With the deadline for filing federal income tax returns pushed to July 15, some Boston residents may breathe a sigh of relief that they have one less issue to deal with right now. However, at some point, they will need to turn their attention to getting their federal returns filed, especially if they are expecting a refund. One of the biggest strategic questions when filling out tax forms is whether it would be more advantageous to use the standard deduction or itemize.
Boston residents share one big question with others across the country: how long should they retain their federal income tax returns and their supporting documents. Answering this question may not be as simple as people think. However, the IRS generally only goes back three years for an audit, but that could be extended depending on a person's circumstances.
In recent weeks, life has changed across the country. It is hard to find any one unaffected by recent events, including here in Massachusetts. Trying to keep up with the changes may seem like an uphill battle. For instance, IRS deadlines that most taxpayers used to rely on have changed dramatically recently.
With everything that is going on across the country right now, the federal government is making certain concessions to help the public. One of them has to do with the IRS and income taxes. The news reports may not have been clear enough, and as a result, taxpayers here in Massachusetts and elsewhere could end up in trouble with the IRS.
Married couples do enjoy certain advantages when it comes to federal income taxes. The exemptions and deductions are often more, which greatly lowers the taxable income they have. The first tax year afterward may cause some shocking revelations when Massachusetts residents divorce. The way they deal with the IRS changes now that they are newly single.
It can be challenging for Massachusetts residents to know what credits and deductions they can and cannot take at tax time. One credit that the IRS says many people are missing out on is the earned income tax credit. The agency estimates that one out of every five who qualify for this credit fail to take advantage of it.
As many Boston residents start preparing their tax returns, finding out they owe money may come as a surprise. Preparing their returns now could give them the time to save up the money owed, but then again, it may not. Many taxpayers' budgets are stretched enough without adding a tax bill into it. Under those circumstances, they could enter into installment agreements.
The deadline for filing federal income tax returns in 2020 is April 15. However, Boston taxpayers do not have to wait that long to file. In fact, getting their tax returns to the IRS early could provide them with some benefits.
Not every college experience works out as Boston residents plan. Any number of things can happen that cause a individual not to complete a degree program at a certain institution. In some cases, any student loans taken out could be discharged by the Department of Education and the IRS may not require the student to count it as taxable income.
Income can be earned in different ways, which means it will be reported in different ways at tax time. For instance, miscellaneous income is reported in boxes 1 through 10 on Form 1099-MISC and must be reported to the IRS. However, Boston taxpayers may actually benefit from the information entered into box 3.