NEW YORK (AP) — It’s tax season in the U.S., and for many people, filing tax returns can be a daunting task that’s often left until the last minute. But if you want to avoid the stress of the looming deadline, start getting organized as soon as possible.
Whether you do your taxes yourself, go to a tax clinic or hire a professional, navigating the tax system can be complicated and stressful. Courtney Alev, a consumer financial advocate for Credit Karma, suggests you take it easy on yourself.
“Take a breath. Take some time, set out an hour, or go through it over the weekend. You’ll hopefully see that it’s a lot simpler than you think,” Alev said.
If you find the process too confusing, there are plenty of free resources to help you get through it.
Here are some things you need to know:
WHEN IS THE DEADLINE TO FILE TAXES?
Taxpayers must submit their returns from 2023 by April 15.
WHAT DO I NEED TO FILE MY TAX RETURN?
While the required documents might depend on your individual case, here is a general list of what everyone needs:
—Social Security number
—W-2 forms, if you are employed
—1099-G, if you are unemployed
—1099 forms, if you are self-employed
—Savings and investment records
—Any eligible deduction, such as educational expenses, medical bills, charitable donations, etc.
—Tax credits, such as child tax credit, retirement savings contributions credit, etc.
To find a more detailed document list, visit the IRS website.
Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, suggests gathering all of your documents in one place before you start your tax return and also having your documents from last year if your financial situation has drastically changed.
O’Saben also suggests taxpayers create an identity protection PIN number with the IRS to guard against identity theft. Once you create a number, the IRS will require it to file your tax return.
HOW DO I FILE MY TAXES?
You can either file your taxes online or on paper. However, there is a great time difference between the two options. Paper filing can take up to six months for the IRS to process, while electronic filing cuts it down to three weeks.
WHAT RESOURCES ARE OUT THERE?
The IRS is piloting a program where you can file your federal taxes online for free called Direct File. This program is now available in 12 states, which include California and New York, and for people who have very simple W-2s, an employee’s wage and tax statement.
Aside from Direct File, IRS offers free guided tax preparation that does the math for you. This is available for people who make $79,000 or less per year. If you have questions while working on your tax forms, the IRS also offers an interactive tax assistant tool that can provide answers based on your information.
Beyond the popular companies such as TurboTax and H&R Block, taxpayers can also hire licensed professionals, such as certified public accountants. The IRS offers a directory of tax preparers across the United States.
The IRS also funds two types of programs There are two programs that provide free tax assistance: VITA and the Tax Counseling for the Elderly program (TCE). People who make $64,000 or less per year, have disabilities, or are limited in English, are eligible for the VITA program. Those who are 60 or older are eligible for the TCE program. The IRS has a website. There is a website for finding organizations that host VITA and TCE clinics.
If you have a tax issue, there are clinics across the country that can help you solve these problems. There are clinics available nationwide. These tax clinics also offer assistance in other languages such as Spanish, Chinese, and Vietnamese.
HOW CAN I PREVENT ERRORS IN MY TAX RETURN?
Many people are scared of getting in trouble with the IRS if they make a mistake. Here’s how to avoid some common mistakes:
—Check your name on your Social Security card carefully.
When working with clients, O’Saben always asks them to bring their Social Security card to double-check their number and their legal name, which can change when people get married.
“You may have changed your name but you didn’t change it with Social Security,” O’Saben said. “If the Social Security number doesn’t match to the first four letters of the last name, the return will be rejected and that will delay processing.”
—Look for tax statements if you have chosen to stop receiving paper mail.
Many people prefer to stop receiving physical mail, but doing so can also mean you miss out on receiving your tax documents.
“If you didn’t receive anything in the mail, it doesn’t mean that there aren’t important tax documents out there that you need to be aware of and report accordingly,” O’Saben said.
—Ensure that you report all of your earnings.
If you had more than one job in 2023, you will need the W-2 forms from each job.
WHAT ABOUT THE CHILD TAX CREDIT?
