When are my returns due and when am I required to pay my taxes?
Individual returns are due on April 15th (assuming the 15th isn’t on a holiday or weekend) after the close of each calendar year but can be filed up to two months later for individuals who are out of the US on the initial due date. Individual returns can also be extended and filed no later than October 15th (assuming the 15th isn’t on a holiday or weekend).
S Corporation and partnership returns are due on March 15th (assuming the 15th isn’t on a holiday or weekend) after the close of the calendar year but can be extended and filed no later than September 15th (assuming the 15th isn’t on a holiday or weekend).
An extension of time to file is not an extension of time to pay. All taxes must be paid in full by their original due dates to avoid penalties and interest. Individuals who qualify for the combat zone extension can file and pay at a later date if they meet certain requirements. See the tab addressing this in FAQs.
Can Hughes Szuberla CPAs file my old tax returns?
Yes. Contact us to proceed.
Am I required to report foreign bank accounts and assets?
Possibly. The Treasury Department requires that if the combined value of your foreign financial accounts (or those for which you have signatory authority) at any time during the previous year exceeds $10,000, you must file a FinCEN Report 114 online by April 15th of the subsequent year. The filing of Form FinCEN Report 114 is automatically extended to October 15th. Foreign accounts include foreign bank accounts, foreign trusts, overseas investment accounts, and foreign retirement accounts if there is a guaranteed payment from the account and if the investor exercises any level of control over the investment, or any financial account for which the taxpayer has signatory authority. Certain taxpayers may also be required to file form 8938 with their tax return. Penalties for not filing these forms can range from $10,000 up to half of the balance of the account. Willfully withholding this information can be cause for criminal charges. Clients who are not sure if they have a filing requirement in this regard should contact us to verify.
You are required to file if you are 1) a citizen or resident of the U.S., 2) a domestic partnership, 3) a domestic corporation, or 4) a domestic estate or trust.
I moved from one state to another during the calendar year. In which state do I pay tax?
You will generally file a part year resident return in each state. The income reported to each state will be the income you earned while a resident of each state.
How many exemptions should I claim on my W4?
Generally speaking you should claim 1 for yourself, 1 for your spouse and 1 for each of your dependents. There are many limitations and other issues which can affect this general rule so please contact us if you would like more comprehensive tax planning.
I earn income as an independent contractor (1099). How does my tax situation differ from that of an employee?
As an independent contractor (IC), your earnings are from self-employment and are generally subject to Social Security and Medicare taxes at 15.3% (2019) in the US regardless of where the income is earned. This is in addition to income tax. The combination of these two taxes can be shocking. There are ways to mitigate the self-employment taxes. Please contact us if you would like to learn more.
What is deductible as an employee?
With the passing of 2018 tax reform unreimbursed employee expenses are no longer deductible. This includes unreimbursed business travel, uniforms, dues and subscriptions, and job search expenses.
What is deductible as an independent contractor?
As an independent contractor (1099), expenses incurred in order to earn the income are generally deductible as long as they are “ordinary and necessary”. This basically describes expenses which are normally incurred in the same line of work and which are not unnecessarily expensive.
How do I know if someone is my dependent?
There are two types of dependents; qualifying children and qualifying relatives. In all cases, the potential dependent must be a US citizen, a resident alien, or a resident of Canada or Mexico, AND be unmarried.
To be a qualifying child, a person must:
Be either your child, step child, eligible foster child, brother, sister, step sibling, or descendant of any of them AND be younger than you AND either under age 19 at the end of the tax year OR a full time student under age 24 at the end of the tax year
OR permanently disabled AND
Live with you more than half of the year AND
Not provide more than half of his or her own support AND
Not be a qualifying child of any other taxpayer
Do I qualify for the child tax credit?
Child Tax Credit payments are available if you have a qualifying child and meet certain other requirements.
A qualifying child is an individual who:
- Does not turn 18 before Jan 1, 2022
- Is your son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half-brother, half-sister, or a descendant of any of them (for example, a grandchild, niece, or nephew).
- Does not provide more than one-half of his or her own support during 2021.
- Lives with you for more than one-half of tax year 2021.
- Is a U.S. citizen, U.S. national, or U.S. resident alien and has an SSN valid for employment in the US.
The American Rescue Plan Act of 2021 authorized early payments of the Child Tax Credit that the IRS estimates you may claim on your 2021 tax return. This was based on information included in your 2019 or 2020 tax return, depending on which return was on file by July 2021. The payments were equal to 50% of the estimated 2021 amount and were issued every month beginning in July 2021 through Dec 2021.
