Taxes are one of the few certainties of life and proper tax planning can significantly boost how much money you have saved for emergencies and even retirement. Filing taxes can be its own challenge–what with the IRS having over 400 forms, all with names comprised of seemingly random combinations of letters and numbers. This guide will help you learn how to file income taxes accurately and optimally.
Table of Contents
Key tax filing deadlines
Q:When is the 2023 tax season?
Q:When can you file taxes?
Q:When are taxes due?
Q:When is the last day to do taxes?
Jilliana Ourth, Debt.com Journalist: As we enter the third tax filing season impacted by the pandemic, which will begin on January 24th — there’s some things you need to know to ensure you’re not one of the millions of filers who will find themselves still waiting for their refund nine months later.
The key to success according to the IRS is to file your return electronically and select direct deposit for your refund.
Pro-Tip, pass on the paper returns, as of late December, the IRS had millions of backlogged 2021 returns, with many taxpayers still waiting for their refunds nine months later, according to national taxpayer advocate Erin Collins.
But before you file anything, you need to make sure the numbers you send in are correct to avoid delay of your refund.
Millions of e-filed returns were suspended last year during processing due to discrepancies between amounts claimed on the returns and amounts reflected on IRS records.
This year, the IRS is hoping to help you out by sending most taxpayers letter 6419 about the 2021 advanced child tax credit and letter 6475 about the 2021 stimulus payments.
These letters will state how much money the IRS has sent you for these tax credits, which will help you send the right numbers during filing.
The deadline to file is April 18th this year and the IRS expects more than 160 million 2021 tax returns will be filed, so it’s smart not to wait until last minute to avoid delays. Still, the IRS expects most refunds will come within 21 days for those who choose direct deposit.
Here at Debt.com we not only want to encourage you to file early to avoid tax fund delays but also to make a plan for your refund!
With this year’s increased tax benefits, you may be eligible for more money than you thought. Use it to take care of immediate needs, or work towards future goals.
You could work the extra funds into your budget, develop a debt action plan, or make a plan to save. Whatever you do with your refund, make sure you do it wisely.
For more money tips, subscribe to Debt.com’s YouTube channel and if you need help getting out of debt or have questions, visit Debt.com today.
Finding the best tax professional
You don’t need to be wealthy or own a large business to benefit from hiring the right tax professional. For some people, preparing taxes can be stressful or complicated. The simplest way is to ask for a referral. If you have friends, family members, or coworkers who have dealt with your particular situation, ask them what service they use and if you are happy with it. Debt.com also provides a list of where you can go for free tax advice. You can also always head to your nearest search engine and look up reviews.
If you head for a retail tax franchise, ask if you can meet with a tax attorney, certified public accountant (CPA), or an enrolled agent (EA).
- Enrolled agents specialize in specific tax areas and are best for dealing with complex tax situations.
- On the other hand, CPAs specialize in areas that are specific to accounting.
- Tax attorneys are best for more complex matters like real estate tax returns.
5 key questions to answer as you decide how to file taxes
As those W-2s or 1099s start making their way to your mailbox, you may start wondering how to file your taxes. Often people will take a crack at filing their taxes themselves so they can save a few bucks. But then you may be stumped with your filing status, or what tax bracket you may fall in. That’s why we’re here to help.
What filing status should I choose?
It can be confusing trying to figure out which status you fall under. If you’re unmarried, you may automatically think to apply under single. But if you’re paying for at least half the support of children, or parents, you would actually file under the head of household status. If you’re married, you might be wondering whether to file jointly or separately.
To help answer all your burning questions, we’ve broken it down:
|Filing status||Who is it for|
|Head of household||Unmarried people who pay for at least half the cost of housing and support for children under the of age 19 or 24 if they’re still a student; parents; siblings; or in-laws.|
|Married filing separately||Married high-income earners; people who are in the process of divorce and believe their spouses may lie about their income; people whose spouses have tax liability issues.|
|Married filing jointly||Most married couples. You can file a joint return even if one of you had no income or deductions. If your spouse dies during the tax year, you will still be eligible to file jointly in that year. For the following two years, you can use the qualified widow or widower status, but only if you have a dependent child.|
|Qualified widow or widower||People who have recently lost a spouse and are supporting a child at home. If the child is out of the house when the spouse dies, this status will not work.|
|Single||Unmarried people who do not qualify for any other filing status.|
You can also always make use of the IRS Interactive Tax Assistant to help you determine your filing status.
