How to File Back Taxes?

File Back Taxes

Do you have any unfiled previous tax returns? Do you find it difficult to file your taxes? Don’t be concerned! We can show you many simple ways to file back taxes, as well as what you can do if you are unable to pay any past-due taxes.

What Are Back Taxes?

Back taxes are any past-due taxes that were not filed on time. Many taxpayers are unable to pay their taxes and, as a result, are afraid to file their returns. It is important that you file your overdue taxes since the IRS can impose significant penalties and possibly place a lien on your property if you do not. Tax debt can put you in a slew of financial troubles with the IRS, including having your mortgage or loan denied. Even if you do not have the financial resources to pay your back taxes, the best approach is to file them on time.

How to File Back Taxes?

To submit back taxes, you will first need to gather various documents and tax forms. The first form you will need is Form 1040, which is the main tax form that individuals must fill out. The IRS updates this form every year, so make sure you have the correct form when you file your taxes. However, if you seek professional assistance, you will not have to worry about getting the necessary documents and filling everything out correctly. Contact SDG Accountants in Miami immediately for the best services for your tax and accounting problems.

You must also calculate your income while filing back taxes. The IRS requires your annual income so that they can calculate how much you should receive in returns. W-2 documents and 1099 forms contain your income statement. If you do not have your W-2s or 1099s, you can acquire a free copy from your employer or a copy of your tax transcript from the IRS. You must also file any income that is not recorded on a form, such as a capital gain from bitcoin or interest from a savings account. It is critical to have the proper files on hand when completing your taxes so that you or your tax firm can do so easily.

Why is it Important to File Back Taxes?

People sometimes do not file taxes because they are scared, they will not receive a refund or that it will add to their financial burden. However, they are incorrect; it is critical to file your tax returns to avoid losing a potential refund from the IRS. If you want to receive refunds, you have three years to file your taxes; otherwise, such refunds will be denied. If a taxpayer’s income tax returns have not been filed, the IRS keeps them. The IRS requires an adequate justification to exempt a person from filing certain returns; otherwise, they will remain on file until the taxpayer files the taxes.

Tax Return

If the amount owed exceeds what can be paid, the IRS will grant taxpayers a further 60-120 days if they request it. The request can be made through the Online Payment Agreement application or by calling 800-829-1040; there is no user cost associated with the request. If you are still unable to pay, you can request an installment plan from the IRS or you may be eligible for an offer in compromise.

There are other instances where taxpayers do not submit taxes voluntarily, even though they are able to. In such circumstances, the IRS may file a substitute return, which denies you any deductions or exemptions you may have been entitled to. If you decide to submit your taxes, the IRS will normally refund any deductions or exemptions you were awarded. Otherwise, the IRS will send you a Notice of Deficiency, which is essentially a 90-day deadline to file your past taxes or file a Tax Court petition.

SDG Accountants are tax specialists and advisors who can assist you in determining the best potential solution to your tax concerns. Contact us immediately by scheduling a consultation using the link below for the best rates available.

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Filing an Income Tax Extension Due to COVID-19

Filing Income Tax Extension

Many people have valid reasons for failing to file their taxes by the deadline. Every year, you must file your taxes by Tax Day, which is April 15th (Tax Day is usually on April 15 but was set back in 2020 and 2021 due to COVID-19). Here is how to avoid penalties for failing to file your taxes by the due date.

What is a Tax Extension?

A tax extension is a period of time granted by the IRS to taxpayers who are unable to file their taxes by the deadline. The extension is valid for six months and is available to all taxpayers. Filing an extension allows taxpayers to postpone their tax filing, but it does not exempt them from paying any back taxes.

There is an exception for taxpayers who are unable to return to the country during tax season. This means that if a taxpayer’s primary work is outside of the United States or Puerto Rico, the IRS will grant them an extension. If a taxpayer is “out of the country,” the IRS will automatically grant them a two-month extension without the need to fill out any forms. For someone who is not in the nation when taxes are due, that period lasts until June. If the taxpayer then requests for the standard six-month extension, they will still have until October 15 to file their taxes.

To learn more about whether you are eligible for the two-month extension, contact SDG Accountants and we will provide you with all the information you want at reasonable rates.

When should you get an Extension?

Although you do not need a reason to request an extension from the IRS, it is nevertheless important that you only request one for logical reasons. Here are some of the most common reasons why taxpayers file an extension each year.

Some typical reasons for requesting extensions include being on vacation and not being able to pay or file your taxes until you return. You will also be unable to file your taxes if you do not have all the required tax forms and documents. Because all forms and documentation are required when submitting your taxes, you should request an extension if you are unable to collect them all on time. You are not in a good financial position to be concerned about taxes right now. If you do not file your taxes on time or pay any overdue taxes on time, you will be penalized by the IRS, which is why you should always file an extension if necessary.

How to File for a Tax Extension?

Tax Extension Form 4868

To request a tax extension, complete Form 4868 by the due date (Tax Day). The form can be completed online or mailed to the IRS. The IRS makes the form available online in PDF format, so anyone can download or print it. If you need to file an extension, schedule a consultation with one of our experienced tax consultants today at a very affordable rate.

