What are some common tax questions?
Tax time is one of the most confusing, frustrating, and even downright scary times of the year for many people. The tax code is written in very technical terms, IRS forms are perplexing, and hiring a tax professional can be pricey.
Before you file your tax return this year, take a look at this list of common tax questions. Hopefully, the answers help you file your taxes confidently.
Most Common Tax Questions
These are the most common tax questions you’re likely to have as you gather your documents and begin preparing your tax return.
If your question isn’t covered here, you don’t have to stay stuck forever. You can begin your tax return free online with H&R Block. If you run into issues or have questions along the way, H&R Block offers unlimited help from live tax experts via on-demand chat or video.
1. When Is My Tax Return Due?
Your 2021 tax return (the one you file in 2022) is due Monday, April 18, 2022. Normally, the tax filing deadline is April 15, but since that day falls on the Emancipation Day holiday in Washington, D.C., the deadline shifts to the next business day.
Taxpayers in Maine and Massachusetts get an extra day to file due to the Patriots’ Day holiday in those states.
Be sure to check out our list of other important tax deadlines for the due dates of estimated tax payments, retirement plan contributions, and more.
2. Do I Need to File a Tax Return?
If your income is below a certain threshold, you might not need to file a tax return at all. The amount of income you can earn without needing to file a return depends on the type of income you have, your age, and your filing status.
Most people don’t need to file if their income is less than the standard deduction. For 2021 returns, the standard deduction is:
- $12,550 for single filers and married couples filing separately
- $25,100 for married filing jointly
- $18,800 for head of household filers
However, there are a few exceptions to that rule. For example, if someone else claims you as a dependent on their return, you have to file a return if your unearned income (such as interest, dividends, and capital gains) is greater than $1,100.
You also need to file a tax return if you:
- Owe Social Security and Medicare tax on tips you didn’t report to your employer
- Took a distribution from a health savings account (HSA)
- Had net earnings from self-employment of at least $400
You can find a more in-depth explanation of the tax filing requirements in the Internal Revenue Service’s Instructions for Form 1040, or use the IRS’s interactive Do I Need to File a Tax Return? tool if you need more help figuring out whether you need to file.
3. Should I Do My Own Taxes or Hire a Professional?
That depends on how complicated your tax situation is and whether you have the time and patience to handle the research and data entry on your own.
You might feel comfortable filing on your own if you just need to enter information from your W-2 and claim the standard deduction and some other common tax benefits like the student loan interest deduction and Child Tax Credit. But if your tax situation is more complicated — for example, you’re self-employed, you own rental property, or a foreign bank account — then you may want advice from a tax professional.
The good news is, you don’t have to choose one or the other. When you file your tax return with H&R Block, you can start doing your own taxes online and get on-demand help from a tax expert if you run into issues or have questions along the way.
4. Can I File Taxes for Free?
Maybe. H&R Block’s Free Online product allows you to file your federal and state income tax returns for free. However, it’s not available to everyone. To file for free, you must have a simple return. That generally means you have income from a W-2, unemployment, Social Security, or retirement account.
H&R Block’s Free Online product also covers the following tax deductions and credits:
- Standard deduction
- Student loan interest deduction
- Child Tax Credit
- Earned Income Tax Credit (EITC)
5. What Filing Status Should I Choose?
There are five filing statuses to choose from. The right one for you depends on your marital status and family situation.
- Single. Choose this status if you’re unmarried and don’t qualify for another filing status.
- Married Filing Jointly. Choose this filing status if you’re married and want to file a joint return with your spouse.
- Married Filing Separately. Choose this filing status if you don’t want to file jointly with your spouse. While there are several reasons you might not want to file jointly, people often use this status when one spouse owes back taxes or has other financial issues.
- Head of Household. Use this filing status if you’re unmarried and pay at least half the cost of maintaining a home for a dependent.
- Qualifying Widow(er). Use this status if your spouse passed away recently and you’re supporting a child at home.
You can also use the IRS’s interactive What Is My Filing Status tool to help you choose the filing status that will result in the lowest tax bill.
6. Which Tax Forms Do I Need?
Most Americans file Form 1040, the tax form used by individual taxpayers. However, you may also need to attach several supplementary forms and schedules to your Form 1040, depending on the types of income, deductions, and tax credits you claim.
Fortunately, a tax software program like H&R Block helps you file the right tax forms by asking basic questions about your tax situation and including the right forms with your return.
7. What’s the Difference Between a Credit and a Deduction?
Tax credits and tax deductions both lower your tax bill, but there’s a very important difference between the two.
A tax deduction lowers your taxable income, so its value depends on your tax bracket. For example, if you’re in the 24% tax bracket, a $100 tax deduction reduces your tax bill by around $24.
On the other hand, tax credits reduce your tax bill on a dollar-for-dollar basis. For example, if you owe $2,000 in tax but can claim a $1,000 tax credit, you only have to pay $1,000.
Refundable tax credits are valuable because if they reduce your tax bill below zero, you get the difference back in the form of a tax refund. For example, if your tax liability is $1,000 and you qualify for a $2,000 refundable tax credit, you would receive a $1,000 refund.
8. Which Tax Credits Am I Eligible For?
That depends on your tax situation. Some common tax credits include:
- Child Tax Credit (CTC). For 2021, the CTC is worth up to $3,000 per child under age 18, or $3,600 per child under age 6.