What tax bracket am I in?
Federal tax brackets are broken down into seven taxable income groups depending on your filing status. Keep in mind that the tax rate you pay is dependent on your taxable income, which is the income you make after all deductions have been subtracted from your adjusted gross income for the year.
And the IRS announced there would be higher federal income tax brackets and standard deductions. The IRS has boosted income thresholds for each bracket to help counteract the effects of inflation, says Josh Zimmelman, managing director of Westwood Tax & Consulting.
Income thresholds for most tax brackets have increased, so taxpayers who earned a bit more this year than last year are less likely to move into a higher income tax bracket (with a higher tax rate).EXPERT: Josh Zimmelman, Managing Director of Westwood Tax & Consulting
|2023 Tax Rate||For Single Filers||For Married Individuals Filing Jointly||For Married Individuals Filing Separately||For Heads of Households|
|10%||$0 – $11,000||$0 – $22,000||$0 – $11,000||$0 – $15,700|
|12%||$11,000 – $44,725||$22,000 – $89,450||$11,000 – $44,725||$15,700 – $59,850|
|22%||$44,725 – $95,375||$89,450 – $190,750||$44,725 – $95,375||$59,850 – $95,350|
|24%||$95,375 – $182,100||$190,750 – $364,200||$95,375 to $182,100||$95,350 – $182,100|
|32%||$182,100 – $231,250||$364,200 – $462,500||$182,100 – $231,250||$182,100 – $231,250|
|35%||$231,250 – $578,125||$462,500 – $693,750||$231,250 – $578,125||$231,250 – $578,100|
|37%||$578,125 or more||$693,750 or more||$578,125 or more||$578,100 or more|
Estimate your owed federal and state taxes based off your taxable income.
What tax deductions can I claim?
You can claim the standard tax deduction, or you can itemize your deductions. When it comes to standard tax deductions, as long as you know your status (single, married filing jointly, married filing separately, etc.) you can simply scroll down this list and find out what your deduction is.
However, there are a few limits. If someone claims you as a dependent, your deduction would get reduced. If you are married and filing separately, your standard deduction could be denied as a result of your spouse filing itemized deductions. And if you were the victim of a federally declared disaster, your standard deduction could potentially increase.
On the other hand, itemized tax deductions are somewhat more difficult because they are more labor-intensive. The way it works is instead of claiming one deduction you would go item by item. If you are doing your taxes on your own, you should choose itemized deductions if they will be larger than the standard deduction. And if you are using a software program to do your taxes, the tax software will pick the best refund option for you.
The following can be itemized:
- State and local taxes (limited to $10,000)
- Home mortgage interest
- Real estate property taxes
- Private property taxes
- Casualty and theft losses
- Work-related expenses
- Medical expenses
- Charitable contributions
- Miscellaneous deductions
What are my tax credits?
Depending on your financial situation, tax credits may allow you to take even more money off of your taxes. There are quite a few ways to claim tax credits. If you’re a parent, you can qualify for an additional child tax credit (ACTC). If you’re a student, you could be eligible for student tax credits. And if you’re elderly or if you have a disability, you may receive a tax credit. You can also claim tax credits for earned income, known as the earned income tax credit (EITC).
However, if you are claiming the additional child tax credit (ACTC) or if you are trying to claim the earned income tax credit (EITC), you could face a delay should you file your taxes early. Under the new tax reform law, any refunds that are claiming these credits cannot be issued until mid-to-late February.
If you’re unsure of what tax credits you may qualify for, see what you may be eligible to use here. It’s always better to be safe than to lose any money by failing to claim a tax credit!
What are my tax exemptions?
For filing in 2023, the personal tax exemption remains at 0, as it was in 2022 because of the Tax Cuts and Jobs Act. The good news is that you won’t have to deal with this facet of your taxes. The bad news is that you won’t get any personal tax exemptions.
