The tax deadline is April 18th. As we near the finish line of tax season, here are a few helpful tips to help you file your taxes on time.
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- Don’t worry about taking your taxes somewhere: You don’t need to worry about going out and taking your taxes to someone to get them done when you can easily and accurately file from the comfort of your own home. Plus, millions of taxpayers may be eligible for TurboTax Free Edition if they file a simple tax return (Form 1040 with no schedules): that includes W-2 income, limited interest, and dividend income reported on a 1099-INT or 1099-DIV, claiming the standard deduction, Earned Income Tax Credit, the Child Tax Credit, and student loan interest. If you have a simple tax return you may even be able to get help along the way or fully hand your taxes over to a TurboTax Live tax expert for free until March 31. With TurboTax Free Edition, new and returning users get free data transfer giving them up to a 50% head start while eliminating data entry, the ability to jump-start your taxes by snapping a photo of your W-2, free driver’s license barcode scan, free step-by-step guidance to help you claim the Earned Income Tax Credit and Child Tax Credit, and free audit guidance.
- Gather your forms in one place: Nothing is worse than not having a form when you need it. Grab all of those income documents: W-2s, 1099’s, and paperwork for tax-deductible expenses. This year, you especially want to make sure you have IRS letter 6419 that reports any advance Child Tax Credit payments you received and letter 6475 that reports the amount of stimulus you received since you need to enter the correct amounts to avoid processing delays and to claim any additional credits you’re eligible for. Tax forms that report student loan interest, education expenses for colleges, and mortgage interest will also be necessary if you’ve had any of those expenses. If you are self-employed, make sure you have your 1099-NEC or 1099-K forms. Also, remember if you are self-employed you may not necessarily receive a form 1099-NEC or 1099-K, but you still need to claim all of your income. Don’t forget, you can also claim your business expenses which will lower your taxable income.
- Pick a time and place: Pick a time and place that does not require you to be in a hurry. Rushing while doing your taxes can cause you to leave something out or enter information incorrectly. Make sure to verify dependents’ correct birth dates and social security numbers. This basic information is required to claim valuable tax deductions and credits such as Earned Income Tax Credit (EITC), Child Tax Credit (CTC), or the credit for other dependents. If you were eligible for the third stimulus payment but only received a partial or none at all, you may be able to claim a recovery rebate credit when you file your 2021 taxes. Recovery Rebate Credits can increase your tax refund and lower the amount you owe.
- E-file with Direct Deposit: Last tax season, more than 75% percent of taxpayers received a tax refund, and the average federal tax refund was about $2,766! The IRS states that it will issue nine out of 10 tax refunds within 21 days or less when you e-file with direct deposit if there are no issues with your tax return.
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- Frequently overlooked tax deductions: Several tax deductions are frequently overlooked and can lower your taxable income and you don’t need to itemize your deductions to claim them. Some of the frequently overlooked deductions include student loan interest deduction, teacher's educator deduction for school supplies purchased up to $250 per k-12 teacher, and deductible portion of your IRA contributions. Under the CARES Act, close to 90% of taxpayers that now claim the standard deduction instead of itemized deductions can now claim up to $300 in cash charitable donations made to a 501(c)(3) organization, so don’t forget your acknowledgments showing your cash donations even if you can’t itemize your deductions. For 2021, this amount is up to $600 per tax return for those filing married filing jointly and $300 for other filing statuses.
- Yes, you still may be able to itemize: Although TurboTax estimated and the IRS data confirmed that about 90% of taxpayers now take the standard deduction instead of itemizing due to tax reform, gathering a few additional receipts for tax-deductible expenses may push you over the standard deduction and lower your taxes. Review these items for a potential tax benefit:
- Previous state tax liability paid
- Charitable contributions – pro tip: TurboTax ItsDeductible will help you track and accurately value your donated items.
- Points paid to purchase a new home or refinance an existing home
- Get your tax refund: Even if you are below the IRS filing threshold ($12,550 single and $25,100 married filing jointly), you should still file a tax return especially if federal taxes were withheld and if you are eligible for a refundable tax credit like the Earned Income Tax Credit since you may have a tax refund waiting. The IRS reports about $1 billion in unclaimed refunds every year, and more recent data reveals the average unclaimed tax refund is close to $800.
- Tax savings for investors. If you are an investor and sold some losing stocks, don’t forget that capital losses on stock sales can be offset against capital gains, lowering your taxes. TurboTax Premier can help you accurately figure out your gains and losses and is the only major online tax preparer that supports importing up to 10,000 stock and up to 4,000 cryptocurrency transactions at once, directly from financial institutions, saving you time and ensuring accuracy. TurboTax Premier has partnered with hundreds of financial institutions and investment platforms to allow you to auto-import your investment info seamlessly when doing your taxes.
- You can talk to a tax expert from the comfort of home. If you have tax questions you can connect live via one-way video to a TurboTax Live tax expert with an average of 12 years of experience and get your tax questions answered from the comfort of home. TurboTax Live tax experts are available in Spanish and English, year-round and can even review your tax return. Or you can just hand it off to a dedicated tax expert to do your taxes from start to finish.
What are you waiting for? Start filing your taxes today, your refund is waiting! By going online to prepare your taxes, you can save time and money and can still talk to a tax expert if needed.