As you dream of warmer temperatures, don't forget to mark Tax Day on your spring calendar. Tax season is underway, and it's an excellent time to make sure you have all your paperwork in order.
The official tax season began on January 28 and it runs through April 15 each year. The two and a half months leading up to the tax deadline provides ample time to collect and prep financial documents for tax returns.
Taking the time to prepare for the tax deadline properly can save you money and help you avoid potential problems with the Internal Revenue Service (IRS).
What tax forms do I need to file taxes?
The first thing you need to do when tax season starts is to gather your paperwork. If you haven't already, start a folder where you can collect income statements, receipts, and information about any deductions you plan to take.
Some of the most common forms you may need are:
W2: If you work with an employer, you’ll receive a W2 sometime in January or early February. The W2 is a printout of all your financial information for the last year. The W2 includes your total earned income, taxes paid, and any other deductions (like health insurance and union dues).
1099: There are several types of 1099 forms. These documents report alternative forms of income. The 1099-MISC reports earnings from work as a freelancer or independent contractor. You might need to file a 1099-K if you earned interest on an investment and a 1099-DIV for earned dividends on investment transactions.
1098: Form 1098 helps you when you want to take deductions on your taxes like student loan interest, medical expenses and charitable donations. Teachers can use this form to deduct classroom expenses.
1040: Form 1040 is the primary tax sheet. The IRS uses this form to gather taxable income for the previous year. The form also helps individuals, and the IRS, determine how much, if any, taxes you owe. Every American citizen who meets income filing requirements must submit their 1040 by April 15.
Take time to get the correct information gathered, so you reduce your risk of an IRS audit.
Where can I file my taxes?
United States law requires U.S. citizens and resident aliens to file taxes each year, with some exceptions. You can use this tool on the IRS website to determine whether you’re required to file. If you make less than $12,000 per year as a single adult or if you make less than $24,000 as a married couple filing jointly, you’ll likely get a pass.
There are a few ways to file taxes.
You can manually fill out a paper form. Check libraries and post offices for paper copies; you may also print a copy from the IRS website. Check your state website for information about where to send your tax forms.
You can also file your taxes online. Try a professional tax preparation website like TurboTax, QuickBooks, and H&R Block. Alternatively, you could take your financial documentation to an expert (many have brick and mortar offices you can visit) and have them file your taxes for you.
What do I need to know about taxes this year?
Congress didn't pass many new laws that will affect your taxes this year, but there are some things to note.
If you were a victim of a hurricane, wildfire or flood, you might be able to get tax breaks and waivers for early withdrawals on your retirement funds.
Another important note: The Tax Cuts and Job Act of 2017 reduced the tax penalty for not having health insurance to $0. And, if you paid for your student’s college tuition, you could qualify for up to $4,000 in deductions.
There's one other item to be cognizant of. Believe it or not, there are scammers out there who want to file your taxes. If you’re getting a refund, they'll file taxes in your name and take your money. The easiest way to protect yourself is to file taxes as early as possible. Other tips: Ignore any calls from the IRS (they'll send you a letter if there are issues with your taxes), shred personal documents, and never sign a blank tax return form.
The IRS takes deadlines seriously. If you miss the deadline, you could face a failure to file penalty. If you don't pay your tax bill by April 15, you could be on the hook for a failure-to-pay penalty. According to the IRS, the failure-to-file penalty is usually more expensive than the failure-to-pay penalty, so you should file for an extension even if you know you cannot make your tax payment on time.
If you’re unable to file your taxes by the April 15 deadline, you can apply for an extension. The extension gives you until October to submit your tax information. This extension does not apply to taxes owed.