deductions.

Alternative Minimum Tax (AMT)
The AMT ensures higher-income earners pay a minimum tax. It disallows some deductions and uses Form 6251 to determine liability.

Self-Employment Tax
This 15.3% tax covers Social Security and Medicare for self-employed individuals. Half of the tax is deductible.

Schedule C
Schedule C reports income and expenses for sole proprietors or single-member LLCs, and it determines taxable profit or loss.

Home Office Deduction
You can deduct home office expenses if the space is used regularly and exclusively for business. You can use the simplified method or actual expenses.

Partnership and S-Corp Tax Deadlines
Partnerships and S-Corps must file taxes by March 15th, earlier than the April 15th individual deadline.

Deceased Person's Tax Deadline
A deceased person's final tax return is due by the regular April 15th deadline following their death.

Trust Tax Return
Trusts must file Form 1041 if they have taxable income, $600 or more in income, or a nonresident alien beneficiary.

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