IRS Free File program open for taxpayers to get a jump start on tax season

5 Benefits of Filing Your Taxes Early

IRS Free File program open for taxpayers to get a jump start on tax season

Whether it’s scrambling to finish that college term paper the night before it’s due or running around the mall looking for Aunt Carol’s present on Christmas Eve, we’ve all been guilty of procrastinating important tasks at some point.   

But there’s one thing we love putting off until the last minute more than anything else: Paying our taxes.

During the 2019 tax season, nearly 34 million taxpayers waited until the week before or the week of Tax Day to file their tax returns. That’s about the same number of tax returns filed in the entire month of March.1 No wonder we’re all stressed during tax season!  

But with over 70% of taxpayers receiving an income tax refund each year of nearly $2,800 on average, we can’t think of a good reason you’d want to delay filing your taxes.2

And that’s not the only benefit of early filing! Here are a few more reasons to get your act together early this tax season.

1. Early filers eliminate tax deadline stress

According to a recent TaxSlayer survey, a majority of taxpayers (52%) are stressed over filing their taxes.3 No shocker there! Any time you face an unpleasant task, it’s best to get it the way as soon as possible. Income taxes are no different. You have to fill out the forms and you have to file them, so just grit your teeth and get it over with.

Taxes shouldn't be this complicated. Let us help.

Give yourself a fake deadline—well ahead of the actual Tax Day deadline—to get your taxes taken care of. Once your return is filed, give yourself a small reward for being so efficient and responsible. Go to the movies. Or have a dance party in your living room. You’ve earned it! Then relax while everyone else stresses out about getting their taxes done on time.

 Once your return is filed, give yourself a small reward for being so efficient and responsible.

2. Early filers average larger refunds

Now listen, a tax refund is not free money. Getting a large refund from the IRS just means you’ve been lending Uncle Sam your money (without interest) all year long—he’s just returning what’s already yours!

If you get a refund that’s more than a few hundred dollars, you probably need to work with a tax pro and your HR department to adjust your withholdings on your W-2 form. Watching those larger paychecks hit your bank account will make you feel you got a raise!

That being said, if the government does owe you money this year, you want to make sure you’re getting every dollar that’s rightfully yours—and filing early can help you do that. IRS data shows that taxpayers who file by late February get significantly larger refunds than those who file later—around $400 on average.4,5

Obviously, if you know you’re getting a refund, you’re more ly to file sooner, and that could be part of the reason early filers enjoy larger refunds.

But another reason is that the sooner you start on your taxes, the more opportunity you have to make sure you’re claiming all the tax deductions and tax credits you’re eligible for, which takes more time and documentation than claiming the standard deduction.

3. Early filers can protect their refunds from identity thieves

There you are, just wrapping up your tax return and about to file it in . . . but it’s rejected. That’s because a tax return using your Social Security number has already been filed, and your heart sinks into your stomach as you realize you’re now a victim of tax refund fraud.

And it happens more often than you think. According to the Government Accountability Office (GAO), the IRS estimated that online tax fraudsters tried to steal at least $12.2 billion through identity theft tax refund fraud in 2016. And while the IRS was able to thwart most of those robbery attempts, $1.6 billion still ended up in the hands of these thieves.6  

Filing early may not completely eliminate the threat of identity theft, but it can protect your refund. If thieves file a return using your Social Security number before you do, the IRS will kick out your return since their records show you’ve already been paid. It can take months to clear up the mess with the IRS and finally receive your refund.

Filing early may not completely eliminate the threat of identity theft, but it can protect your refund.

4. Early filers with a tax bill have time to make a plan

When you’re facing an income tax bill instead of a refund, it’s natural to put off filing as long as possible. But if you go ahead and fill out your tax forms and file them, you’ll know exactly how much you have to pay—and you won’t have to pay in full until Tax Day.

The more time you have to come up with the money, the less ly you are to bust your budget or drain your emergency fund. So, don’t spend the first part of the year with your head in the sand. Get the facts about what you owe, make your plan, and get that tax bill the way.