The advance payments are not income. However, if the amount of advance payments you received is greater than what is calculated when you file your 2021 tax return, you may have to repay some of the amount received in advance if you don’t qualify for repayment protection. This could happen if the number of qualifying children on your 2021 return is different than the number on your 2020 return (ex., you had 2 qualifying children on your 2020 tax return and you have one or none on your 2021 tax return). The repayment protection is based on your adjusted gross income as calculated on your 2021 tax return.
For more information on the specifics of the 2021 Child Tax Credit and Advance Child Tax Credit payments and to visit the special portal set up by the IRS for this credit, please visit the IRS website – 2021 Child Tax Credit and Advance Child Tax Credit Payments — Topic A: General Information | Internal Revenue Service (irs.gov).
OTHER DEPENDENT CREDIT
If your dependent(s) does not qualify for the Child Tax Credit, they may qualify for the Other Dependent Credit. You are eligible for this credit if you can claim the person as a dependent and the dependent meets certain conditions:
- Turned 18 before Jan 1, 2022
- Is a US citizen, national or resident alien and have an individual taxpayer number
- Dependent parents or other qualifying relatives that you support
- Dependent who lives with you but isn’t related to you
- You cannot use the dependent to claim the Child Tax Credit/Additional Child Tax Credit
The maximum credit per dependent is $500.
CHILD AND DEPENDENT CARE CREDIT
The child and dependent care credit is a tax credit that may help you pay for care for a qualifying person so that you can work, look for work or attend school. A qualifying person is a dependent under the age of 13, or a dependent of any age or spouse who is incapable of self-care and who lives with you for more than half of the year. The amount of credit you can claim depends on your income and the actual expenses paid in 2021 for your dependent’s care. For 2021, the maximum credit you can receive is $4,000 for one qualifying person and $8,000 for 2 or more qualifying persons.
For an extensive list of FAQs including who qualifies and special circumstances, please visit the IRS website – Child and Dependent Care Credit FAQs | Internal Revenue Service (irs.gov).
I'm married. Should I file jointly with my spouse or separately?
In most cases married taxpayers are better off filing jointly with their spouses. Generally, you want to figure your taxes jointly, then separately and compare the outcome. Other considerations like a pending divorce or legal concerns should also be considered.
I have a tax balance due with my return. What are my payment options?
There are a number of different ways to settle an outstanding balance with the IRS beyond sending a check with a payment voucher. If you are unable to pay your tax balance due in its entirety when the return is filed, an installment agreement can be requested from the IRS. All payment options can be found at the following IRS webpage: http://www.irs.gov/Payments
When preparing my tax information, what should I do to substantiate my deductions in the event my return is audited?
Audits are fairly rare. However, planning to successfully defend against an audit should always take place when the return is prepared. To this end, good practices include the following:
Original copies of all tax documents going back 3 years.
Always save receipts to prove any deductions claimed.
I'm under audit. What do I do?
Before contacting the IRS, contact us as soon as possible.
What information does Hughes Szuberla require in order to prepare my return?
Generally, we request the following info:
- W-2s / 1099s / 1098s / 1095s / prior year federal and state tax returns (new clients only). Always keep your original documents.
- U. S. state of residence during tax year and current U.S. address
- Phone number
- Date of birth (for every person on the return including dependents)
- Any other tax related info you have: marital status, dependent(s) (SS#’s, full names, dates of birth), house expenses (property taxes, interest, indicate if you recently purchased), interest/dividend/rental income, capital gains from investments, charitable contributions (list the amounts, the organization they were contributed to, and state whether cash or property) car registration fees, etc.
How can I obtain my tax documents to send to Hughes Szuberla?
If you are unable to find the tax documents needed to prepare your returns, you have two options: call each of the institutions/employers/brokers/etc. and ask them to resend the documents or obtain a record from the IRS. In order to obtain a record from the IRS, either order them online at www.irs.gov or call (800) 829-1040 and request an “account transcript” for the tax year in question. They will either fax it or mail it to the address you have on file with the IRS. If you have the fax number of the CPA at Hughes Szuberla you are working with, you can have the IRS fax the transcript directly to that individual.
After I send my tax information to Hughes Szuberla, what happens next?
You should receive an email confirmation from us by the close of the next business day stating that we received your tax information. This email will usually include a link you will use to pay our fee. We will begin preparing your return after we receive confirmation that the fee is paid. Once we prepare the return, we will email you with any outstanding questions. Once those questions are resolved, we will e-file your returns upon receipt of your signed 8879 (e-file authorization). The form 8879 has to be signed by the Taxpayer and Spouse (if applicable) before we can file the tax return.
I'm considering setting up an LLC, S corporation or other entity. Can you help?
Yes. Contact us to determine what entity makes the most sense for your situation.
How should I send my tax information to Hughes Szuberla?
We send all our previous clients a link to a secure portal where they can upload their documents safely. If you are a new client or do not have the email with the link please email info@HSTaxCPAs.com.