Determining Adjusted Gross Income (AGI)
If you’re trying to figure out your adjusted gross income, you can calculate it by adding up all your income and subtracting all deductions and related payments. Gross income includes wages, dividends, any capital gains, business income, retirement distributions as well as other forms of income. Adjustments to income include student loan interest, alimony payments, or contributions to certain retirement accounts, such as a 401(k) or traditional IRA.
Example: Dorothea is a teacher who brought home $50,000 in gross wages last year. She spent $1,000 on supplies for the classroom. So, Dorothea’s adjusted gross income would be $49,000.
Self-employed individuals will have to use their 1099 form plus any non-1099 income to calculate total wages. If you offered any discounts to customers during the year, you’ll have to deduct that number from your calculated income. Why? Because the IRS considers coupons and discounts as “returns and allowances.”
Example: Sophia is self-employed. The total amount of her services reported on her 1099 form is $45,000. She offered two clients discounts of $500 each. She also paid $4,000 in health insurance last year. So, her AGI would come out to $40,000.
If you’re filing online, you won’t need to worry about calculating your AGI because the software will do it for you. And if you hire a tax preparer, they will also calculate your adjusted gross income as part of the process.
After you file taxes
Now that you’ve filed your taxes, you may feel a sense of relief. And though sometimes the best part of filing your taxes is simply being done with it, there are a few more steps you need to take once your return is complete. Take a gander at some of the steps we have listed. Not only will you save time and effort, but you might even make out with more money on your tax returns.
Getting a tax refund
After filing taxes, many taxpayers get anxious about where their refunds might be. Generally, the IRS states that most taxpayers will receive their refunds within 21 days of filing. If you file electronically and sign up for a direct deposit, you may get your refund in as little as 14 days. But that is not always a guarantee because certain factors can delay refunds. And when you do get your refund, be sure to use your tax refund wisely.
|Filing Method||How soon can you check your tax return status?||When can you expect your tax refund?|
|e-file||24 hours||Usually within 21 days|
|File by mail||4 weeks||6-8 weeks|
Even if you cannot afford to pay your taxes, you still need to make sure you file them. The penalty for not filing is ten times the penalty for not paying. Once you’ve filed and you find that you owe taxes, know that paying by the deadline can actually save you money. Should you fail to pay your taxes by the due date, then the amount you owe immediately becomes tax debt. You would start accruing interest and penalties – the IRS levies late filing and failure to pay penalties – that could make paying more difficult.
Filing taxes late
If you’re behind schedule, you can use IRS Form 4868 to file a tax extension. This form is used to request an extension to your deadline. If you have reasonable cause for filing late, you can avoid late filing fees altogether.
Carlos Samaniego, Founder of Tax Debt Consultants LLC., says to file your taxes even when you are unable to pay because the penalties could force you down a deeper debt hole.
The worst thing a taxpayer can do is file a late tax return. The penalties can go up to 5% of the amount due for each month it is late. File your return even if you can’t pay to avoid the late file penalty.EXPERT: Carlos Samaniego, Founder of Tax Debt Consultants LLC
However, be aware that if you file for an extension and don’t make the deadline in October, you will be charged a failure-to-pay fee. This fee is 5% of your unpaid taxes for every single month, compared to only half of 1% if you had filed.
So, even if you’re unable to pay your full tax amount on time, file anyway. Because the penalties for failing to file are worse than the penalties for failing to pay. And those penalties start accruing right away. Filing in October won’t delay the penalties. They will be retroactively applied from April.
Tax changes for 2022
There were a few changes added in 2022. With regard to charitable contribution deductions, taxpayers who do not itemize deductions may now qualify for a deduction. If they are married taxpayers filing jointly, they may qualify for a deduction up to $600 and up to $300 for all other filers.
In January 2022, the IRS will send out Letter 6419, which contains the total amount of Advance Child Tax Credit payments taxpayers received in 2021. If they received less than the amount they were eligible for, they would be able to claim a credit for the remaining amount of child credit from their 2021 tax return.
Additionally, eligible families, who did not receive monthly advance payments in 2021, can still get a lump-sum payment by claiming the Child Tax Credit when they file their 2021 federal income tax return. This also includes families that don’t normally have to file a return.
