How To File Taxes: Is Filing Taxes is a tedious task? Yes! filing the United States Tax Returns has always been a difficult task since there should be a thorough evaluation is required to choose the eligible deductions, credits etc. Choosing incorrect Form, Filing Status, Claiming Ineligible credits and the other tax benefits can lead to IRS or State Income Tax Departments Audits and Expensive notices.
We have carefully mentioned many aspects and precautions to take up before you file your tax returns, to avoid any Audits, Expensive notices for the tax authorities.
Primarily there two types of tax filing E-filing (electronic filing) & Paper Filing. Tax Forms 1040, 1040A, 1040EZ and 1040NR can be E-flied but forms 1040X and 1040 with ITIN application should be paper filing, it means the physical tax returns in the form paper need to be mailed to the tax authorities for acceptance.
Standard Deduction Tax filing for Tax Year 2019
Below increased standard deductions by the IRS will be unchanged till 2025.
|Married Filing Separately (MFS)||$12200|
|Married Filing Jointly (MFJ)||$24400|
|Qualifying Widower with Dependent Child (QWDC)||$24400|
|Head of the Household (HOH)||$18350|
There are various types of deductions, the deductions will reduce your taxable income it means more deductions you claim as per your eligibility the lesser will be your taxes.
Child Tax Credit Changes
There are two types of credits, Refundable & Non-refundable.
Non-refundable Child Tax Credit has been increased to $2000 for each qualified child.
Refundable Child Tax Credit has been increased to $1400 for each qualified child.
Phaseout annual income limit for Child Tax Credit if single filers are $200,000 and for married joint filers $400,000.
To claim Child Tax Credit the dependent should have ITIN. Taxpayers claiming dependents with AITN or ITIN holders can only claim other dependent tax credit of $500.
Tax Credits are different from the tax deductions because the deductions reduce your taxable income but, credits will reduce your actual tax. The taxpayer should be cautious in claiming credits and deductions, since IRS and State Income Tax Departments have their own way of evaluation of the returns, if any incorrect details or ineligible expenses claimed on the tax returns may lead to audits/expenses notices from tax authorities.
Other Dependents Tax Credit
Personal tax credit for each dependent is $500
Below is the various test to determine the eligibility for other dependents tax credit for the tax year 2018:
Dependents mean a “qualifying child” “qualifying relative” below tests will determine the eligible relative.
- Relationship Test
- Age Test
- Residency Test
- Support Test
- Tiebreaker Test
Since there are various tests to
You might benefit by itemized deductions, but you can either choose itemized or standard deduction whichever is higher, below are some of the itemized deductions.
- Out of pocket medical and dental expenses
- Mortgage interest
- Unreimbursed Casualty and Theft loss
- Contributions made to qualified charities or charitable organizations
For the tax year 2019 you cannot claim your unreimbursed employee business expenses on your tax returns since 2106 form is invalid.
Below Unreimbursed Expenses were allowed till the tax year 2017.
- Vehicle expenses
- Parking fees, tolls, transportation
- Travel expenses
- Meals and entertainment
Non-residents who are on F1 or other nonresident visas need to file for 1040NR, and cannot claim tuition fees
We have noticed that the non-residents who are on student visas are using online tax filing websites, these online filing websites just provide software it means there is no tax consultants support, advice. The taxpayer himself is filing his/her tax returns so if there is any concerns from the tax authorities the taxpayer is answerable.
filing form 1040 instead form 1040NR and claiming the resident tax benefits, which is led them to pay hefty penalties to IRS and State Income Tax Departments.
Since IRS has made changes in the standard deduction, child tax credit etc. The taxpayer has to ensure that his tax withholding for federal and state income tax departments by his employer is accurate, if the taxes are withheld less than required taxes then the taxpayer has to pay the balance due/OWE amount with the interest to the tax authorities.
The online tax filing websites are exclusively for the residents (H1, L1, GC, Citizens etc.).
The USA taxation is much about understanding the tax laws, as mentioned earlier the incorrect filing of tax returns can lead to audit or expensive notices from IRS or State Income Tax Departments, there are various online websites providing filing services for free or for few dollars, but the questions are whether the tax returns being prepared by a tax professional (CPA’s, Enrolled Agents)? any data security? any more tax services for free?.
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