With no state taxes in Texas, it is one less thing to worry about when filing taxes. But, you might wonder if you need to file taxes or are exempt from taxes this year.
Some people mistakenly do not file taxes. So here are some of the reasons that people do not file taxes or file them incorrectly:
Failure to file
There are a few reasons people fail to file, such as these:
- Forget to file
- Unsure of the exceptions
- Live Abroad
To stay caught up on taxes in these situations, research the specific rules on the IRS website. For example, there is a minimum income you have to make to file taxes, or there are particular organization exemptions. Also, there are similar regulations for United States citizens living abroad to those living in the United States. Finally, neglecting the problem does not mean it will go away.
Typically, your employer will withhold taxes from your paycheck, but it might be the case that they do not withhold enough taxes. So, then it is unfortunately on you to pay the IRS the amount when you file your tax return. Also, if the underpayment is significant enough, you might be penalized.
Not paying estimated taxes
If you are self-employed, you must pay estimated or quarterly taxes. However, there is an exception; if you had no tax liability for the prior year, you do not need to make quarterly payments. But, you will be penalized if your quarterly payments do not equal at least 90% of this year’s taxes or 100% of last year’s taxes, whichever is less. Also, if you do not file, it will hurt your chances of claiming federal benefits during retirement.
Are you paying taxes this year?
Everyone is busy, so it is easy to put off filing taxes, which many people dread doing. But it is a necessary task, unless you are exempt, to avoid getting in trouble with the IRS.