Filing taxes can be a positive or negative experience depending on whether the IRS owes you money or you have to pay the IRS. When you go to file your taxes this year, these are some considerations to think about.
When is the Tax Deadline?
Do you know the deadline to file taxes this year? This year you need to either file your taxes or request an extension by April 15. While April 15th is always the deadline, sometimes if that day falls on a weekend, the actual deadline could be later. Not so for this year. The actual deadline is April 15th. If you do not take action before this deadline, you can be charged a failure to file penalty that could result in costs up to 5% of your tax bill for every month that your return is late up to 25%.
If you are expecting a refund and you don’t file in time, you miss out on the opportunity to get the hundreds or even thousands of dollars you could have gotten back.
If you are not expecting a refund and you don’t file in time, you should still pay on time. Doing so can help you avoid late payment penalties. Be sure to consult with your tax professional to help you determine when to file and when to pay.
What is my Tax Filing Status?
When you file your taxes, you can file as Unmarried, Married Filing jointly or separately, or as a Qualifying Widower. Based on your status, you will have different rules to follow. We’ve outlined some things to consider about your tax filing status. A tax professional will be able to help you determine what the right status is for you.
Unmarried adults without dependents file as Single. On the other hand, unmarried adults with dependents who rely on a worker to support them may be able to file as the Head of Household. By filing for this, it enables you to earn more money before you move up to the next tax bracket. Additionally, you can get higher standard deductions.
Married couples have the option to file taxes jointly or separately. Married Filing Jointly gives you more benefits if it makes sense, but ultimately the married couple has to make that decision. If you do decide to file jointly, it can double your standard deduction and the amount of money you can earn before you move up to the next tax bracket. If you decide to file separately, you won’t be able to claim certain tax deductions and credits.
Qualifying widower is an option for individuals whose spouse has passed away. You can file as Married Filing Jointly in the year your spouse dies and then file as a Qualifying Widower for the two years following. By filing this way, it can give you the same tax brackets and standard deductions as married couples, even if your spouse is deceased. If you’re eligible for it, you should consider claiming it because it can significantly reduce how much you owe in taxes compared to filing as Single or Head of Household.
Which Tax Deductions Can I Claim?
You are allowed to write off certain expenses to reduce your tax bill as long as you have documentation to prove it. There are many items that can be written off.
Some of these deductions can include charitable donations, office supplies for your own business, and educational expenses.
Although the IRS does not need submitted documentation for these write-offs, it is important to have the documentation for it in case you’re audited.
Filing your taxes could be complicated. Consider consulting with a tax professional before making any decisions about your taxes, and hiring a tax professional or using tax preparation software for your taxes might be a wise option.
If you need any help with your finances, please feel free to reach out to us online at caminofcu.org or at 800-835-3400.