If you are making around $40,000 or below, Local Tax has advice to make sure you don’t pass free money, know how to get out of penalties with the IRS, and pay less in taxes.
This won’t be generic advise that you get anywhere and waste your time.
Here are tactics and savings to keep your money.
- Call the IRS and request to eliminate penalties.
- If you have not filed your taxes; file your taxes.
- Check your filing status so you can have more benefits.
- File taxes even if you know that you will owe taxes.
Call or write to the IRS
If you received a letter from the IRS stating that you need to pay a specific amount .
The truth is you can be forgiven. With the” first time penalty waiver.” You can even write an informal letter that pertains to the specific letter that you received.
“Please remove my penalties because I have reasonable cause.” you’ll need to cite your reasonable cause.
You can have the following reasons:
- Medical health issues
- Mental health decline
- Sudden death in the family
- Sudden loss of income to pay the dues
Check your filing status
If you are supporting someone, a child, parent, grandparents, brother or sister that has mental impairment and can’t lookout for themselves. You can file as a head of household.
In this manner, you can qualify for a bigger standard deduction and lower tax rates.
File your taxes even if you’ll owe taxes
If its April 15th ( for 2020 it’s July 15th because of the COVID-19 pandemic) and you know that you’ll owe something, still file your taxes.
You’ll options anyway than dealing with penalties and interest that will be given to you by the IRS.
Here’s your options:
1. File an extension
2. Structure a payment plan
If you don’t file you’ll be penalized to 5% a month. That is highway robbery!
Exempt yourself from that penalty and file your taxes.
Take advantage of the earned income tax credit
You’ll qualify for an earned income tax credit if you’re making $15,000 to $25,000 take advantage of this tax credit.
The EITC is designed for low to medium income families. This is one of the few credits that is refundable. What that means is, even if you paid $0 in taxes you can still get money back from the federal government.
Basic EITC qualifications:
1. You must have earned income. W-2 employment or self-employed.
2. You can’t file returns as married filing separately.
Filing income is very important to consider too. See the table below.
| Filing Status | 0 children | 1 child | 2 children | 3 children |
| Single, Head of household or widowed | $15, 820 | $41,756 | $47,440 | $50,594 |
| Married filling jointly | $21,710 | $47,646 | $53,330 | $56,844 |
For a few that has investment income, the cut-off limit to qualify is $3,650 or less.
Credits can be as large as $6,660 with three or more children to $538 with no qualifying children. Looking at these numbers, the EITC is designed to help low income families that have children.
If you are filing single there are few additional qualifications to you:
1. You need to be living in the U.S. for at least six months of the year. Digital nomads won’t qualify if you lived more time outside the U.S.
2. You cannot be a dependent on someone else tax return.
3. You need to be 25 years old to 65 years old to qualify.
If you have questions or you feel that you qualify for this credit, give us a call, email, or message us on our FB page. Also, the IRS has the EITC assistant to know more about your eligibility.
Take advantage of these tactics and save money on taxes
Most of our reaction when we get a letter from the IRS is fear. Don’t give in to fear, try these tactics first and take advantage of the EITC if you earn $40,000 or less.
Seasoned tax professionals are confident that they can coach you to take these steps and save your money for your family.
Call, email or message us if you feel that you need help to qualify for these credits or you received a letter from the IRS.
Subscribe to our weekly newsletter and be in the know.
