Resident Individual Income Tax
Resident taxpayers who are required to file a federal individual income tax return are required to file a Louisiana income tax return, IT-540, reporting all of their income. If a Louisiana resident earns income in another state, that income is also taxable by Louisiana. A temporary absence from Louisiana does not automatically change your domicile for individual income tax purposes. As a resident taxpayer, you are allowed a credit on Schedule G for the net tax liability paid to another state if that income is included on the Louisiana return.
Residents may be allowed a deduction from taxable income of certain income items considered exempt by Louisiana law. For example, Louisiana residents who are members of the armed services and who were stationed outside the state on active duty for 120 or more consecutive days are entitled to a deduction of up to $30,000. In each case, the amount of income subject to a deduction must be included on the Louisiana resident return before the deduction can be allowed.
An Offer In Compromise
Sometimes taxpayers are able to settle their tax debt to the IRS for less than what they owe. This is called an offer in compromise. If you simply cant afford to pay your taxes, the IRS may consider this option based on the amount of your debt, your income and expenses, and how many assets you own.
There are some important things you must know about an offer in compromise. First, there is a non-refundable $205 fee to apply. Low-income taxpayers can sometimes have this fee waived. Youll also have to send in an initial payment with your application to show good faith. The offer in compromise option isnt available to serial non-filers. If you havent filed a tax return in a while, you wont be eligible for a deal. Those with an open bankruptcy case are also ineligible.;
If you remember nothing else about an offer in compromise, please remember to approach them carefully. When you see tv commercials for companies offering tax relief, know that all they do is help you file the paperwork for an offer in compromise. Some of these companies are legitimate, but many are scams and none can truly settle your debt for pennies on the dollar, as is often promised.
If you need help filing for an offer in compromise, please contact us at Picnic Tax or contact another reputable CPA. The IRS accepts less than 50% of the offer in compromise applications they receive, and we hate to see taxpayers charged fees by unscrupulous companies to file for tax deals they have no chance of getting.
If You Owe More Than You Can Pay
If you cannot pay what you owe, you can request an additional 60-120 days to pay your account in full through the Online Payment Agreement application or by calling 800-829-1040; no user fee will be charged. If you need more time to pay, you can request an installment agreement or you may qualify for an offer in compromise.
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Forgot To File Your Taxes Last Year What You Need To Know
- Habitual late-filers face higher late-filing penalties equal to 10% of the current years balance owing and 2% each month it is outstanding, to a maximum of 20 months.
If filing your taxes before the deadline went over your head last year, procrastinating can make things worse.
Unlike sales tax, which you pay on the spot, Canadas income tax system is based on self-assessment. Make your money, plan your affairs as best you can and then, pay up.
Not everybody does this, though. So, if the tax filing deadline sneaked up and passed you, here are a few things to keep in mind.
Filing Back Taxes In Canada
You should file your taxes on time. This is the best way to avoid interest charges, penalties, and additional hassle from the Canada Revenue Agency . However, for many reasons, people sometimes do not file their taxes when they should. Maybe you forgot or maybe you didnt realize that you needed to file. Maybe you did not file on purpose. Sometimes, people believe that its in their best interest to not file their taxes if they dont have the money to pay their tax debt. This isnt true, but its a common belief and it happens.
For whatever reason, if you didnt file your taxes when you should have, and now youre wondering how far back you can file taxes in Canada, the good news is that it is possible to file prior year returns.
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Pay Social Security Taxes To Qualify For Benefits
Self-employed individuals have to pay Social Security taxes through their estimated tax payments and individual income tax returns. By filing a return and paying the associated taxes, you report your income so that you may qualify for Social Security retirement and disability benefits when you need them.
