Tax season is here again, and for many, it comes with stress, confusion, and uncertainty. Whether you’re filing for the first time or a seasoned taxpayer, understanding key aspects of the tax process can save you time, money, and frustration. Edward Sumaila, a tax expert and PhD candidate, shares valuable insights to help taxpayers make informed decisions. As the CEO of Alltypes Insurance LLC and an authorized IRS e-file provider, Sumaila has helped countless individuals and businesses navigate the complexities of tax filing. Here are five crucial things you should know before filing your taxes this year.
1. Tax Credits vs. Tax Refunds: Don’t Get Confused
One of the biggest misunderstandings in tax filing is mistaking tax credits for tax refunds. Many people assume that qualifying for a tax credit means they will receive a large refund, but that’s not always the case.
Tax Credits reduce the amount of tax you owe. Some credits, like the Child Tax Credit (CTC) or Earned Income Tax Credit (EITC), are partially refundable, meaning if your credit exceeds your tax liability, you may receive a refund.
Tax Refunds occur when you have overpaid taxes throughout the year via paycheck withholdings or estimated tax payments. If your withholdings and refundable credits exceed what you owe, you get a refund.
Key takeaway: Just because you qualify for a credit doesn’t mean you’ll get a refund—it all depends on how much tax was already withheld from your paycheck.
2. Choosing the Right Filing Status Can Make a Big Difference
Your filing status determines your tax rates, standard deductions, and eligibility for tax credits. Yet, many taxpayers file under the wrong status, costing them money.
The IRS recognizes five main filing statuses:
Single: Unmarried individuals with no dependents.
Head of Household (HOH): Unmarried individuals supporting a dependent; offers better tax rates and deductions.
Married Filing Jointly (MFJ): The most beneficial option for married couples, maximizing deductions and credits.
Married Filing Separately (MFS): Often results in fewer benefits and disqualifies taxpayers from key credits like the EITC.
Qualifying Surviving Spouse: Allows widows/widowers to file as MFJ for a period of time.
Key takeaway: Filing under the wrong status can cost you thousands in missed deductions and credits.
3. Small Business Owners Have Tax Elections—Make the Right Choice
If you’re a small business owner, your tax liability depends largely on how your business is structured. Many entrepreneurs miss out on tax-saving opportunities simply because they don’t understand their options.
By default, sole proprietors and single-member LLCs report income on their personal tax returns. However, business owners can elect to be taxed as an S Corporation (S Corp) or C Corporation (C Corp) for potential tax advantages.
Key takeaway: The structure you choose affects your tax burden and long-term financial planning. Consulting a tax expert can help you optimize your tax strategy.
4. Not All Tax Preparers Are Qualified—Verify Before You File
Every year, taxpayers fall victim to errors, fraud, and misinformation because they trust unqualified tax preparers. Many assume that all tax preparers are certified, but that’s far from the truth.
To avoid mistakes and penalties, always verify your tax preparer’s credentials. The IRS provides a Directory of Federal Tax Return Preparers where you can confirm a preparer’s qualifications.
Key takeaway: Work with trusted professionals like Edward Sumaila of Alltypes Insurance LLC, an IRS-authorized e-file provider, to ensure accuracy and compliance.
5. Don’t Compare Your Tax Refund to Others—Every Situation is Different
It’s common to hear people comparing their tax refunds with friends and family, but no two taxpayers are alike. Refund amounts vary due to factors like:
Form W-4 withholdings (how much tax is taken out of your paycheck).
Deductions and credits based on family circumstances.
Filing status and income levels.
Two individuals with the same salary can have completely different refunds based on their withholdings, dependents, and tax credits.
Key takeaway: Instead of comparing refunds, focus on optimizing your tax strategy for your unique financial situation.
Take the Stress Out of Tax Filing—Work with an Expert
Filing taxes doesn’t have to be a nightmare. By understanding tax credits, selecting the right filing status, structuring your business correctly, verifying your tax preparer, and managing your refund expectations, you can avoid common mistakes and maximize your financial benefits.
For expert tax assistance, Edward Sumaila and his team at Alltypes Insurance LLC are ready to help you navigate tax season with confidence. Reach out today and take the stress out of filing your taxes!
Edward Sumaila (PhD Candidate) Alltypes Insurance LLC – Authorized IRS e-file Provider.
704 Polo Dr. N, Columbus, OH 43229
614-316-8407
