Spring is just around the corner which means blooming peonies, crisp spring hair, and…our taxes are due. Filing taxes is the one last thing we have to do before 2015 is 100% behind us. While this might make most of us cringe, it doesn’t have to be the case. We’ve partnered up with 1040.com for tips on how to make filing your taxes easier this year and in the years to come.
1040.com is a DIY return filing application that works to make filing fast and simple. It walks you through easy questions to make sure you’re getting all the tax breaks available to you. And they pull data from your prior year return, so filing with them can be easy! They also store a copy of your return just in case you need the information later. So not only do they make actually filing your return simple, they also provide easy to understand, basic information that’s good for everyone who pays taxes to know. And what we really love: For every tax return filed with 1040.com, they will donate $2 to Healing Waters International!
1. Start early and file on time.
It’s March already. I know. But that doesn’t mean you still can’t start early and avoid being one of those people sweating the deadline. The official, annual deadline for individuals filing a 1040 (individual income tax return) is April 15th, unless that day falls on a weekend or holiday. This year, the federal income tax deadline is April 18th. Most states have an income tax filing deadline on April 18th or just after.
There are many good reasons for not being a last minute filer, but one big reason is to lower your chances of identity theft. Each year there are billions of dollars in refunds claimed by sneaky thefts—they steal your personal data and file falsified tax returns to nab a fraudulent tax refund. Once they’ve filed with your social security number, it can take up to a year to sort it out with the IRS. The easiest way to deter this fraud? You guessed it: File early.
Starting now—and really I mean now—can help you not only avoid undue stress and lower your chances of identity theft, but means you can also take the time to make sure you don’t miss anything. And as a bonus: if you are due a refund, you’ll get to enjoy that money sooner. If you do end up owing money, it’s better to know it sooner rather than later, so you can plan for how to make the payment.
2. Know your tax credit and deduction basics.
No one has ever accused the U.S. tax code of being simple, but don’t use that complexity as an excuse to not learn some of the basic tax breaks you’re entitled to.
Tax deductions work to lower the amount of taxable income you have. Top tax deductions include:
- Mortgage interest deduction: If you own a home and paid interest on your mortgage in 2015, you’re eligible to take a tax deduction for the amount of interest you paid.
- Charitable contribution: Don’t forget to keep the receipts for any money or goods you donated. Charitable contributions are an often-overlooked tax deduction.
- Self-employed health insurance: While being your own boss can be very expensive, don’t forget to take a deduction for the cost of your health insurance premiums.
- State and local tax: If you pay state and local tax, you can deduct the amount you paid from your federal tax return.
- Student loan interest: If you paid interest on your student loan this year and fall under certain income thresholds, you could be eligible to deduct up to $2,500 student loan interest.
Tax credits are a little different in that they lower the amount of tax you owe. Once you take your deductions and know how much tax you could owe, you have a chance to reduce that amount by claiming tax credits. These include:
- Earned income credit: This credit benefits low to moderate income individuals and families who are currently working (including self-employed).
- American Opportunity Credit: up to $2,500 of the first $4,000 of qualifying education expenses
- Child and dependent care credit: available to people who must pay for childcare for dependents under age 13 in order to work or attend school
3. Gather everything you need before you begin.
I find the most frustrating part of filing taxes is trying to corral all the information I need. Once I have it all together, sitting down to actually file my taxes is made much easier. Here’s a list to start of the typical things you may want to gather before sitting down to get started:
- Social security number
- W2 from your employer
- 1099s for other income (1099-INT, 1099-DIV, 1099-K)
- Last year’s tax return
- Other income (self employment income not on a 1099)
- Retirement account or IRA contributions
- Student loan interest statement
- Education costs (form 1098-T)
- Home mortgage interest expense
- Charitable donations
- Checking account information for refund or payment
4. Be prepared with health insurance information.
Each person needs to show proof of health insurance, so be prepared to answer questions to prove that you are covered. If you are insured through your employer you’ll likely only need to answer a few basic questions. If you purchased your own insurance through a Marketplace, you’ll be sent form 1095-A that you need to use when filing your taxes. You’re potentially eligible for a tax credit from buying Marketplace insurance.
5. Keep notes for next year.
As Ben Franklin once noted, nothing is said to be certain, except death and taxes. Not really a cheery thought, but you get the drift. You can be certain you’ll file your taxes next year, so why not make it easier on yourself? Make sure to save a copy of your tax return to your computer and also make a list of all of the documents you needed. As they start rolling in next year, you’ll be able to quickly set aside everything you know you need.
6. File online.
While some of you may prefer the old pen and paper route, there is a much easier avenue! Filing online is not only fast and easy, but in some cases you can even file your federal tax return for free. You’ll also be sure you’re not missing out on any credits or deductions you might qualify for. And if you do receive a refund, you’ll actually receive it faster when you file online.
1040.com offers both Federal and State filing and will even file a basic 1040EZ for free. In 2015, for every tax return filed with them (including returns that are filed for free), $2 will be donated to Healing Waters International (HWI), a nonprofit on a mission to end the global water crisis. HWI not only works to provide clean water but they partner with the communities to educate them on proper health and hygiene. With Healing Waters, $25 gives fresh water to 1 woman or child in an underdeveloped part of the world for a year! Read more about their #25for25 campaign aimed at empowering women through clean water.
And one last thing to make tax season just a little bit easier: 1040.com is offering a giveaway to our readers!
Two people will win:
Free Federal and State tax return filing on 1040.com
Leave a comment here letting us know what you plan to do with your tax refund and the extra $500 cash if you win! Make sure your email is included so we can contact you. Enter by March 16th and the winner will be announced that evening on Facebook and Twitter!
Read here for official rules.
This post is sponsored by 1040.com but the opinions within are those of The Everygirl editorial board.