Tax Planning & Preparation

Milton Law Group > Specialties & Services > Tax Planning & Preparation

Tax Planning & Preparation

Tax Return FAQs

By developing a deep understanding of your personal, professional, and financial lives, Milton Law Group tax professionals provide our clients with comprehensive year-round tax planning advice and year-end tax return preparation services.

Our team specializes in preparing income tax returns for individuals, families, self-employed taxpayers, and small businesses.

Tax preparation clients include W-2 wage earners, independent contractors who receive 1099-MISC income, single-member LLCs (treated as a sole proprietorship), trusts, estates, partnerships, and S-Corporations.

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Tax Return FAQs

  • How long does it take for a tax refund to arrive? 
    • Per the IRS, most refunds are issued within 21 days of filing your return, if you file electronically, and may take up to six weeks if you paper file. You can check the status of your refund after 24 hours of filing (if e-filed) or four weeks (if paper filed) by using the Where’s My Refund? Tool on the IRS website, which can be found here. 
    • Additionally, selecting direct deposit as refund type will ensure that you receive your refund faster. 
  • Am I required to file a tax return? 
    • That depends on your gross income, filing status, age, and whether you are claimed as a dependent on someone else’s return. 
  • Should I take standard deductions or itemize? 
    • Since deductions reduce your taxable income, you will want to take the greater of either the standard deduction or your total itemized deductions. Compare your itemized deductions with the standard deductions amounts. 
    • Itemized deductions fall into five different categories and are subject to income limitations:
      • Medical and Dental expenses (must be greater than 7.5% of AGI) 
      • State and Local Taxes you paid (limited to $10,000) 
      • Interest you paid  
      • Charitable contributions 
      • Casualty and theft losses 
  • What are common red flags for tax audits? 
    • High income earners and self-employed business owners are more susceptible to being chosen by the IRS for an audit.  
    • Taking large deductions 
    • Failing to report all income, including cryptocurrency or 1099s from side jobs. 
    • If you are audited, it is imperative to keep adequate tax records providing evidence to back up all income received and all deductions taken. 
  • How do I file an extension? 
    • Taxpayers are entitled to an automatic 6-month extension. All that is required is Form 4868, which must be filed before the filing deadline. It is important to note that this 6-month extension applies only to filing taxes and does not extend your time to pay taxes. Getting an extension avoids the failure to file penalty, but it does not avoid the failure to pay penalty. 
    • If you need an extension to pay, you must file Form 1127 – the Application for Extension of Time for Payment of Tax Due to Undue Hardship 
  • Who can be claimed a dependent? 
    • Dependents include qualifying children, relatives, and individuals whom you provide their support. You can determine if someone qualifies as a dependent by looking at Table 5 in IRS Publication 501. 
    • The test for qualifying child is: 
      • Child must be your son, daughter, stepchild, foster child, brother, sister, half-brother, half-sister, stepbrother, stepsister, or a descendant of any. 
      • Child must be: (a) under the age of 19 at year end and younger than you or (b) under the age of 24 at year end, a student, and younger than you, or (c) any age and permanently disabled. 
      • You must have provided more than half of the child’s support during the year 
      • The child must not be filing a joint return (unless joint return is solely to claim refund of income tax withheld or estimated tax paid). 
    • The test for qualifying relative is: 
      • The person cannot be a qualifying child of you or any other taxpayer. 
      • The person must (a) be related to you in a way or (b) must live with you all year 
      • The person’s gross income must be less than $4,200. 
      • You must provide more than half the person’s support for the year. 
  • What is the difference between a tax credita tax deduction, and a tax exemption? 
    • A tax credit reduces the amount of actual tax owed, whereas both tax deduction and exemptions reduce the amount of taxable income.  
    • Exemptionaccount for your filing status and the number of dependents you claim. Deductions are expenses incurred throughout the year and are itemized on Schedule A.  
    • Common tax credits are child tax credit, earned income tax credit, foreign tax credit, residential energy credit, and more. You should consult with a tax lawyer to see if you qualify for any credits to reduce your tax owed. 
  • What should I do if I am a freelancer with no tax withholding? 
    • You should pay quarterly estimated payments to the IRS to avoid interest and penalties upon filing your tax return.  
  • How long should I keep tax documents? 
    • The standard is to keep tax documents for three years. In the event that you are audited, you will want to present the IRS with the prior three years tax documents. 
  • Can I deduct mortgage interest expense? 
    • If you itemize your deductions, you can deduct the mortgage interest paid on the first $750,000 of your mortgage taken out after December 15, 2017. 
    • If your loan started before December 16, 2017, you can deduct interest on the first $1 million of mortgage debt. 
    • Additionally, you can deduct interest on home equity loans or lines of credit only if the debt was used to “build, buy, or substantially improve” the home secured by the loan.  
  • Do I have to pay tax on alimony received? Can I deduct alimony paid? 
    • If your divorce agreement was finalized before the end of the year, then the spouse paying alimony is able to deduct the alimony payments and the recipient spouse includes the income on their return. 
    • If your divorce was finalized in the current tax year, then alimony payments are neither deductible for the payer or includable on the recipients return.  

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