By: Todd Schanel, CFA, CPA, CFP®
on March 11, 2020

Taxpayer-CPA-Accountant-Tax Return-Jupiter FLCongratulations on landing your first job! This means you will be joining fellow citizens in fulfilling your responsibilities as a taxpayer. Here in the U.S., we have a system of voluntary compliance, which means you are expected to voluntarily do the following:

  • Report all of your income to the IRS, including any payments you receive in cash.
  • Calculate the taxes you owe on your income.
  • Pay the taxes you owe.
  • File your tax returns on time.
Who has to file a tax return?

If your income is over the threshold for your filing status, you need to file a tax return. Here are the 2019 filing thresholds:

  • Single: $12,200
  • Married filing jointly: $24,400
  • Married filing separately: $5
  • Head of household: $18,350

However, if you are exclusively self-employed, the filing threshold is much lower. If you make more than $400 from self-employment, you’ll have to file a tax return and pay self-employment taxes.

Understanding your tax documents

Income that you receive as an employee is reported to the government on Form W-2, while income you receive as an independent contractor will be reported on Form 1099-NEC. Other types of income may be reported to you on Form 1099. You will get copies of these forms to help you prepare your tax return.

How do I report my income?

You (or you and your spouse, if you are filing together) will report your income to the IRS on Form 1040.   You’ll also report any deductions you have that reduce your taxable income. It is perfectly legal to avoid tax by taking all the deductions you’re entitled to.

If you live and work here in Florida, you will not need to file a state income tax because Florida does not have a state income tax. But if you live or work in a state that does have a state income tax, you will most likely need to file a state income tax return as well.

When is the deadline for filing?

Tax returns for the previous year are due on April 15. That means your 2019 return will be due on April 15, 2020. When April 15 falls on a weekend, tax returns will be due on the Monday after that weekend.

What if I can’t file on time?

You can get a six-month extension by filing Form 4868 by mail or online. This will give you until October 15 to file your return. However, an extension does not give you extra time to pay. If you think you will owe additional tax, you should make a payment when you file for your extension.

How do I pay my taxes?

If you are being paid as an employee, your employer should be withholding tax from your paychecks to cover your taxes. But if you are an independent contractor, you’ll need to make estimated tax payments. You may need to make estimated tax payments if you have other sources of income, such as investment or rental income. You make estimated tax payments by paying one-fourth of your estimated additional tax due on these dates:

  • April 15
  • June 15
  • September 15
  • January 15

If any of these dates fall on a weekend, the due date will be pushed to the Monday following that date. Payments can be made by check or electronically.

Please feel free to contact us if you have any questions.

Schanel & Associates is a CPA firm specializing in accounting, tax, business valuation and litigation support serving Palm Beach, Martin and St. Lucie Counties and beyond since 1993. Our CPAs and accounting professionals work with individuals, businesses, estates and trusts to provide everything you need under one roof. For more information, contact us today at 561-624-2118.
Todd Schanel has been a principal at Schanel & Associates since 2004, where he specializes in financial planning, tax planning and consulting services. He also serves as Founding Principal and Director of Investment Advisory Services at Core Wealth Management, our sister company, where he leads an accomplished professional team offering independent and objective financial advice to help clients achieve their financial goals. Todd has been a CFA Charterholder since 2005, and in 2007 he earned his Certified Financial Planner® designation and became a licensed CPA. In 2015, he earned the Certified Valuation Analyst (CVA) designation.