How Divorce Affects Your Taxes?

Filing Taxes After Divorce

Every day, about 2,400 divorces are filed in the United States, resulting in an average of 16,800 divorces each week and more than 875,000 divorces per year. Divorce affects 13.2 percent of the population in Florida, making it the fourth most divorced state. Many areas of a person’s life alter after a divorce, including their tax filing. Find out the answers to your tax-related problems, most importantly filing taxes after divorce.

How does Filing Taxes Change after Divorce?

The IRS distinguishes between married and unmarried taxpayers. After a divorce, the way you file your taxes can alter dramatically. Your filing status, for example, will change, and your tax rates may be higher than before.

Choosing a Tax Filing Status after Divorce

The IRS permits unmarried taxpayers to choose between two filing statuses after their divorce: single or head of the household. As a single taxpayer, you do not bear most of the financial burden for a dependent. Meanwhile, it is your job as the head of the household taxpayer to pay at least 51% of the cost of caring for a dependant. You must confirm your eligibility for the head of the household status. If you have custody of your children, be sure you qualify for head of the household status, as this will affect your tax treatment, particularly if you have a lower income. As the head of the household, you are more likely to pay lesser taxes if you have a smaller income. This can also qualify you for other tax breaks and credits.

How does Filing Taxes Change after Divorce?

Every day, about 2,400 divorces are filed in the United States, resulting in an average of 16,800 divorces each week and more than 875,000 divorces per year. Divorce affects 13.2 percent of the population in Florida, making it the fourth most divorced state. Many areas of a person’s life alter after a divorce, including their tax filing. Find out the answers to your tax-related problems after a divorce.

Change in Tax Rates after Divorce

When you divorce, your filing status changes from married to single or head of household, which means your income will be different because it is no longer combined with your partner’s income. This can result in a change in your tax rates to either a higher or lower tax rate. When filing jointly, your income is higher, so you pay more tax. When you divorce, your status changes, and if your income was more than your spouse’s, you would pay a higher tax rate as a single taxpayer. On the other hand, if you earned less than your spouse, your tax bracket as a single taxpayer will either remain the same or be lower than before. These also differ depending on whether you are a single person or the head of a household.

Can I Claim Tax Credits after Divorce?

Many parts of your tax situation change after a divorce, including your filing status, tax rates, and even tax credits. If you file as a single or head of the household after your divorce, you will very certainly lose any past tax credits you claimed as a married person. You may also be eligible for new tax credits following your divorce. These tax credits are primarily determined by who has custody of the children. If you are the parent without custody, you will very certainly be unable to claim these tax credits unless your ex-spouse does so on your behalf. As long as all other living circumstances are met, the custodial parents can sign a written declaration allowing you to claim those credits. Many tax credits are available to parents who have a dependent, including the child tax credit (CTC), the credit for other dependents (ODC), the child and dependent care credit, and the earned income tax credit (EITC).

How do I File Taxes if my divorce is not yet Finalized?

This is important to know if you have not yet finalized your divorce and need to file your taxes. If you have a final divorce decree, a decree of separation, or an annulment, the IRS considers you to be unmarried. If you do not have any of these documents by December 31, the IRS will consider you married and expect you to file your taxes accordingly. If the following conditions are not met by December 31, you have two options for filing your taxes: you can file a combined return as usual, or you can submit separate returns using the married filing status separately. If you and your spouse are still on good terms, it is recommended that you file taxes jointly because it saves money on returns.

SDG Accounts in Miami can assist you with your tax issues and filing taxes after divorce. We will provide you with the best advice at very cheap pricing. Book a consultation now at the link below!

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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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