Is a State Tax Extension Any Different from a Federal Tax Extension?

A federal tax extension is similar to a state tax extension. If you file for a federal extension, you will almost always be granted a state extension as well. Some states, however, have different rules and deadlines for their taxpayers. In Florida, for example, you must file a state form F-7004 before the due date to receive a 6-month extension. In other states, such as Virginia and Colorado, taxpayers automatically receive a 6-month extension if they do not apply for it. Every state has its own set of laws and deadlines, and all taxpayers should adhere to the deadlines in their current state.

To learn more about how to file for an extension, consult our Miami Tax Accountants today. We can give you the best advice on your tax issues and assist you in filing extensions at reasonable costs.

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Calculate Capital Gains Tax on Cryptocurrency

Capital Gains Tax

What is Cryptocurrency?

Cryptocurrency is a digital currency or payment system that may be used to buy and sell products and services on numerous online platforms. It enables everyone in the world to send and receive money from the comfort of their own home. Cryptocurrency exists entirely as a digital currency that can be used everywhere and eliminates the need to always carry real money. It can only be used once since it is protected by databases and cannot be reused. Every cryptocurrency transaction is recorded in a public ledger. It is similar to a digital wallet. What is the point of even leaving the house if everything is digital?

Is Cryptocurrency Secure?

Cryptocurrency is primarily built and secured using a technology known as the blockchain. A blockchain is a type of highly secure database for recording and storing transactions. To someone who is just getting started with bitcoin, it can seem incredibly confusing. However, if you understand its purpose and functionality, it will be as easy as pie. To really understand what blockchain is, it is necessary to first understand what a database is. A database is a platform that collects information and stores it in an electronic file cabinet. It is typically organized in the form of a table, allowing the user to quickly find and use the information without having to spend hours searching for it. A database is designed to hold massive amounts of data for huge corporations or even government agencies because all data can be simply categorized by numbers and accessed by many individuals. At the very least, you will not have to spend hours digging through a real cabinet for a misplaced file!

Now that we have covered databases, let’s look at how they differ from blockchains. The structure of the two differs significantly; a blockchain stores its data in blocks/chunks chained together, whereas a database stores all its data in tables. A blockchain collects information in groups/blocks, and each block has a defined storage capacity. When one block is full, it is chained onto the previously full block, forming a data chain known as a blockchain. You are probably wondering how all that info is protected from hackers. Let me explain whenever a blockchain of data is created, it is structured in such a way that it cannot be easily accessible. Blockchains rely on a network known as cryptography. If tons of blocks connected with an overabundance of data is not enough to frustrate a hacker, cryptography makes it even more difficult. It is safeguarded by private keys that network participants can only obtain; these keys serve as a digital signature for all transactions. Overall, if you are ever concerned about your digital money being stolen, return to this post and you will be pleased with how secure your information is.

How Do I Gain on Bitcoin?

Capital Gains Tax

We can never escape paying taxes, no matter where in the world we move to. When living in any country, it is both a necessity and a requirement. So, how can you pay taxes if you continually or regularly use digital money to gain capital? Well, let me explain.

The IRS has addressed all of the citizens’ questions about filing their taxes when most of their income comes from trading. The IRS defined bitcoin as an asset equivalent to property in Notice 2014-21, and it is taxed accordingly. The IRS has made it mandatory to report any bitcoin transaction, no matter how little the amount. The tax rate on capital gains currently ranges from 0% to 37%, depending on how the gain is calculated.

The IRS has addressed all of the citizens’ questions about filing their taxes when most of their income comes from trading. The IRS defined bitcoin as an asset equivalent to property in Notice 2014-21, and it is taxed accordingly. The IRS has made it mandatory to report any bitcoin transaction, no matter how little the amount. The tax rate on capital gains currently ranges from 0% to 37%, depending on how the gain is calculated.

  1. The accounting method you employ to calculate gains.
  2. How long the coins were kept before being sold.
  3. Your total income for the year, including non-crypto transactions, as well as your tax filing status.

Let’s start with the accounting method. The coin sold is significant for the accounting method. Profits = sales price – cost basis is the formula for calculating the capital gain on any cryptocurrency. The goal is to have a larger cost basis to pay less tax on capital gains. To precisely identify the coins sold, detailed records are required. If you sell the coins with the highest cost basis, also known as Highest-in-First-Out (HIFO), you will have to pay the least amount of capital gain taxes. However, if detailed records cannot be discovered, you will be forced to use the First-in-First-Out (FIFO) approach, in which you sell the earliest purchased coin regardless of price.

After calculating your gains using an accounting method, you will categorize them as short-term or long-term based on when you sold them. Short-term gains occur when a coin is sold after being held for less than a year, and they are included in your income and taxed as regular income. Long-term gains arise when a coin is held for more than 12 months before being sold. These gains are taxed at 0%, 15%, or 20% depending on the tax bracket.

How Can We Help?

All of this demands the services of a tax accountant who can provide you with the most accurate estimate and assist you in making the most profit. SDG Accountants is one of the best accounting firm in Miami. We offer a variety of tax services, including US expat tax and US corporate tax. We can assist you in filing your taxes and estimating your capital gain.

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