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It’s easy to feel frustrated by the layers of intricate rules that govern your tax obligations. An overview of the basics can take some of the mystery out of the process. That’s what a free resource provided by Justia aims to do.
Taxes can cause immense stress to many Americans, and not just because of the financial burden. A maze of laws and regulations controls what a taxpayer owes and whether they can claim certain benefits like deductions or credits. It’s impossible to capture all the nuances in a clean and concise summary. However, some taxpayers may want to get a sense of the basics before bringing their specific concerns to an attorney. The Tax Law Center in the Justia Legal Guides can serve as a starting point. It helps taxpayers understand the core concepts, while offering practical tips. Here are some common questions to which it provides general answers.
Should I Itemize Deductions on Federal Taxes?
The Tax Cuts and Jobs Act nearly doubled the size of the standard deduction in 2018, while eliminating many types of itemized deductions. This means that taking the standard deduction instead of itemizing deductions makes sense for many more taxpayers than it did before. (Keep in mind that the Tax Cuts and Jobs Act is scheduled to expire at the end of 2025.) If you choose to take the standard deduction rather than itemizing, you can still take a few “above-the-line deductions” that are technically considered adjustments to income.
Can Parents Get Federal Tax Benefits?
There’s bad news and good news. The Tax Cuts and Jobs Act removed the standard dependency exemption, but certain tax credits may be available. If you have a child under 17 who is considered a dependent, you may qualify for the child tax credit. You may even get a partial child tax credit if you don’t owe taxes. In addition, you might qualify for the child and dependent care tax credit if you have a qualifying child under 13 for whom you’re incurring child care expenses. If you adopt a child, you may be able to get an adoption tax credit, although this isn’t available to stepparents.
How Does Federal Tax Law Treat Alimony?
Before the Tax Cuts and Jobs Act, the IRS allowed an ex-spouse who paid alimony to deduct it from their return, while the ex-spouse receiving alimony needed to report it among their taxable income. Now, alimony payments are neither deductible by the paying ex-spouse nor taxable to the recipient ex-spouse. The old rules generally still apply to divorces finalized before 2019, but the spouses can agree to modify their settlement agreement to follow the new rules.
How Do I Fix a Mistake on My Federal Tax Return?
If you made a simple math error, the IRS likely will correct that mistake and make the adjustment without requiring further action. If you made a more substantive mistake, you can file an amended tax return, which should allow you to avoid or minimize the consequences of the mistake. (You’ll generally need to file the amended tax return within three years if you’re claiming a credit or refund, or within two years of paying the tax if that’s later.) For mistakes discovered once the IRS has started to audit the return at issue, you can just tell the tax agent about the error rather than amending the return.
What’s the Deadline for the IRS to Assess More Tax?
The IRS typically has three years to assess further tax after the taxpayer files their return, or three years after the due date of the return if that’s later. The IRS has six years if the taxpayer underreported their gross income by more than 25 percent, and an unlimited period if the taxpayer filed a fraudulent return or never filed the return. It’s important to keep your returns for as long as the IRS could conduct an audit. Some taxpayers may find it helpful to keep these records permanently.
Can I Settle My Federal Tax Debt for Less?
You might be able to get the IRS to accept an offer in compromise to settle the debt that you owe for a smaller amount. This usually requires showing that the IRS probably won’t be able to collect the full amount of the debt for the foreseeable future, or that you have exceptional circumstances that would make paying the full amount an economic hardship. Less often, a doubt regarding the taxpayer’s liability might support an offer in compromise. If the IRS rejects an offer because it’s too low, it may give you a sense of what it would accept, and you can make a new offer. You can also appeal the rejection of an offer.
Can I Discharge Federal Income Tax Debt in Chapter 7 Bankruptcy?
If you file under Chapter 7, you likely won’t be able to include income tax debt in your discharge. However, there’s a narrow exception for certain income tax debts if the return was due at least three years before you filed. You usually must have filed a return for the debt at least two years before filing for bankruptcy. The debt usually either must have been assessed at least 240 days before you filed or must not have been assessed yet. This exception isn’t available if you filed a fraudulent return.
Which States Don’t Have Income Tax?
States that currently don’t collect income tax are Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Wyoming, and technically Washington. (There’s a capital gains tax in Washington, but this is considered an excise tax rather than an income tax.) Justia provides a 50-state survey on state income tax laws.
How Does Federal Capital Gains Tax Work?
The capital gains tax rate depends on whether the gain is short-term or long-term. A short-term gain, which means that you held the asset for no more than one year, is taxed at your income tax rate. A long-term gain, which means that you held the asset for more than one year, is subject to one of three fixed rates, which tend to be lower than the standard income tax rate.
Will My Estate Need to Pay Federal Estate Tax?
Your estate will need to pay federal estate tax only if it’s worth more than a certain very high amount, which is $13.99 million as of 2025. Transfers from the estate to a surviving spouse generally aren’t subject to the estate tax. People often manage to avoid the estate tax by creating instruments such as trusts to hold assets separately from the estate. (States may have their own estate taxes or “inheritance taxes,” which have separate rules.)
How Is Property Tax Calculated?
Property tax is usually calculated according to the value of the property, a method known as an “ad valorem” tax. The local taxing authority assesses the value of the property on a recurring basis, accounting for any changes to the property since its last valuation. A property owner may be able to appeal an appraisal that they feel is unreasonable. It’s worth noting that how much you use the property doesn’t matter. Property tax is based only on ownership.
Final Thoughts
Tax obligations can impose a significant burden, and any disputes over a tax may have high stakes. To fully protect your interests and ensure that no stone is left unturned, you may want to consult a tax lawyer who can review the details of your situation and provide personalized advice. In the meantime, the Tax Law Center offers a readable overview of some key concepts in this area. Like the other Justia Legal Guides, it furthers our mission of making the law free and accessible to all.
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