Farber Tax Solutions Helps You At Every Step Of The Way Including:
- 1|;Organizing: We analyze all documents and communication, to fight the CRA on your behalf
- 2|;Audits: We assist you with audits and ensure proper conduct by tax authorities
- 3|;Appeals: We can prepare a Notice of Objection, clarifying your standing with the CRA
- 4|;Litigation: We represent you at all levels of court
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Filing An Amended Return
If you file your income tax return and later become aware of any changes you must make to income, deductions, or credits, you must file an amended Louisiana return. To file a paper amended return:
- Mail an amended return that includes a payment to the following address:Louisiana Department of Revenue
Calendar Year Vs Fiscal Year
The IRS actually gives you two choices when it comes to your tax yearyou’re not necessarily stuck with using the calendar year. You can elect to use the fiscal year instead, but there are some important differences:
- Most individual taxpayers elect the calendar year option, and they must do so if they don’t keep adequate books and records to support using a fiscal year.
- A fiscal year can end on the last day of any month other than Decemberotherwise, it would be a calendar year. It can vary from 52 to 53 weeks, and it’s typically used by businesses.
Sole proprietors, shareholders in S corporations, and partners in partnerships can’t simply begin using a fiscal year if they’ve already filed at least one tax return in previous years that was based on a calendar year. They must get special permission from the IRS to make the change.
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You Can Set Up A Payment Agreement With The Irs
If you owe money to the IRS, you can set up payment agreements if you cant pay back your returns right away. There several types of payment plans, depending on what you need. If you dont set up a payment plan with the IRS and you avoid paying the IRS, the IRS will send their collections department after you.
Filing Past Due Tax Returns
File all tax returns that are due, regardless of whether or not you can pay in full. File your past due return the same way and to the same location where you would file an on-time return.;
If you have received a notice, make sure to send your past due return to the location indicated on the notice you received.
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The Repercussions Of Cheating
Many otherwise honest people fail to report all their income, either inadvertently thanks to the complexities of the tax rules or because theyre actually trying to hide something.
For those who get caught fiddling with their books, the penalties can be severe. Cheating on taxes is a criminal offence punishable by fines equal to several times the amount of tax owing, plus the tax, plus the interest, and possibly even prison time.
And, contrary to popular belief, theres no time limit for the CRA to prosecute you for cheating or filing late. Its never too late to be brought up on tax charges from years ago.
Furthermore, waiting until youre caught, or until an investigation on your return has begun, means your bargaining power is reduced. If youve made a mistake, finance professionals advise that its better to fess up as soon as possible and then look into the possibility of amnesty or reprieve.
What If I Cant Pay
An unexpected tax bill can pose a very real financial problem, and sometimes frightened or frustrated taxpayers fail to file a tax return if they know they cant pay the tax due. Unfortunately, this is never the best solution to tax problems. Even if you owe tax you cant pay, your first step is to make sure you file your past due return if you havent already. You can then contact the IRS to apply for a payment plan.
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Electronic Filing Options For Individual Income And Business Taxes
Being sensitive to the changing economic climate, the Kansas Department of Revenue no longer produces and distributes a large number of paper documents. Instead, instructions, sample tax forms, and schedules can be accessed on the Department’s website by going to the forms and publications page. The Department also offers the following alternative electronic reporting and filing options.
How Do I File Returns For Back Taxes
When would someone file back taxes, and what does this process typically look like?
Should you file back taxes? It may not be too late to file a previous year’s tax return to pay what you owe or claim your refund. Learn more about why one may choose to file back taxes and how to start this process.
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Filing Back Taxes With Tax
Using an online tax-filing service will cost money, but it will offer more guidance and information about which forms you need and how to complete them. However, some online products only allow you to access a few years of prior-year tax forms. Select services do allow you to e-file back taxes for certain tax years, but itâs likely that you will need to print your tax return after filling it out and then mail it to the IRS.
How To Avoid A Failure To File Penalty
If youre going to miss the tax-filing deadline, help yourself avoid the penalty for not filing taxes by getting an extension to file your tax return. A tax extension can get you an extra six months to get your tax return to the IRS.
Remember, however, that a tax extension only gets you more time to file your tax return. It does not get you more time to pay your taxes.
If you miss the tax extension deadline, though, that failure to file penalty could come back to haunt you.
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The Irs May Have Filed A Return For You
Sometimes the IRS starts the process called a substitute for a return about three years after the due date on the return. When you file a return to replace the substitute of return, the IRS closely scrutinizes the replacement return and compare it to information statements on file. The IRS might take more time than usual to process the replacement returns in some cases, more than four months because of the scrutiny of the replacement return.
