Linda M. Eicholz, CPA

Unlike employee wages, earnings from self-employment typically do not have taxes withheld. As a result, many self-employed people face IRS penalties for not paying enough estimated tax throughout the year.

If you have dependent children, then you likely know that you need to list them on your annual tax return. However, your children may also need to file their own returns if they earned income above certain thresholds.

One of the many confusing aspects of the federal tax code is that the seemingly basic word 'income' has multiple meanings for the IRS. Gross income includes all sources of income, adjusted gross income subtracts specific adjustments, and taxable income is the amount left after deductions and exemptions.

The IRS enforces a pay-as-you-go rule for federal taxes, meaning that taxpayers must make regular tax payments throughout the year. Most employees meet this requirement through payroll withholding, but many people make costly mistakes that can lead to penalties or underpayment.

Over the years, offshore bank accounts have played a central role in a broad spectrum of illegal activity, including money laundering, fraud, and tax evasion. People with foreign financial accounts must comply with stringent reporting requirements to avoid costly penalties.

By reducing your tax bill on a dollar-for-dollar basis, tax credits could provide a real boost to your household bottom line. However, getting the most out of tax credits requires understanding common myths, such as the belief that all credits are refundable or that they apply to any type of income.