If a taxpayer did not qualify for the third economic impact payment or if they did not receive the full amount, they may be eligible for the Recovery Rebate Credit. In early 2022, the IRS will send Letter 6475 which contains the total amount of the third economic impact payment and any additional payments. Taxpayers will need the total amount of economic impact payment and any additional payments they have received to calculate their correct 2021 Recovery Rebate Credit amount for filing their tax returns.
The Consolidation Appropriation Act for 2020 increased the minimum addition tax for failure to file a tax return within 60 days of its due date. The new additional tax is $435 or 100% of the amount of tax due — whichever is less.
For more information on tax changes visit the IRS website.
Tips for filing taxes
If you’re looking for a few tips and tricks for filing your taxes, you’ve come to the right place. We know of a few clever ways you can get more bang for your buck:
- You might be able to claim a home office deduction and even deduct the cost of painting your home office.
- If your employer paid you while you were on jury duty and required that you hand over your jury duty pay from the court, you will be able to claim the amount you handed over as an adjustment to your income.
- If you’re self-employed, you may be able to qualify for deductions through any necessary purchases you need to make for the business.
- You may qualify for the Lifetime Learning Credit if you’re in graduate school or beyond. This will allow you to claim 20% of your qualified costs up to $10,000, or a $2,000 maximum per tax return, depending on your income.
- A lot of people often choose a standard deduction because it’s less hassle. But if you can itemize, choose that option because you could make out with a bigger refund.
- Scrutinize the IRS guidelines thoroughly because you might be entitled to deductions you’ve never even seen or heard of.
- If you have been financially supporting a vulnerable friend or an elderly family member, you may claim them as a dependent.
- If you can, contribute to tax-deferred retirement accounts so you can reduce your taxable income.
Tax filing FAQ
Q:What should I do if I haven’t received my W-2?
If you still don’t have your W-2 Form after contacting the IRS, you have two options:
- File your return by April 15 and use Form 4852, Substitute for Form w-2, Wage and Tax Statement. You’ll need to estimate your wages and withholdings to the best of your ability.
- Ask for more time to file by submitting a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. You can file the request electronically as well.
Q:How much do I have to make to file taxes?
However, you are not required to file taxes if you make less than a certain amount:
|Married filing jointly||Both under 65||$25,100|
|Married filing jointly||Only one over 65||$26,450|
|Married filing jointly||Both over 65||$27,800|
|Head of household||Under 65||$18,800|
|Head of household||Over 65||$20,500|
|Qualifying widower||Under 65||$25,100|
|Qualifying widower||Over 65||$26,450|
|Married filing separately||All ages||$5|
Q:How should I pay my taxes?
- You can pay using your bank account when you e-file your returns.
- You can also pay directly from a checking or savings account for free.
- Credit and debit cards are also acceptable ways to pay online or by phone.
- The IRS will let you make cash payments with participating retail partners. Visit gov/paywithcash for more instructions.
- You may be eligible for monthly payments, but you must file all required tax returns first. Then you can apply for an installment agreement through the Online Payment Agreement
Q:When are state taxes due?
Q:What happens if I forgot a deduction when I filed?
Q:How do I get help with a tax audit?
Keep these documents safe:
- Tax returns filed in the past 3 years
- Evidence of claimed deductions
- Receipts for big purchases
- Any other supporting documentation
Q:What if I need to file an amended tax return?
If you are amending a prior year’s return, and your original return for that year was filed by paper during the current processing year, then you’ll also need to file an amended return by paper. Be aware that the IRS has said they are currently experiencing delays in processing amended tax returns. Due to the large volume of amended returns submitted in 2021, the IRS still has more than 2.3 million amended tax returns for 2020 to process.
IRS.gov – Form 1040-X, Amended U.S. Individual Income Tax Return, Frequently Asked Questions
IRS.gov – Definition of Adjusted Gross Income
IRS.gove – Tax Calendars For use in 2022
IRS.gov – Get ready for taxes: Here’s what’s new and what to consider when filing in 2022
IRS.gov – Haven’t received your Form W-2 yet? The IRS can help
National Taxpayers Union – Income Tax Brackets for 2021 and 2022
Article last modified on February 14, 2023. Published by Debt.com, LLC