The ever-dreaded Tax Day is fast approaching, and some — well, many — haven’t even begun to think about filing their taxes yet. In 2016, statistical analysis website 538 ran the numbers, and the vast majority of tax filers do so the day they’re do. America sure didn’t learn a lot from high school, it seems. Regardless, doing taxes at the last minute leaves little wiggle room for questions, concerns, research, and more about how to file and what counts. So, we here at Kuettel Capital wanted to offer some FAQs about filing taxes to make it easier.
What happens if I file late?
Luckily, the IRS has a way to file for an extension, just like you did in your undergrad days. The only catch is that you have to file for an extension before April 15 as well so that the IRS isn’t looking for your late taxes. It’s simple and quick to file for one, so if you’re at all nervous that your paperwork won’t get done in time, get to work filling out that form ASAP. Otherwise, the IRS may come a-knocking.
What do I do about my side-hustles?
If you’re a working young adult, chances are, you have a main gig (formerly known as a day job) and a side hustle, which could include anything from selling beanies on Etsy to walking dogs to tutoring and more. If you’re side hustle sends you a W-2, treat it as you would any other job. Enter the necessary information and move along. You may also be able to write off certain personal expenses as business expenses. For example, if you use your phone for any part of your work, write it off. The same may apply for some of the mileage on your car and even internet access if you ever work from home. The IRS generally frowns on under-the-table or informal employment and imposes steep penalties on employers or employees who don’t report things like tips. However, as long as it’s a small amount of money, you’ll probably be okay if you don’t report it.
Do I have to file on my cryptocurrency?
As a matter of fact, you do. The IRS decided that, for the purposes of reporting income, cryptocurrency counts as property, not as legal tender. As such, you have to disclose how much money you made in the trading of bitcoin and other blockchain currencies. Since the trading of cryptocurrencies has taxable consequences, the IRS has decided that they’re indeed taxable.
What should I do with my return?
Many people splurge a little once they get their money back and treat themselves to a shopping spree or update to their homes. While you can splurge a little, the best idea is to save as much as you can. Put most of your windfall into either your savings account or invest it wisely via an app or with a trusted financial adviser. Especially for young people, getting in the habit of tucking away money will serve them well as they begin house-hunting and making big life decisions.