7 Answers to Frequently Asked Income Tax Questions

Taxes are one of the most confusing aspects of personal finances. The IRS regulations are complicated, and many tax rules change from year to year. Even if you have a relatively simple financial situation or use a good tax software program such as Turbo Tax, taxes can still trip you up.  

In this episode, I’ll cover answers to seven common questions about income tax. They’ll help you comply with the law, minimize what you owe, understand tax deductions and credits, pay household workers or nannies properly, and avoid trouble if you can’t pay Uncle Sam on time.  

7 Answers to Frequently Asked Income Tax Questions

1. Who must pay income tax? 
2. When should you itemize income tax deductions?
3. Who can claim the home mortgage interest tax deduction? 
4. If my raise puts me in a higher tax bracket will I get less pay? 
5. What’s the difference between tax deductions and credits? 
6. Do I have to pay taxes for a household worker or nanny? 
7. What if I can’t afford to pay my taxes?

Here are the answers to some common income tax conundrums.

Question 1: Who must pay income tax?

Michelle B. from Orlando, Florida, says, “Hi, Laura. I’m a longtime podcast listener and have purchased your books on Audible. I’ve got a burning question and think you’re the perfect person to trust to answer it correctly. Is it true that filing an income tax return is optional or not required if you don’t have any taxable income?”

Thanks for your kind words, Michelle! It’s true that not everyone must file an income tax return. The requirements depend on how much you earn, your filing status, and age.

For 2018, if you’re a single taxpayer, you must pay taxes if your gross income exceeds the standard deduction, which is $12,000. If you’re married and file jointly, the limit is double that, or $24,000. If you’re over age 65, these income thresholds go up slightly.

Gross income is all income you receive that isn’t exempt from tax. It typically includes wages, retirement benefits, and investments. It includes all sources of income, including any earnings you might have from outside of...

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