Tax Topics

Individual Tax

Paying taxes is a responsibility of all who live and work in the USA. It is important to note that the tax system is a "pay as you go" system. That is at least quarterly you must send tax money to the IRS. For people working for a company, this happens "automatically" because your company takes care of that by withholding from your paycheck and paying the taxes as required. For self employed (gig workers) or those that have significant investment income, it is the responsibility of the tax payer to pay quarterly. This applies to federal, state and local taxes. These payments are sent as "estimated" taxes. These payments are due on the fifteenth of April, July, October and January.

Electronic Filing is an important consideration. Federal, State and most Local taxing agencies have websites where individuals and businesses can file their taxes and make payments or get refunds. When getting a refund or making a payment, it is best to use electronic banking. Doing electronic filing is the most accurate and the fastest way to handle taxes. In rare cases a paper filing is required or a supplemental paper form or documentation is needed.

For Tax Payers with children there are tax credits that can lower your payment or create refunds even if no taxes are owed. These credits are the Child Tax Credit - CTC and the Earned Income Credit - EIC. Since the child tax credit is $2000 per child and the EIC is several thousands of dollars, it is important for you to claim this credit if you are eligible.

It is also important to accurately report income from asset trades (i.e. stocks or other assets). You need to know the dates of acquisition and sale and the amount you paid (basis) and the amount you received from the sale to determine the profit or loss. These days brokerages will provide that data to you but if you have other assests you traded without another agency, you need to keep records of the transactions. This also applies to crypto currency transactions. There are substantial tax implications for trades occurring less than one year and more than one year.

For people in states like Ohio in addition to Federal and State tax forms the taxpayer must pay taxes to cities which requires a third level of expertise. Because of credit from one city to another (e.g., the work city to the residence city) the filing can be complex.

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