1.When are taxes due?
ANSWER: For most individuals in the United States, federal income tax returns are due on April 15th of each year. If this date falls on a weekend or holiday, the due date is typically the next business day. Extensions may be filed to push the deadline to October 15th. A tax extension is not an extension to pay. Payments made after April 15th may accrue penalties on any unpaid amounts after April 15th.

2. What if I can’t pay my taxes by the due date?
ANSWER: If you can not pay your taxes by the due date, you still should file your tax return on time to avoid late filing penalties. Payas much as you can to reduce interest and penalties on the remaining balance. You may also be able to apply for a payment plan with the IRS. You can apply for a payment plan online through the IRS website if your tax debt is below a certain amount. If you are facing financial hardship, you may also apply for an offer in Compromise where the IRS may accept less than the full amount you owe. If you are unsure what is the best way to handle unpaid taxes or if you have a large debt, it is helpful to consult a tax professional.

3. What is the standard tax deduction?
ANSWER: The standard tax deduction is a fixed dollar amount that reduces the income on which you are taxed. The amount of the standard deduction depends on your filing status and is adjusted each year for inflation.

4. Should I Itemize deductions or take the standard deduction?
ANSWER: Whether you should itemize deductions or take the standard deduction depends on which option gives you the greater tax benefit. You may want to take the standard deduction if your total allowable itemized deductions are less than the standard deduction amount. If your total itemized deductions exceed the standard deduction. Some examples of itemized deductions include mortgage, charitable contributions and medical expenses.

5. What is the tax credit and how is it different from a tax deduction?
ANSWER: A tax deduction reduces the amount lowers your taxable income, reducing the amount of income that is subject to taxation. A tax credit provides a direct reduction of your tax liability, meaning it reduces the amount of tax your owe dollar for dollar. Examples of a tax deduction may include mortgage interest or charitable contributions. Tax credits are more valuable than deductions because they apply directly to your tax bill, regardless of your income or tax bracket. There are two types of tax credits. A non-refundable tax credit can reduce your tax liability to zero, but if the credit exceeds your total tax owed, you do not get the difference as a refund. A refundable tax credit will reduce your tax liability to zero, but can also result in a refund if the credit exceeds the amount of taxes you owe. Examples of tax credits include child tax credit or earned income credit.

6. What income is taxable?
ANSWER: Taxable income is the portion of your total income that is subject to taxations by the IRS. Taxable income includes various types of income such as wages, interest earned, dividends, capital gains, tips or bonuses earned from working with an employer. If you run your own business, your net earnings (income minus allowable expenses) are taxable. Certain types of income, such as gifts and inheritances, may be excluded from taxation.

7. How can I check the status of my tax refund?
ANSWER: There are several methods available for checking the status of your refund. Your refund status will be available 24hrs. after filing electronically or 4 weeks after mailing a paper return. To check the status of your return online visit the IRS website and use the “Where’s My Refund” tool. You will need your social security number or Individual taxpayer identification number (ITIN), your filing status (single, married, head of household, etc.) and the exact amount of your refund. You may also check the status of your refund using the IRS@Go app from the Apple App Store or Google Play store. This app allows you to check your refund status and real-time updates. You can also check your refund status by calling the IRS Refund Hotline at 800-829-1954. Make sure to have your social security number, filing status and the exact amount of the refund, when using any of the above options.

8. What should I do if I made a mistake on my tax return?
ANSWER: If you make a mistake on your tax return, first determine what type of mistake you made. If there is a small error such as math mistakes, the IRS often corrects these automatically. In these instances, you do not need to do anything. The IRS will inform you if a correction was made. If there is a significant error such as incorrect filing status, income, deductions or credits you will need to file an amended tax return (Form 1040-X).

9. What is the difference between a tax deduction and a tax credit?
ANSWER: A tax deduction reduces your taxable income. By lowering your taxable income, you pay less tax overall, but the amount of savings depends on your marginal tax rate (the tax rate applied to your highest portion of income). A tax credit directly reduces your tax liability, meaning it subtracts the credit amount from the total taxes you owe. The tax credit provides a dollar for dollar reduction in your tax bill, making tax credits more valuable than deductions.

10. How do I make estimated tax payments?
ANSWER: There are several ways to make your tax payments to the IRS. Choosing to make payments online is highly recommended. Online, you can make a payment directly from your bank account without paying any additional fees. You can pay at the IRS Direct Pay Link. Another free option is the IRS Electronic Federal Tax Payment System (EFTPS). Here you can schedule payments in advance. You will need to enroll online at EFTPS LINK and receive a PIN to use the system. You may also choose to pay via debit or credit card online through an IRS-approved payment processor, though these services may charge a small convenience fee. You may also make payments via mail by using form 1040-ES to mail in your payment. Include the voucher (from the form) for the appropriate quarter and send it with a check or money order payable to the United States Treasure. Make sure to include your Social Security Number (SSN) or Employer Identification Number (EIN) and the tax year. Mail the payments to the IRS address for your state (listed on the instructions for form 1040-ES.

11. What is the difference between tax planning and tax preparation?
Tax planning and tax preparation are two interconnected but different processes. Tax Planning is a proactive, year-round approach aimed at minimizing tax liability by forecasting income, identifying deductions and credits, and structuring investments and business operations. It involves strategies like deferring income, adjusting deductions, optimizing business structures, and ensuring compliance with evolving tax laws. Tax planning also prepares businesses for major changes such as expansions or acquisitions, helping to maximize financial benefits while minimizing tax burdens.

-Tax Preparation, on the other hand, is a reactive, once-a-year task. It involves compiling financial records, completing tax forms, and filing returns based on past activities. This ensures compliance with IRS regulations and determines whether additional taxes are owed, or refunds are due.

Starting tax planning early in the year is essential for maximizing tax benefits. It allows for better cash flow management, more accurate quarterly tax payments, and flexibility to adjust to any tax law changes. Early planning also prepares businesses for significant transactions and ensures that end-of-year strategies, like deferring income or accelerating expenses, can be implemented effectively.

12. When should I start tax planning for my business?
Starting tax planning early in the year is essential for maximizing benefits and minimizing tax liability. By planning at the beginning of the fiscal year, businesses can take advantage of deductions and credits, manage the timing of large purchases, and ensure compliance with changing tax laws. Early tax planning also helps businesses accurately project quarterly payments, avoid surprises, and prepare for major changes like expansion or acquisitions.

Additionally, planning ahead allows businesses to optimize their structure, adjust salary and distributions, and implement end-of-year strategies like deferring income or accelerating expenses. Effective cash flow management is another benefit, ensuring businesses can meet their tax obligations without financial disruption.