As tax season approaches, the looming deadline of April 15 can induce stress and confusion for many. The landscape of tax laws has evolved, presenting taxpayers with numerous options and technologies that might be overwhelming, especially for those contemplating filing on their own. Let’s delve into some crucial information and demystify the complexities:
1. Filing Deadline: This year’s deadline for filing your 2018 return is April 15. With just a few months left, it’s essential to start gathering information and making decisions, such as choosing between the standard deduction and itemizing.
2. Deduction Options: Deductions play a crucial role in reducing taxable income. The two primary deduction options are:
- Standard Deductions: Based on your filing status, this allows a fixed dollar amount deduction.
- Itemized Deductions: Permits deduction of eligible expenses listed on Schedule A, requiring meticulous documentation.
3. Standard Deduction Amounts: According to the IRS, standard deductions for 2018 are:
- Single filers: $12,000
- Married filing separately: $12,000
- Married filing jointly: $24,000
- Heads of household: $18,000
4. Choosing the Best Option: To maximize your refund, consider your specific situation. Standard deductions are advisable for those without significant expenses, while itemized deductions suit those with substantial work-related, home, or donation expenses. A ballpark calculation can help decide the most beneficial approach.
5. Free Filing Options: Explore the convenience of Free File directly through the IRS website, offering no-cost preparation and filing using IRS-approved software. Ideal for those with simpler returns, it’s fast and efficient if you have your documents ready. Free File and related forms are available from January 28.
6. Caution with Free Filing Services: While many professional tax firms offer free or low-cost filing, be cautious. Some limitations may apply, and audit assistance guarantees might not be as comprehensive. Mistakes are easier to make when handling returns independently.
7. Consulting a Professional: Even if you opt not to file with a professional tax preparation company, seeking their advice can be valuable. They can help calculate your owed amount, providing insights that prove beneficial whether you decide to file with them or go the DIY route.
8. Tax Credits Matter: Beyond deductions, explore available tax credits. These directly reduce your tax liability and can include education credits, child tax credits, and energy efficiency credits. Researching and claiming applicable credits can significantly impact your final tax bill.
9. Stay Informed About Changes: Tax laws are dynamic, and staying informed about changes is crucial. Regularly check the IRS website or consult with a tax professional to ensure you’re aware of any alterations that might affect your filing status or potential deductions.
10. Retirement Contributions Impact Taxes: Contributing to retirement accounts such as a 401(k) or IRA can have dual benefits. Not only are you saving for the future, but you might also qualify for deductions, reducing your taxable income. Understanding the contribution limits and eligibility criteria is vital for maximizing this potential benefit.
Filing taxes need not be a stressful or expensive endeavor. For those with simpler returns, consider using Free File or other low-cost online tax preparation platforms. Make informed decisions and embrace the wealth of resources available to make tax season a smoother experience.
