Oh my, it’s tax season again. April 15th will be here before we know it. For most of us, we’re hoping that we don’t have to write a check to the IRS. Hopefully, we’ll be able to get a decent refund. For the procrastinators among us, you still have time to get your act together but the clock is ticking….
70% of taxpayers are eligible to file for free according to the National Taxpayer Advocate’s Office. The IRS Free File program at IRS.gov/freefile partnering with tax preparation software businesses allows taxpayers whose adjusted gross income (AGI) is $69,000 or less to use it. Only 2% of eligible taxpayers use the program. Some specifics: It’s not widely publicized and some say it’s a bit confusing to use because the partner sites don’t readily point to the free portion. It’s at least worth checking out to spend less on tax prep. It’s legal, will get you accurate calculations and save you money.
Once you round up your W2s, 1099s and other tax forms, you could either use the IRS free file option if eligible, a tax preparer or any of the many do-it-yourself tax software programs out there. Unfortunately, it seems that the cost for tax prep keeps going up like most other things. You’ll have to make the decision on how to proceed.
A red flag to be on the lookout for is tax scams. The scammers are out in force and they sadly try to capitalize on the vulnerable and low informed. We need to remain vigilant to spam and scam phone calls that are NOT from the IRS. The IRS will never call to request immediate payment of your taxes owed without first mailing you a bill. The IRS will not request payment with a specific method (ie. debit card, credit card etc.) and it will never ask for the numbers of those cards or social security numbers over the phone. Lastly on this, the IRS will NOT threaten you with any police or law enforcement action. It’s terrible as Americans that we have to endure this awful practice, but we do.
I’m not a tax expert and I’m not an accountant either, so please don’t take this as specific tax advice, but you still have time to make tax deferred contributions to your Individual Retirement Arrangements (accounts) IRAs. If you are a parent trying to help your college student(s) with their increasing education costs, you may be eligible for the American Opportunity Tax Credit (AOTC) worth up to $2500 and/or Lifetime Learning Credit (LLC) worth up to $2000. Eligibility is determined by your modified adjusted gross income (MAGI). For investors, you can offset capital gains with capital losses, called tax loss harvesting. If you’re able to, it’s smart to max out retirement accounts in tax efficient investments.
In my next blog post, I’ll discuss the importance of having an emergency fund and how to set one up among other helpful tips to get or keep you on your financial peace journey.
Are you interested in a second opinion about your finances? Click on the “Schedule a Consultation” and I’ll be happy to help you get or stay on track to achieve your personal finance goals.
Have a great day!
Respectfully,
Mike F.