Tax Season is Here: Filing Tips
Tax season officially kicked off late last month and the
countdown to April 15, 2015 is on. The Internal Revenue Service (IRS) expects
to receive 150 million individual income tax returns this year. While few
people enjoy this process, it is far better to file your taxes than have the
IRS call on you—and do so with penalties. Listed below are tips to make filing
your taxes as painless as possible.
first step to filing your taxes is to gather the necessary forms, and you
should receive these in the mail by early February. This will include a W-2
from each workplace where you’ve received a salary as well as a variety of
other forms, which could include interest and earning statements. You’ll also
want to gather records of deductible expenses that you’ve, hopefully, been
saving throughout the year.
of the Free File Program
IRS offers the Free File program available at IRS.gov. This program opened for
taxpayers on January 16, and it provides the following two options:
offered by IRS’ commercial partners available to individuals and families with
incomes of less than $60,000. Fourteen brand-name software companies are
participating in this year’s program.
fillable forms, which are the electronic version of IRS paper forms, available
to taxpayers of all income levels. This option is helpful to those who are
comfortable completing their own returns.
Tax Refund Loans
Aren’t Worth It
many tax preparers offer tax refund loans or other immediate refund programs,
you won’t get your refund that much quicker. Plus, these providers skim a
percentage of your return off the top for the convenience of getting your
refund a few days sooner. The IRS expects to issue more than 90 percent of
refunds within 21 days. To ensure the expediency of your tax refund, it is
encouraged to electronically file your refund and choose direct deposit. The
IRS reports that more than three out of four refund recipients will go this
route. For comparison, paper returns will take a minimum of seven weeks for
refunds to be issued.
Money on the Table
often overlook deductions, which is the equivalent of giving away money. While
many people know about the child and dependent care credit that can be claimed
if you’ve paid a provider to care for a dependent while you’ve either worked or
looked for a job, listed below are several others:
contributions paid through payroll deductions when employees retain pay stubs
search expenses allow deductions for costs such as travel and resume printing.
income tax credit for families with lower incomes.
Affordable Care Act
Under the Affordable Care Act,
individuals and families will face fines of $95 per person and $47.50 per child
or 1 percent of income—whichever is higher—if they did not have health
insurance in 2014. The fine will increase each year. The good news is that the
majority of taxpayers will merely need to check a box to verify they had health
insurance in 2014.
Scam artists and unethical tax preparers
come out in droves during tax season. The IRS will never email you to ask for
confidential financial information so be aware this is a phishing scheme.
Additionally, beware of tax preparers who earn commission based on the size of
your refund. This is incentive to inaccurately fill out forms, which puts you
at risk with the IRS. When looking for a tax preparer, always ensure this
person guarantees to pay penalties resulting from filing errors.
If April 15 comes around and you’re
simply not prepared to submit your tax return, you can always file for an
extension. Particularly if you expect to receive a return, it is important to
be thorough in your documentation. If you need more time, the IRS will give you
six more months—until October 15—to finish filing if you complete the 4868 form
by April 15. That said, you will be required to pay any taxes owed by this date.
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