2013 Tax Season: What You Need to Know
by David Sung
The IRS Tax Day filing deadline for 2014 is Tuesday, April 15. Filing your individual income tax return can be intimidating, even for those who have filed before. So, we put together some tips and frequently asked questions along with the answers you need to help you get through another tax season.
Do I Have to File?Whether or not you need to file your taxes is pretty straightforward – as long as your gross income is above the threshold for your age and filing status, then you should file as long as no one else is claiming you on their income taxes.
There are also other reasons why you would need to file. For example: If you are self-employed, you must file if your net earnings are more than $400. If you determined that you are not required to file, there are still benefits to filing a tax return that you should consider. There are tax breaks and credits that you may qualify for – the refund for excess withholdings or the refundable earned income tax credit, for example. Refundable credits are refunds you might get back if the credit exceeds your tax liability. When in doubt, ask for help. Affordable tax filing software will take you through step by step. Filing for the simple federal return is usually free, but if you want to file your state income taxes, then it will cost a small additional fee. You will be asked to import your W-2 form or fill it out manually, and then you will be walked through a series of questions like, ‘Do you own a home?’
What Can I Deduct?Deductions for charitable donations are available for items such as donated property including real estate, cars and furniture. If you use your car for a nonprofit, then you may be able to deduct your mileage. Cash donations to charities are also deductible. Tithes made to a church or religious organization can also be deducted. There are some exceptions, however, such as the nonprofit must be 501(c)(3) tax status. You must be able to show all receipts, and there is a maximum amount you may deduct. Check with a professional accountant to be sure you don’t exceed these amounts. Sometimes a job may require special resources you need to purchase out of your own pocket. Those may include subscription costs, professional organizations, or if you are required to use your personal phone for your job. Those expenses can usually be deducted from your income tax obligation. Family obligations are another expense that might be deductible for you. It could be possible to deduct money for any dependents you have, like your children or your older parents. Alimony can also be deducted. Some percentage of certain healthcare expenses can also qualify. Again, if you have any questions, contact a tax professional.
What Documents do I Need to Keep?You should keep any documents you use to file a tax return for at least three years. Those include:
- W-2 and 1099 forms
- Your IRS confirmation
- Medical expenses
- Childcare expenses
- Receipts from charitable donations
- Receipts from unreimbursed work expenses
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