Tax FAQ's

Taxes & Accounting

FAQ's

This depends on several factors, including gross income, filing status, age, and whether you’re a dependent on someone else’s federal income tax return. In 2022, the filing threshold for a single taxpayer under the age of 65 was $12,400. For married couples filing jointly, it was $24,800 if both spouses were under the age of 65.

You will also need to file a tax return if you received at least $400 in self employment income or received untaxed tips.

In short, yes. Up to 50% of Social Security income is taxable for individuals with a total gross income (including Social Security) of at least $25,000, or couples filing jointly with a combined gross income of at least $32,000.

Up to 85% of Social Security income are taxable for individuals with a total gross income of $34,000 or higher, or couples with a combined gross income of $44,000 or higher.

While both can reduce the amount of tax you pay, deductions reduce the amount of income you pay taxes on, while credits are a dollar-for-dollar reduction in the amount of tax you owe.

With $50,000 of income and a $1,000 tax deduction, your taxable income would now be $49,000. By contrast, a $1,000 tax credit would reduce the actual amount of tax owed by $1,000. If you owed $1,000 in income tax, your tax liability would now be zero.

While dependent upon your situation, some deductions you can claim even if you don’t itemize are:

  • Contributions to individual retirement arrangements, including IRAs, SEP IRAs, Simple IRAs and solo 401(k)s. These contributions phase out with higher incomes.
  • 50% of self employment taxes
  • Tuition and fees for higher education up to $4,000
  • Health savings accounts contributed to with personal funds

Deductions you may be eligible to claim if you itemize are:

  • State and local taxes paid (SALT)
  • Medial expenses
  • Charitable contributions

Lastly, credits you may be eligible for include:

  • The earned income tax credit.
  • The child tax credit. $2,000 per qualifying child, with $1,400 being a refundable credit.
  • The child and dependent care tax credit. Up to $3,000 in expenses for the care of one qualifying person, with the maximum credit for two or more dependents being $6,000.
  • American Opportunity Credit. Provides a maximum credit of $2,500 for qualifying education expenses paid for eligible students. Only allowed for the first four years of post secondary education.
  • Lifetime learning credit. Allows a maximum credit of $2,000 per year for post secondary educational costs. The credit is 20% of qualifying expenses up to $10,000.

Email, call or text us today if you need to file an extension.

A dependent is defined as a person you are responsible for supporting.

Qualifying Child:

  • A qualifying child is a child under the age of 19, or under 24 if they are enrolled as a full time student. The child must live with you for over one half of the year, or qualify for an exception, and they cannot provide over one half of their own support. The child cannot file a joint tax return, except to claim a refund. A qualifying child must meet five tests in order to be claimed as a dependent.

1.) The relationship test. To meet this test, your child must be relayed to you; a son, daughter, adopted child, stepchild, foster child, brother, sister, half brother, half sister, stepbrother, stepsister, or a descendant of any of those relatives.

2.) The age test. The child must be under the age of 19 at the end of the tax year, and younger than you (or your spouse if filing a joint return).

  • Or, under the age of 24 at the end of the year, enrolled as a full time student for at least 5 months of the tax year, and younger than you (or your spouse if filing a joint return).
  • Or, any age if permanently and totally disabled at any time during the tax year.

3.) The residency test. The child must live with your for at least one half of the tax year, with the following exceptions;

  • Temporary absences for illness, education, business, vacation, military service or detention in a juvenile facility.
  • The birth or death of a child during the tax year.
  • Kidnapped children.
  • Children if divorced or separated parents.

4.) The support test. Your child cannot provide one half of their own support for the tax year. Foster care payments and scholarships are notconsidered support for this test.

5.) The joint return test. You’re child cannot file a joint tax return, unless they filed a joint return only to claim a refund. I’m this case, the child must meet all the other requirements to be considered a qualifying child.

Qualifying Relative:

A qualifying relative must share a specific family relationship with you or live with you the entire tax year. You must provide over one half of their support, they must have a small amount of income (if any), and they cannot be claimed as a dependent by anyone else.

Even if you are unable to financially meet your tax liability, you must still file a tax return. We will be glad to work with the IRS to develop a payment plan that is best suited for your current budget.

At Frigate Financial, we never charge for consultation or questions. We are a Financial Service Firm that prioritizes your financial health from beginning to end, at every stage. So please never hesitate in contacting me directly for any specific, or related, questions or concerns—I am always available for direct contact through your preferred method; so call, text, or email me now, and whenever you require insight, or advice, in the future.