This Tuesday is everyone’s favorite holiday. Is it Flag Day? No. Is it Siblings Day? Nope, that was last week. O.K., I can’t contain my excitement any longer: it’s the deadline to file your taxes with the I.R.S. If you’ve already filed, then you’ve got me beat (I’m still deciding whether ramen noodle handouts qualify as income or not). If you’re waiting until the tax due date to submit your return, here are 11 questions you might be asking yourself and their enlightening answers, brought to you in part by the IRS and TurboTax.
How do I get started?
The million dollar (less applicable taxes) question! If you made $1,000 or more, use form 1040-ES to file your return and estimate what you owe. Once you’ve calculated your return, you can make payments using the IRS’ electronic payment system.
What’s my income?
If you earned income from wages, tips, a salary, interest, or a capital gains (among other sources), you will need to declare this as income. The total amount of earned income received in 2013 needs to be tabulated in the corresponding box on the 1040-ES. If you are an employee, you should have received one or more W2 forms from your employer which includes how much they paid you over the year. Likewise, if you're an independent contractor, you should have received a 1099 form(s).
How do I calculate what I owe?
Depending on the nature of your occupation, you may have taxes already withheld from your income, or you may need to estimate your tax payments (if you are self-employed, you will need to estimate). You can use the 1040-ES form to estimate how much you owe.
For estimating what you owe, check out this sleek I.R.S. video:
What can I deduct from my Adjusted Gross Income?
There are certain expenses you can deduct from your gross earned income to ensure you get most of your money back. For instance, you can deduct expenses related to searching for a new job within your field, travel, printing and mailing, the cost of placing ads, headhunter’s fees, telephone expenses, computer and others. The I.R.S. has a great video listing valid deductions here.
What if I can’t pay all my taxes?
Even if you feel you can’t cover the entire amount you owe the government, pay as much as you can before the tax due date window closes. This will reduce future interest payments you will need to pay on the outstanding sum. You can also apply for a bank loan to cover the balance: the interest rates a bank loan will incur are oftentimes less than those the IRS apply to your debt.
If you need help paying the rest of your taxes there are a few resources you can take advantage of, like the IRS’ Fresh Start program. If you’ve fallen on hard financial times, call the IRS at 1-800-829-1040, and a representative will be able to talk to you in more depth.
Can I claim an Earned Income Tax Credit?
One of the biggest blunders taxpayers will make is not reporting all applicable deductions and credits. To qualify for the Earned Income Tax Credit (E.I.T.C.), you must receive an earned income and an adjusted gross income within certain bounds, as well as meet certain stipulations. Your E.I.T.C. number will depend, then, on your marital status as well as the number of dependents you claim. The I.R.S. offers a service called the EITC Assistant that will tell you if you are eligible to receive this credit.
How do I account for my student loan interest payments?
If you took out a student loan to pay off qualified college expenses (tuition, fees, room and board, books, supplies), the interest payments you make on the loan can be deducted from your gross income. You can only deduct payments from your income made against the loan during the past year. The IRS has a quick and easy program that will help you calculate how much interest you can deduct from your income.
The maximum benefit you can receive is $2,500 – this is the most you can reduce your taxable income by after you pay your student loan interest. You, your spouse, or your dependent must have been enrolled at least half-time to apply, and your income must not have exceeded $75,000 if you’re single or $155,000 if you’re filing jointly.
How do I know if I need to amend my tax return?
You will need to file an amendment to your tax return if you: forgot to report additional tax forms (W-2 or 1099); received a corrected tax form (W-2C); you forgot to report income, or claim dependents credits, or deductions, or conversely claimed dependents, credits, or deductions you claimed that were not applicable.
Don’t file a tax return if your e-filed return is rejected, pending, or deemed by the IRS as containing mathematical errors. If it is rejected, incorporate the changes outlined; if pending wait until the return is accepted; or if math errors have been made, follow IRS instructions when correcting (though usually the IRS will make these simple changes for you).
Should I use tax preparation software?
Taxes can get confusing, and if your receipts, W2 and 1099 forms, and all other miscellaneous materials are mounting into a daunting pile, you’ll wish you had a software program to keep tabs on and parse all the information. The IRS offers a number of free and useful programs, and there are others that are very modestly priced especially with the use of a coupon. A program like TurboTax can help you maximize your returns so you get the most rebate, practically paying for itself.
How can I file for an extension?
So you’ve come terms with the fact you won’t finish in time for the tax due date, and will need to file for an extension to complete the rest of your return. Luckily, you can appeal for a free and automatic six-month extension. However, just because you’ve received an extension for filing does not mean you received a grace period within which you can pay your bill. Pay your tax bill, or however much of it you can, before the deadline to minimize fees and penalties.
What are some common errors people make on their tax returns?
Don’t hit send / lick that stamp just yet! Remember to first double check:
- All Social Security Numbers on the return for accuracy
- All names are spelt as they are on Social Security cards
- All your math to minimize errors
- Claimed credits and deductions to prevent over or under claiming
- Your bank account number if you requested your refund be sent by direct deposit
- Areas requiring a signature or a date have been filled appropriately