Everything from filing your yearly tax return to understanding long-term tax planning strategies that work for you.
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If your income is greater than the standard deduction for your filing status, you must pay taxes. The majority of the time, whether you must file a tax return depends on your annual income, filing status, and age. To determine whether you must file and pay taxes, the IRS has an interactive tool on its website. Even if you don't have to, you should file if you are eligible for a tax refund.
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The IRS will issue a bill and begin the official collection process if you don't pay your taxes. The IRS will take any refunds that you are due in subsequent tax years if you don't pay that bill. Until you pay your outstanding taxes in full, it may potentially file liens and levies against your assets and income. If you're unable to pay your tax debt in full right away, the IRS provides payment plans.
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Up to five months after you are required to file your tax return, the IRS will charge you a failure-to-file penalty equal to 5% of the total amount owed. After 60 days, you must make a simultaneous payment of $435 or 100% of the tax payable, whichever is smaller. A substitute return that the IRS eventually files on your behalf is likely to be devoid of any tax credits or deductions you are entitled to.
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According to the IRS, the majority of taxpayers who owe a refund ought should receive it in less time than 21 days. However, if the IRS needs to review your return or if you filed by mail, it can take longer. Use direct deposit and file electronically to hasten the process. You can check the status of your federal tax return using the IRS's online "Where's My Refund?" service. Refunds of state taxes could take up to 90 days.
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Overpaying taxes through annual withholding or refundable tax credits frequently results in a sizable tax refund. Both the Earned Income Tax Credit and the Child Tax Credit are refundable tax credits. Your taxable income might be decreased with the use of tax deductions. Nonrefundable tax credits can then be used to lower your tax obligation. All of these could increase your tax refund.
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No particular tax rate exists for small firms. The business structure affects the rate you as a small business owner pay. The tax rate for many small firms is the individual tax rate, which can be between 10% and 37% depending on revenue. 2 A corporation may pay a flat rate of 21% corporate tax.
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The state where the estate is located and whether you're also submitting a check or money order for any taxes due determine the mailing address for a paper copy of Form 1041 and accompanying schedules. On its website, the IRS lists the addresses for Forms 1041.
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In order to prevent incurring interest and penalties on the outstanding sum until it is paid off, you must pay the balance on line 37 of your tax return as soon as feasible.
The IRS provides two methods of online payment: Direct Pay and the Electronic Federal Tax Payment System (EFTPS). In addition, some retail partners accept payments made with cash, debit or credit cards, bank wire transfers, checks, money orders, electronic funds withdrawals, and even cash.
If you don't have the money to pay your tax debt in full right once, the IRS offers installment agreements that allow you to pay it off over time. A small fee and interest will be charged. But making payments gradually is far preferable to ignoring your debt and hoping it will go away.
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