Will Filing My 2020 Return Affect My Stimulus Payments
If the IRS owes you money from the first two stimulus checks — maybe you didn’t receive either check or received less than you qualified for — you can claim the missing payments through a;recovery rebate credit;on your 2020 tax form. This holds even if you’re not usually required to file taxes. So the longer you wait to file, the longer it’ll take to get your missing stimulus payment.;
The IRS says it will automatically evaluate your eligibility for the third stimulus check when your 2020 return is processed. If the IRS calculated the amount of your third stimulus payment using your 2019 tax return, you could qualify for more money as a so-called “plus-up payment” once the IRS receives 2020 taxes and recalculates your total. However, until you file a 2020 tax return, the IRS won’t have your new income or dependent information on file.;
The IRS plans to issue eligible taxpayers third stimulus payments and plus-up payments through the end of 2021.;
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What Happens If You Dont File
If youre tempted to just let a missed tax return slide, you should know that doing so can cause a host of issues. Although potentially significant, the most minor issue a missed filing can cause is trouble getting a loan. Getting a mortgage, refinancing your home, obtaining a business loan or requesting student financial aid all require you to submit a copy of your filed tax return. You wont get far if you dont have one.
Possibly more problematic is the possibility of a substitute return. If you dont file a return on your own, the IRS may gather the tax information they have and prepare one for you. Simply letting the IRS do the work for you may sound like an easy solution, but they may not be aware of or overly concerned about any deductions or credits you could take. Theyll simply prepare a basic return and send you a copy. If you dont take any action in 90 days, that return and any tax you owe on it becomes binding.
Once the IRS files a return for you, youll need to pay any tax due. If you dont, the IRS will take collection action. This may include taking extra payments from your paycheck or filing a federal tax lien against you. Note that if you fail to file your taxes several times, the IRS may take criminal action against you as well as collection action.
Double Check Your Tax Return Before You File
Double checking your tax return prior to submission can ensure your tax refund is processed quickly. Failure to do so may cause the IRS to delay the processing of your tax refund.
Here is a list of questions to review prior to filing your tax return to ensure the IRS processes your tax refund as quickly as possible.
- Did I review my identifying numbers for myself, spouse and dependents?
- Did I ensure the names on my tax return are spelled correctly?
- Did I review my dependents information?
- Have I reviewed my banks routing and account numbers for accuracy?
- Did I include the correct date of birth for myself and dependents
- Did I electronically sign my tax return ?
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How Much Tax Penalties Cost
There are two possible penalties you could pay if you owe back taxes:
A failure-to-file penalty when you file late. Itâs worth 5% of your unpaid taxes and it accrues each month until it reaches 25% of your unpaid taxes. If you are owed a refund from the IRS, you wonât have to pay this penalty.
A failure-to-pay penalty applies any time you donât pay your full tax bill on time. Itâs worth between 0.5% and 1% of your unpaid taxes, accruing each month until it reaches 25% of your unpaid taxes. You donât have to pay this tax if youâre getting a tax refund from the IRS.
If you continue not to pay your taxes, the amount you owe could come out of future tax refunds, and the IRS could even put a lien on your assets or property. Read more about the tax penalties for filing your taxes late.
Documents For Tax Credits And Deductions
Tax deductions and tax credits reduce the amount of income tax you owe for the year . You may need to gather additional tax documents to claim specific types of credits and deductions. For example, you probably need to have a copy of Form 1098-T if you want to deduct college tuition with the lifetime learning credit.
Even if credits and deductions were changed or eliminated for future years, you can claim them if they were available for the tax return youâre claiming. Learn more about the difference between tax credits and deductions as well as the difference between different types of deductions.
Common documents you may need include:
Receipts from charitable donations for the charitable contributions deduction
Receipts for unreimbursed employee expenses, such as for travel or union dues
Moving expenses if you moved for a job
Documents showing the value of any casualty and theft losses, not including losses already covered by your homeowners insurance policy
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