The IRS has officially began processing tax returns and to tell you more, we turned to personal finance columnist, Jaime Mejia, to tell you more about the opening of the season and how to keep more of your hard earned money.
Tax filing season officially began on January 30, 2013 when the IRS began to accept e-filed individual tax returns. The deadline for filing your taxes is still Monday, April 15.
This year’s tax season started a little later than usual since the IRS was reviewing changes to the tax code stemming from the fiscal cliff legislation, according to an IRS spokesman.
Since no one deserves more money in their pocket than you, it’s important not to wait until the last minute to prepare your taxes so you can get the tax refund you deserve. In fact, TurboTax is up to date and currently accepting individual e-files.
Here are five things you can do to get ready to file your taxes now:
1. If you still haven’t done so, organize your deductible expenses from 2012 that can help lower the amount you owe. A good place to start is to remember all of your visits to the doctor or dentist – as well as your dependents’ (i.e., children and elderly parents) – and associated costs. Look for the receipts or invoices that you received for these medical and dental treatments.
2. The payments you made against the interest on your home mortgage are also deductible. Look out for a letter from your bank or a 1098 form detailing how much interest you paid in 2012. For example, if a family had a household income of $60,000 in 2012 and paid $11,000 in interest on their mortgage, the income on which their taxes will be based will be $49,000. You could then apply additional deductions (like the Dependent Care Deduction, donations and others) on this lower income, ultimately lowering the taxes you owe.
3. Your donations and contributions to non-profit organizations are also deductible. Donations to your church, and even clothes and toys that you donated to Goodwill or the Salvation Army can help lower your taxes. For this, it’s important to keep receipts for your donations to recognized organizations and assign a real value to the items you donate. TurboTax ItsDeductible can help you correctly value your items at fair market value per IRS requirements.
4. Determine which deductions and credits you could qualify for based on who your dependents are and how much you invested in them in 2012. For example:
a. In 2013, we’ll continue to enjoy the benefits of the Child Tax Credit, which can give you up to $1,000 back for each eligible child. This will lower the final amount of your income susceptible to taxes.
b. The Earned Income Tax Credit (EITC) continues to be expanded this year to families in the lower income brackets. This tax credit can be worth a credit up to $5,891.
c. An education credit called the American Opportunity Credit was also extended, allowing eligible taxpayers to get a credit of up to $2,500 for costs associated with college education.
5. If you work from home, keep in mind that you might be able to deduct costs associated with it, such as rent, phone and internet services, among others.
The average tax refund was $2,700 in 2012, which is equivalent to three months’ worth of grocery expenses for a family of four! So make sure to take the time to gather all of the documents associated with your expenses and income in one place and take advantage of the tax credits and deductions available to you this year.
TurboTax will guide you step-by-step through all of the tax deductions and credits you’re eligible for. If you have a question, TurboTax has tax experts who are CPAs, IRS enrolled agents, and tax attorneys available year round to answer your questions for FREE.