You can save time and reduce hassle by gathering the right paperwork the first time around. Not sure what you’ll need to have in hand to file your taxes? Download your free tax preparation checklist.

5. Early filers face less competition for access to their tax professional

You may have found out the hard way that it’s tough to get on a good tax pro’s schedule during crunch time. In fact, if you need a pro and haven’t set an appointment by at least four weeks out from Tax Day, you may have to file an extension.

On top of that, some tax pros will charge more to complete your taxes as the filing deadline approaches. The best way to avoid all that hassle is to get an appointment with your advisor as soon as possible.

Now, if you have a relatively simple tax return and want to try filing yoru taxes on your own, check out RamseySmartTax. If your taxes are more complicated, however, a pro may be your best bet.

Don’t have a tax pro or want to work with a new one this year? We can put you in touch with a tax advisor Dave recommends in your area today!

Источник: https://www.daveramsey.com/blog/benefits-of-filing-taxes-early

Steps to Take Now to Get a Jump on Your Taxes

IRS Free File program open for taxpayers to get a jump start on tax season

Tax planning is for everyone. Get ready today to file your federal income tax return.

Steps you can take now to make tax filing easier in 2021

Viewing your online account allows you to access the latest information available about your federal tax account through a secure and convenient tool on IRS.gov.

View your account information to see information from your most recently filed tax return.

Two important reasons to have an account now are:

  • Individuals with an account on IRS.gov/account can view the amounts of the Economic Impact Payments they received.
  • Some people will need the amount of their adjusted gross income from 2019 if they use different software to file their tax returns for 2020.

If you have questions about how to create an account or how to reset your username or password, see Secure Access: How to Register for Certain Online Self-Help Tools.

Have your records organized to make preparing a tax return easier. It may also help you discover potentially overlooked deductions or credits.

Include in your tax records:

  • Forms W-2 from employers
  • Forms 1099 from banks and other payers
  • Other income documents and records of virtual currency transactions.
  • Form 1095-A, Health Insurance Marketplace Statement, if you purchased Marketplace coverage
  • Notice 1444, Your Economic Tax Payment, if you received an Economic Impact Payment and think you qualify for the Recovery Rebate Credit

Notify the IRS if your address changes and notify the Social Security Administration of a legal name change.

Remember, most income is taxable. This includes:

Ensure your Individual Tax Identification Number (ITIN) hasn’t  expired before you file a tax return in 2021.

If you need to file a tax return in 2020, IRS recommends you submit a Form W-7, Application for IRS Individual Taxpayer Identification Number, or Formulario W-7 (SP), Solicitud de Número del Identificación Personal del Contribuyente del Servicio de Impuestos Internos, now to renew your ITIN.

As a reminder, ITINs with middle digits 70, 71, 72, 73, 74, 75, 76, 77, 78, 79, 80, 81, 82, 83, 84, 85, 86, or 87 that expired in 2016, 2017,  2018, or 2019 can also be renewed.

Use the Tax Withholding Estimator to help you determine  the right amount of tax to have withheld from your paycheck. This tool on IRS.gov will help determine if you need to adjust your withholding and submit a new Form W-4 to your employer. 

Consider estimated tax payments. If you receive a substantial amount of non-wage income self-employment income, investment income, taxable Social Security benefits and in some instances, pension and annuity income you should make quarterly estimated tax payments, with the last payment for 2020 due on Jan. 15, 2021. Payment options can be found at IRS.gov/payments.

 What’s new and what to consider when you file in 2021

If you received a federal tax refund, you may have been paid interest. Interest payments are taxable and must be reported on your 2020 federal income tax return. In January 2021, the IRS will send a Form 1099-INT to anyone who receives interest totaling at least $10.

Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer.

For example, the IRS, along with its partners in the tax industry, continue to strengthen security reviews to help protect against identity theft and refund fraud.

Additionally, refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) can’t be issued before mid-February. The law requires the IRS to hold the entire refund − even the portion not associated with EITC or ACTC.

