As a taxpayer, you must know your tax responsibilities. Typically, most U.S. citizens and permanent residents working in the United States should file a tax return if they reach a certain amount of income for the year.
In fact, they might have to pay penalties if fail to return the tax on time. In case, anyone willfully fails to file a return they might have to pay additional fines and possible criminal prosecution. To know more about your due dates and other potential information taxpayers can get in touch with IRS in Alabama.
What factors can affect filing requirements?
You might be subjected to filing for an IRS refund in Alabama. In fact, there are certain things that can affect an individual to file a tax return.
Gross income
It means all the income one receives in the form of money, goods, property, and services. it can include any income from sources outside the United States or from the sale of a main home.
Required filing
Taxpayers need to see in case their gross income is over the filing threshold. It has different filing thresholds so taxpayers might have to consider their potential filing status.
Typically the filing status is divided into different categories including single, head of household, married filing jointly, qualifying spouse, and separate married filing.
Self-employed status
Self-employed are required to file an annual return and pay an estimated tax quarterly in case they have net earnings from self-employment of $400.
Status of dependent
Even if a person claims as dependent – they might have to file a return. It completely depends on Gross income:
• Earned income: it includes salaries, wages, professional fees, and other received as pay for work.
• Unearned income: it can include investment types including interest, dividend and capital gain, rents, and royalties.
Potential benefits for taxpayers
Get money back: people might get their money back in case they file a tax return. In case the employer withheld the taxes from their paycheck – they might owe a refund when they file taxes.
Avoid interest and penalties
Taxpayers can typically avoid the interest and penalties simply by filing an accurate tax return. In case one does not have a sufficient amount they should file on time and can request an extension to avoid further penalties.
Apply for financial help
If they apply for financial help, students need to provide tax account information from their parent’s tax return. IRS Data Retrieval Tool allows completing the Free Application and securing their tax return to the FAFSA form.
Build social security
Reporting income on tax returns plays a crucial role for self-employed taxpayers since this information can be used to calculate their social security benefits.
Bottom line
If taxpayers report all the incomes lenders can easily evaluate your financial picture in order to determine the loan amount and rates of the taxpayers.
