Framingham Tax Preparation Lawyer

What is a Form 1040?

Form 1040 is a document that applies to all working Americans. It’s used for federal taxes to determine the amount of taxable income the filer earned.

The form consists of two sections:

• Income where you report your total earnings from the calendar year
• Deductions that can be subtracted from the amount you owe

A 1040 is distinct from your W-2, which reports your wages. Form 1040 accounts for your gross income, which includes other avenues of earning money such as investment returns.

What Counts as a Deduction?

Deductions can be a complicated concept to grasp for new and even experienced filers.

Deductions allow you to lessen the amount of your income that is taxable. Common deductions include:

• Home office expenses
• Educational expenses, including student loan interest
• Medical expenses
• Individual Retirement Arrangements

Our tax preparation attorney will help you evaluate your annual expenses and determine if any of it qualifies as a deductible expense.

Types of Tax Credits

Tax credits lessen the amount of taxes a filer must pay through a different approach. Whereas deductions lessen the amount of a taxpayer’s income if taxable, tax credits subtract from the actual amount of taxes owed dollar-for-dollar.

There are two types of tax credits:

• Nonrefundable tax credit, which applies to your taxes up to the amount you owe.
• Refundable tax credit, which applies to the amount you owe and returns the excess money to the taxpayer.

This is to say that if a taxpayer owed $100 but got a tax credit for $200, they would either simply have their owed amount become zero (if the credit was nonrefundable) or receive a check for $100 (if the credit was refundable).

Some common types of tax credits that you may qualify for are:

• Earned Income Tax Credit
• Lifetime Learning Credit
• Residential Energy Efficient Property Credit
• Child and Dependent Care Credit
• Credit for the Elderly or Disabled

Our Framingham tax preparation attorney will help you determine if you’re eligible for tax credits, and if so, which ones. We are committed to helping you get the most return while subjecting yourself to the least risk.