20SomethingFinance 2010 Tax Guide
It’s about that time to hunker down and start thinking about your 2010 taxes. It won’t hurt, I promise. I’ve written a lot of tax related articles over the years, and thought I would put together a little guide to help you get started with some of the basics.
If I included every piece of tax information that I’ve written, it would be a mini book, so I’ll link to where you can read more if it’s something you’re interested in. Keep in mind that I am not a tax professional, so don’t rely on me as one. Serious questions require a tax professional, or at least a good copy of Turbotax or H&R Block.
When can I Start Filing my 2010 Taxes?
You’re free to start anytime, as long as you have your W2′s, 1099′s, and any other tax related forms that you expect to be sent to you. I personally wait until the end of February to start because some financial institutions are slow in getting their 1099′s out.
When can I Submit my 2010 Tax Return?
Right now, but make sure you have all of your forms so that it is complete. There are some notable exceptions to this rule in the 2010 tax cycle, caused by the Obama tax cuts, which were retroactive. This has led to a tax filing delay for some:
- Taxpayers who itemize tax deductions. This is because schedule A needs to be re-worked.
- Those claiming the Higher Education Tuition and Fees Deduction – which is claimed on IRS form 8917.
- Those claiming the Educator Expense Deduction, which is given to K-12 teachers who use money out of pocket to pay for educational materials.
The tax filing delayed start date for these filers is now February 14 (Valentines Day). These filers can start their taxes now, they just need to wait until the 14th to submit.
What is the 2010 Tax Filing Deadline?
Another interesting quirk this year. The tax filing deadline is almost always April 15th, unless it falls on a weekend or a Holiday (in which case it’s pushed to the following Monday). Well, the 15th is a Holiday in Washington DC this year, so the deadline is pushed to the 18th.
A common misconception around the tax filing deadline is what it actually is. Is it the day your return has to be received by the IRS? No. It’s actually the day you have to have your return to the IRS postmarked or submitted electronically. So do one or the other by April 18, 2011!
What if I need a Filing Extension?
You need to file an extension for your 2010 taxes is the same April 18th deadline, and it buys you a a six month extension to October 15, 2011. This doesn’t mean you can simply get away with not paying your taxes for 6 months, you have to submit your estimated taxes due (if you owe) by April 18th, and then submit your paperwork by October 15th. But you might as well just get it done, if you are able. Get that weight off your shoulders!
What Can I Still do to Impact my 2010 Tax Return?
It’s not too late to still have an impact on your 2010 taxes, believe it or not. One of the biggest ways that you can lower what you owe or get a bigger return is through contributing to a traditional IRA, Keogh, or SEP IRA (check out the 2010 maximum IRA contribution limits and Traditional IRA income phaseout limits for deductions). You can contribute and have it count towards the 2010 tax year up until the tax deadline, which will lower your overall adjusted gross income (AGI).
If you’re income is low enough, you might even qualify for the retirement savings contribution credit.
Itemizing your deductions may help too. If you are self-employed, have a home or mortgage, or have a lot of out-of-pocket medical expenses, you may have a good shot at saving more through itemized deductions than taking the standard deduction. Doing so might even put you into a lower 2010 tax bracket so that some of your income isn’t taxed at the higher rate.
If you did any of the following during 2010, it could have a big impact on your return:
- Made home energy efficiency improvements? You could qualify for a 2010 energy tax credit.
- Had a child this year or was guardian for at least half a year? You could claim a child tax credit.
- Bought your first home before April 30th? You are eligible for a first-time homebuyer tax credit. Don’t forget it!
- Had self-employment income? You can deduct business related expenses.
- Have huge out-of-pocket expenses for medical purposes? Deductible, at a certain level.
- Paid tuition? Deductible.
- Paid interest on a mortgage or property tax? They’re deductible.
- Made a Roth IRA Conversion? You can spread out your income tax liability over the 2011 and 2012 tax calendar years.
E-File that Tax Return!
Efiling is the way to go. It allows you to get your return faster and the error rate is much lower than on paper returns. I’ve written about the best and cheapest ways to efile in the past. I’ve used both Turbotax and H&R Block to efile in the past, and they are equally great products. Both offer a free 1040-EZ federal e-file version. Filing state returns electronically will cost you anywhere you go, as will more complicated returns.
I Got a Huge Tax Return, Great! Not so Great…
It always cracks me up when people brag about how big of a tax return they are getting. Getting a tax return simply means that you gave the federal government an interest-free loan over the previous year. My goal, when I do my taxes, is to pay back a small amount, so as to avoid getting a penalty.
If you keep getting huge returns, you may need to make some changes to your withholding tax allowances (you do this through your payroll department at work). Sorry to rain on the parade.
Checking your Tax Refund Status
If, after submitting your return and finding out you’re going to be getting a refund, you’d like to check on your tax refund status, do it on this IRS site. Keep in mind that the IRS never will send you an email with this option. To be safe from scammers, type www.irs.gov into your browser address and go to their site. Then click ‘where’s my refund’.
Remember to Have Fun
I always enjoy sitting down in a dark room in early March with a bottle of Jack and doing my taxes. And you should too! Taxes aren’t so bad, especially if you did things the right way all year long. Have fun! And, yeah, you probably shouldn’t get drunk when doing your taxes.
What tax filing tips do you have?