Tax day is April 18 this year, so make sure you know what you need to do to not face penalties….(read more)

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As tax season approaches, many people have questions about filing their taxes. Part 2 of our series on answering your tax questions will explore topics such as filing extensions, when to itemize deductions, and more.

Filing Extensions

If you find yourself unable to file your taxes by the April 15 deadline, you can request an extension from the IRS. This extension will give you an additional six months to file your taxes, pushing the deadline to October 15. However, it’s important to note that this extension only applies to filing your tax return, not paying any taxes owed. If you owe taxes and do not pay by the April 15 deadline, you may be subject to penalties and interest.

To request an extension, you must fill out Form 4868 and submit it to the IRS by the April 15 deadline. This form can be submitted electronically or on paper. Be sure to estimate the amount of tax you owe and include that in your extension request, as failure to do so may result in penalties and interest.

Itemizing Deductions

When it comes to deductions, taxpayers have a choice between taking the standard deduction or itemizing their deductions. The standard deduction is a set amount that reduces your taxable income. For tax year 2020, the standard deduction is $12,400 for single taxpayers and $24,800 for married taxpayers filing jointly.

Itemizing deductions, on the other hand, involves listing all your deductible expenses, such as mortgage interest, charitable donations, and medical expenses, and adding them up to arrive at a total deduction amount. You can then deduct this amount from your taxable income, potentially lowering your tax liability.

So, when should you itemize deductions? If your total deductible expenses exceed the standard deduction, it may be advantageous to itemize. However, it’s important to weigh the time and effort involved in itemizing against the potential tax savings. Additionally, some deductions, such as those for state and local taxes, are subject to a cap, which may reduce their effectiveness.

Working with a Tax Professional

Navigating the world of taxes can be complicated, which is why many taxpayers choose to work with a tax professional. Tax professionals can help you understand your tax situation and offer advice on how to reduce your tax liability.

When choosing a tax professional, it’s important to consider their qualifications and experience. Enrolled agents, certified public accountants (CPAs), and attorneys are all authorized to represent taxpayers before the IRS. Additionally, ask about their fee structure and make sure you understand how they will be compensated.

In Conclusion

Filing extensions, itemizing deductions, and working with a tax professional are all important considerations as you prepare to file your taxes. By understanding these topics, you can make informed decisions and potentially reduce your tax liability. As always, if you have specific questions about your tax situation, consult with a tax professional or visit the IRS website for more information.