- Earned Income Tax Credit. This credit gives low- to moderate-income people a refundable credit. The size of your credit depends on your income and how many children you claim as dependents.
- American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC). These tax credits for education credit help offset the cost of higher education if you qualify.
- Adoption Tax Credit. This tax credit helps offset the cost of qualified adoption expenses.
- Child & Dependent Care Credit. This tax break helps working parents cover the cost of childcare for a dependent or care for another family member who is physically or mentally unable to care for themselves.
9. Which Tax Deductions Can I Claim?
Roughly 90% of taxpayers claim the standard deduction, which is a flat dollar amount based on your filing status.
Instead of taking the standard deduction, you can itemize. Itemizing involves keeping track of the actual amounts you pay for certain expenses throughout the tax year and reporting them on Schedule A attached to your Form 1040. Itemized deductions include:
- Out-of-pocket health care expenses
- Home mortgage interest
- State and local taxes
- Charitable contributions.
There are also a handful of “above-the-line deductions” that you can claim even if you don’t itemize. These include contributions to a health savings account (HSA) or IRA, self-employed health insurance premiums, and more.
The good news is you don’t have to memorize all of these tax credits and deductions. When you file with H&R Block, the software asks questions about your circumstances and helps you claim the right tax breaks,
10. Should I Itemize or Take the Standard Deduction?
In general, you can itemize or claim the standard deduction — whichever results in the lowest tax bill or highest tax refund. So, even if you’re not sure itemizing is the best choice, keep track of your itemized deductions throughout the year.
At the end of the year, itemize if your total itemized deductions are larger than the standard deduction available for your filing status. Otherwise, claim the standard deduction.
11. Who Can I Claim as a Dependent?
You can claim someone as a dependent if they’re your “qualifying child” or “qualifying dependent.” However, the IRS has some tricky definitions and rules around claiming qualifying dependents.
Be sure to understand the nuances of claiming dependents and consult a tax professional at H&R Block if you still have questions.
12. What Happens If I Don’t File My Taxes on Time?
If you miss the tax filing deadline, just file your tax return as soon as possible. If the IRS owes you a refund, you won’t have to pay a late filing penalty. However, you can’t get your refund until you file.
If you owe tax, the IRS will charge a late filing penalty, late payment penalty, and interest on the outstanding tax due.
You can avoid penalties by requesting a six-month extension of time to file your return. Keep in mind that this gives you more time to file — it doesn’t give you more time to pay the tax you owe. So you should estimate your tax liability and pay it with your extension request.
13. What Happens If I Can’t Pay My Taxes?
The IRS is used to working with people who need more time to pay their taxes in full. That’s why it offers payment plans.
If you can pay the balance due within 120 days, apply for a short-term payment plan online or call the IRS at 800-829-1040.
If you need more time to pay taxes, you can request an installment agreement. You can apply for the plan online if you owe $50,000 or less in combined tax, interest, and penalties. If you owe more than that, you need to apply for an installment plan using Form 9465 and Form 433-F.
14. When Will I Get My Tax Refund?
It’s tough to say. Normally, the IRS issues most refunds within 21 days. Your best bet for quick processing is to file your taxes electronically and have your tax refund direct-deposited into your bank account.
However, some refunds take longer, and the IRS has warned taxpayers that 2022 will be an especially challenging year for timely refunds. The IRS is still working through a backlog of returns from 2021 and dealing with ongoing staffing challenges brought on by the COVID-19 pandemic.
Expect the IRS to take more time to process your refund if your tax return includes the Recovery Rebate Credit, EITC, or Additional Child Tax Credit.
If it’s been more than 21 days since you e-filed your return and you haven’t received your refund, you can check the status using the IRS2Go app, the Where’s My Refund tool, or the IRS’s Check My Refund Status page.
15. How Do I Amend My Tax Return?
You can amend your federal income tax return by filing Form 1040X. The IRS used to require taxpayers to file Form 1040X by mail, but you can now file an amended return electronically.
If you prepared the return you need to correct using tax software like H&R Block, just follow the instructions in the software to amend and e-file your return.
16. How Do I Avoid an Audit?
There’s no foolproof way to avoid an IRS audit. The IRS might select your return for an audit randomly or because you have certain audit red flags on your return, such as high deductions compared to your income.
Fortunately, H&R Block’s tax software reviews your return for mistakes and common red flags and alerts you to potential issues.
17. How Long Should I Keep Tax Records?
The IRS recommends keeping your tax records for three years from the date you filed your tax return. That’s because the agency generally has three years from the date you filed to audit you.
However, that statute of limitations can be longer if you:
- Claimed a loss from a worthless security or bad debt
- Didn’t report income that you should have reported
If either of those situations applies, you should hold onto your tax records for seven years from the date you filed.
If you don’t file a return at all or file a fraudulent return, there is no statute of limitations, so you should hold onto your tax records indefinitely.
Hopefully, these answers to common tax questions will help you get started fulfilling your filing obligations this tax season. If you’re worried you might have more questions during the tax filing process, consider preparing your tax return online with H&R Block. You’ll be able to access an experienced tax pro at any time via chat or video.
After all, tax law is confusing. Getting tax preparation help from someone who does taxes for a living ensures you’re in the best possible situation when you file your return.