This law change, which took effect in 2017, helps ensure that taxpayers receive the refund they're due by giving the IRS more time to detect and prevent fraud.

Social distancing: Stay home and stay safe with IRS online tools

Make your first stop IRS.gov where you’ll find online tools to help you get the information you need.  The tools are easy-to-use and available 24 hours a day. Millions of people use them to help file and pay taxes, find information about their accounts and get answers to tax questions.

Get the help you need when you’re ready to file with these online tools:

Use IRS Free File  

Beginning in January 2021, almost everyone can file electronically for free on IRS.gov or with the IRS2Go app. The IRS Free File program, available only through IRS.

gov, offers brand-name tax preparation software packages to use at no cost. The software does all the work of finding deductions, credits and exemptions for you. It‘s free for those who earned $72,000 or less in 2020.

Some of the Free File packages also offer free state tax return preparation.

If you’re comfortable preparing your own taxes, you can use Free File Fillable Forms, regardless of your income, to file your tax returns either by mail or online.

Use the VITA Locator Tool

The IRS's Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs offer free basic tax return preparation to qualified individuals. The VITA Locator Tool. Will help you locate an open VITA site near you.

Find a tax professional

You have several options to help find a tax preparer. One resource is Choosing a Tax Professional, which offers a wealth of information for selecting a tax professional. There are various types of tax return preparers, including enrolled agents, certified public accountants, attorneys and some who don't have a professional credential.

The Directory of Federal Tax Return Preparers with Credentials and Select Qualifications can help you find preparers in your area who currently hold professional credentials recognized by the IRS, or who hold an Annual Filing Season Program Record of Completion.

Use the Interactive Tax Assistant (ITA)

Beginning in January 2021 use the ITA to find out if life event changes make you eligible for credits you didn’t qualify for in the past. The ITA is a tool that provides answers to many tax law questions.

It can determine if a type of income is taxable, if you're eligible to claim certain credits, or if you can deduct expenses on your tax return.

It also provides answers for general questions, such as determining your filing status, if you can claim dependents, or if you have to file a tax return.

Check the status of your refund  by going to IRS.gov and clicking on Where's My Refund? The status of your refund will be available within 24 hours after the IRS receives your e-filed tax return. If you filed a paper return, it can take up to four weeks after it is mailed. The Where’s My Refund? tool updates once every 24 hours, usually overnight, so you only need to check once a day.

File electronically and choose Direct Deposit for your tax refund – it’s the fastest and safest way to receive your money. Electronically filed tax returns are received within 24 hours, and paper tax returns take weeks. If you file a paper return, you can still choose direct deposit. The FDIC website offers information to help you open an account online.

There’s never been a better time to join the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

VITA/TCE volunteers provide free tax return preparation for eligible taxpayers. With many people experiencing financial changes this year, additional volunteers are needed to assist them.

In response, the IRS is rolling out new ways to make volunteering easier.

New this year, potential volunteers can tune in virtually to learn more about the program, find out which volunteer role is right for them and ask questions. Additionally, some sites will now give volunteers the option to assist taxpayers virtually rather than the face to face assistance.

This allows volunteers to help taxpayers complete their returns over the phone or online. Some volunteers may conduct a quality review with the taxpayer before the tax return is e-filed with the IRS.

Virtual volunteering is a great option for new volunteers, since they can ask experienced volunteers for help while completing tax returns.

Visit IRS.gov/volunteers to learn more and sign up. After signing up, you’ll receive more information about attending a virtual orientation.

Link & Learn Taxes is a web-based training program for volunteers. It prepares VITA and TCE partners and volunteers to provide quality tax return preparation services in their local communities. This fun, interactive course teaches you to accurately prepare income tax returns for individuals, and you can obtain volunteer certification along the way at your own pace!

Источник: https://www.irs.gov/individuals/steps-to-take-now-to-get-a-jump-on-next-years-taxes

You can ly file your taxes for free, but are doing it the wrong way

IRS Free File program open for taxpayers to get a jump start on tax season

WASHINGTON (NewsNation Now) — Tax season began Friday, but many Americans are paying to file their taxes, despite the fact it should be free.