Earlier this year, Congress announced a bipartisan agreement to improve the existing child tax credit. Currently, the tax credit is $2,000 per child, but only $1,600 is refundable. The proposed bill would gradually increase the maximum refundable child tax credit to $1,800 for 2023 tax returns, $1,900 for the following year, and $2,000 for 2025 tax returns. If this agreement is approved, around 16 million children in low-income families would benefit from this expansion of the child tax credit, according to the Center on Budget and Policy Priorities. Lawmakers are aiming to pass this bill as soon as possible. WHAT IF I MAKE AN ERROR?
Mistakes occur, and the IRS takes different actions depending on each situation. Generally, if you make a mistake or something is missing from your tax records, the IRS will audit you, Alev said. An audit means that the IRS will ask you for more documentation.
“In general, they are very understanding and willing to work with people. You’re not going to get arrested if you enter the wrong information,” Alev said.
WHAT IF I HAVEN’T FILED FOR YEARS?
It is possible to file taxes after the deadline and, if you were due a refund, you might still receive it. If you haven’t filed for years and you owe money to the IRS, you may face penalties, but the agency can help you arrange payment plans.
HOW CAN I AVOID FRAUDS?
You Tax season is a prime time for scams, said O’Saben. These scams can come through phone calls, texts, emails, and social media. The IRS does not use any of these methods to contact taxpayers. Tax preparers might run scams, so it's important to ask many questions. If a tax preparer promises a larger refund than in previous years, it could be a warning sign, O’Saben said.
If you can’t see what your tax preparer is doing, request a copy of the tax return and inquire about each entry.
HOW LONG SHOULD I KEEP COPIES OF MY TAX RETURNS? tax scamsIt’s a good idea to keep copies of your tax returns in case the IRS audits you for an old item. O’Saben suggests keeping tax return documents for up to seven years.
HOW DO I FILE A TAX EXTENSION?
If you don't have enough time to file your tax return, you can request an extension.
However, remember that the extension is only for filing your taxes, not for paying them. If you owe taxes, you should make an estimated payment before the deadline to avoid penalties and interest. If you expect a refund, you will still get it when you file your taxes.
Filing an extension will give you until Oct. 15 to file your taxes. You can apply for an extension through your preferred tax software or preparer, the IRS Free File tool, or by mail.
IRS Free File
tool or via mail. extensionWHAT HAPPENS IF YOU FILE TAXES LATE?
If you miss the tax deadline and don't request an extension, you could face several penalties. A late tax return will result in a failure-to-file penalty, which is 5% of the unpaid taxes for each month the return is late, according to the IRS. If you owe taxes and didn’t pay them before the deadline, you will receive a failure-to-pay penalty. Interest will also be charged on the owed taxes and penalties. If you are owed a refund, you will not receive a penalty and will get your tax return payment. Special circumstances that prevented timely filing or payment might allow you to reduce or eliminate your penalty. If the amount of taxes owed becomes too large, you can apply for a payment plan, which will enable you to pay over time.
NEW YORK (AP) — It’s tax season in the U.S., and for many people, filing tax returns can be a daunting task that’s often left until the last minute. But if you want to avoid the stress of the looming deadline, start getting organized as soon as possible. Whether you do your taxes yourself, go to a…
If you missed the tax deadline and you don’t file for an extension, there are several penalties that you might receive. If you missed the deadline you might receive a failure-to-file penalty. This penalty will be 5% of the unpaid taxes for each month the tax return is late, according to the IRS.
If you owe taxes and you didn’t pay them prior to the tax deadline, you will receive a failure-to-pay penalty. Interest will also be charged on both taxes and penalties owed. If you are due for a refund, you will not receive a penalty and you will receive your tax return payment. If you had special circumstances that meant you were unable to file or pay your taxes on time, you might be able to remove or reduce your penalty.
If the amount of taxes you owe becomes too large, you can apply for a payment plan. Payment plans will allow you to pay off over time.
