Taxes: What You Really Need to Know

Taxes: What You Really Need to Know

The reality is that understanding taxes can be an empowering experience; virtually everyone earning money in the U.S. has some form of tax obligation. But how daunting is tax preparation, really?

Preparing your tax return may seem intimidating, but with the right guidance and tools, you can do it stress-free. Consider consulting with a tax professional—it’s the best thing you can do.

Deductions and credits can be your best friends when it comes to taxes because this is where you can reduce how much you owe or even get refunds. Deductions reduce the amount of income subject to tax, while credits directly reduce the amount of tax owed. Some of the most common deductions and credits include the standard deduction, educational credits, and more.

In the realm of taxes, there are special situations such as freelancers, expatriates, and changes in the law.

Freelancers or independent workers in the United States handle their taxes a bit differently than regular employees. They make quarterly tax payments, unlike employees whose taxes are withheld from each paycheck. Freelancers often make estimated tax payments to the IRS every quarter.

Business expense deductions allow freelancers to deduct many expenses related to their work, such as the cost of a computer, software, and a home office space.

Expatriates are U.S. citizens or permanent residents living outside the country. They must file taxes in the U.S., even if they live and earn money in another country.

Foreign income exclusion allows expatriates to qualify for excluding a certain amount of their foreign-earned income from their U.S. taxes to avoid double taxation, but there are limits and specific rules.

Credits for taxes paid in other countries allow individuals to take credits for taxes paid to other governments, which can reduce what they owe in the U.S.

Let’s not forget that tax laws in the U.S. can change due to new legislation or policies like tax reforms. Occasionally, the government may pass new laws that change tax rates, credits, deductions, and rules on how taxes are calculated.

It’s important to stay updated, especially for those with complex tax situations like freelancers or expatriates, to avoid errors or penalties. Tax planning and strategy are also crucial. Understanding how taxes work can help you make smart decisions throughout the year that can minimize what you owe and maximize potential refunds.

In conclusion, you can become a tax pro. With the right information and a positive attitude, managing your taxes can go from a dreaded task to a manageable part of your financial life.

If you need more information, contact us at (781) 289-4341, schedule an appointment with one of our specialists, and follow us on our social networks.


References: Home: Internal Revenue Service. Internal Revenue Service | An official website of the United States government. (n.d.).
Internal Revenue Service (IRS): Usagov. Internal Revenue Service (IRS) | USAGov. (n.d.). Taxes.
USAGov. (n.d.).

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