According to the IRS, 70 percent of taxpayers are eligible to do their taxes for free. However, according to data analyzed by NewsNation, not many are taking that option.

We looked at the last several years of data from the IRS and found that in the 2019 federal fiscal year (Oct. 2018-Sept. 2019), only 2.8 million returns in the U.S. were filed with the Free File program. Compare that to an estimated 100 million taxpayers who are eligible. Instead, those people paid or filed by paper.

Who is eligible and how does it work?

There are two types of Free File. For those making an adjusted gross income of $72,000 or less, the IRS has partnered with nine companies as part of the Free File Alliance.

What is Adjusted Gross Income (AGI)?

Gross income minus adjustments to income. Gross income includes your wages, dividends, capital gains, business income, retirement distributions as well as other income. Adjustments to Income include such items as Educator expenses, Student loan interest, Alimony payments or contributions to a retirement account.

IRS

TurboTax, 1040Now and TaxACT are among the members.

To use IRS Free File, taxpayers need to go to IRS.gov and use a tool to find the company best matched with their tax situation. In addition to the normal documents needed for taxes, people also need an email address and a copy of last year’s tax return.

Once the taxpayers are matched to the service, they can fill out their taxes for free. Some providers also offer free state preparation.

Free File is open for the season. The IRS won’t begin processing tax returns until Feb. 12, which is later than normal due to the pandemic. The Free File platforms are starting to accept tax returns, but won’t transmit until Feb. 12.

This year, the IRS is also recommending that taxpayers file online and use direct deposit for refunds.

For those with an income above $72,000, there are basic Free File fillable forms. Those aren’t available until Feb. 12.

The problems with Free File

It seems pretty simple. Taxpayers work with the tax service matched to them, fill out their tax return forms and file. There should be zero costs. So, why are not many people taking advantage of the program?

Reporting by nonprofit investigative news group ProPublica in 2019 found several issues with Intuit-owned TurboTax and its marketing.

First, the site was advertising “free filing” on their homepage and throughout the site. No matter what happened when ProPublica tried to file taxes, there would be a charge. Sometimes more than $200.

It turns out, you actually cannot go directly to TurboTax.com. Hidden in the support section of the site was a note that it’s impossible to find the actual free version on TurboTax’s site. Instead, people were supposed to go to TaxFreedom.com.

ProPublica later discovered code in the site that deliberately hid Turbo Tax’s IRS Free File program from Google searches.

They also found the company made people with disabilities, the unemployed and students pay more for their services after the new tax law was passed and even steered members of the military away from the free version that’s promised by the federal government.

A Senate investigative panel in June 2020 found, among other things, that “until recently, the IRS conducted little oversight of the Free File program.”

When will I get my 2021 tax refund?

For taxpayers who get a refund check, it’s normally the top question: When will I get my tax refund?

The questions is already spiking in 2021. Here’s what we know:

  • Now: Many tax prep companies are allowing people to E-File their taxes and IRS Free File is open.
  • Feb. 12: The IRS will begin processing returns.
  • Within 21 days: Nine 10 taxpayers who filed online with direct deposit will receive their refund.
  • First week of March: People who filed with the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC), known as PATH Act returns, will start to get refunds.
  • April 15: Deadline for filing tax returns

Stimulus change

There is one notable change to the tax-filing process for 2020. If you didn’t get either of the stimulus payments or the wrong payment, you may be eligible to receive the remaining money in your tax refund.

“Given the pandemic, this is one of the nation’s most important filing seasons ever. This start date will ensure that people get their needed tax refunds quickly while also making sure they receive any remaining stimulus payments they are eligible for as quickly as possible,” IRS Commissioner Chuck Rettig said in a statement.

Источник: https://www.ktsm.com/news/you-can-likely-file-your-taxes-for-free-but-are-doing-it-the-wrong-way/

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