Frequently Asked Questions
What Is a Tax Return?
A tax return is a form or forms filed with a tax authority that reports income, expenses, and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the overpayment of taxes.
Who Should File a Tax Return?
Most U.S. citizens – and permanent residents who work in the United States – need to file a tax return if they make more than a certain amount for the year.
You may want to file even if you make less than that amount, because you may get money back if you file. This could apply to you if you:
Have had federal income tax withheld from your pay
Made estimated tax payments
Qualify to claim tax credits such as the Earned Income Tax Credit and Child Tax Credit
Who Should File a Tax Return | Internal Revenue Service (irs.gov)
What does a tax return preparers do?
A tax preparer is an individual who prepares, calculates, and files income tax returns on behalf of individuals and businesses. There are several different types of tax preparers, with some having credentials issued by third-party organizations while others are non-credentialed preparers.
What are the Benefits of Filing a Tax Return?
Get money back. In some cases, you may get money back when you file your tax return. For example, if your employer withheld taxes from your paycheck, you may be owed a refund when you file your taxes.
Avoid interest and penalties. You may avoid interest and penalties by filing an accurate tax return on time and paying any tax you owe in the right way before the deadline. Even if you can't pay, you should file on time or request an extension to avoid owing more money.
Protect your credit. You may avoid having a lien placed against you when you file an accurate tax return on time and pay any tax you owe in the right way before the deadline. Liens can damage your credit score and make it harder for you to get a loan.
Apply for financial aid. An accurate tax return can make it easier to apply for help with education expenses.
Build your Social Security benefit. Claiming your self-employment income on your return ensures that it will be included in your benefit calculation.
Get an accurate picture of your income. When you apply for a loan, lenders will look at your tax return to figure your interest rate and decide if you can repay. If you file accurate tax returns, you may get a loan with a lower interest rate and better repayment terms.
Get peace of mind. When you file an accurate tax return and pay your taxes on time, you'll know that you're doing the right thing to follow the law.
Who Should File a Tax Return | Internal Revenue Service (irs.gov)
What is Adjusted Gross Income?
Adjusted Gross Income (AGI) is defined as gross income minus adjustments to income. Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account.
Definition of Adjusted Gross Income | Internal Revenue Service (irs.gov)
How long should I keep my tax records for?
Keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return.
What are the differences between an accountant, a CPA and a bookkeeper?
While a CPA's key role is to provide financial advice, a bookkeeper is mainly responsible for maintaining an organized record of all financial transactions. A bookkeeper keeps a history of every financial transaction in the accounting books. A CPA analyzes these books and offers appropriate financial advice.