Tax time is here.
But you wouldn’t know it by the lack of 1099’s hitting my mailbox, oddly enough.
I did just get my W2, so I got that goin’ for me, which is nice.
And instead of procrastinating until early April, I hope to finish my 2012 tax return by mid February this year.
Why? Rampant e-file tax identity theft fraud. Beat the scammer in filing your return and you won’t have any problems. Wait until the April 15 tax deadline, and you’re more open to becoming a victim. More on that in a post later this week.
For now, it’s time for some non-fear mongering motivation, to help jumpstart your 2012 tax return.
Keep in mind that I am not a tax adviser. Serious questions should be taken to a tax professional or the IRS.
When is the Tax Deadline?
The 2013 tax deadline (for your 2012 calendar year taxes) is Monday, April 15th (no Emancipation Day extension like the last few years).
The deadline is the day you must have your return to the IRS postmarked or e-filed.
When can I Start Filing my 2012 Taxes?
You can start now, so long as you have all W2’s, 1099’s, and any other tax related forms in order to properly fill out your return.
The tax prep software companies are usually making some last minute adjustments to their software with IRS guidance right about now, and you should receive all your tax forms within the next few weeks.
What if I Need a Filing Extension?
If you won’t finish your return and need an extension past the tax deadline, you must file IRS Form 4868 by April 15 as well. The deadline for filing an IRS tax extension is October 15, 2013 (an additional 6 months). Note that you still must submit estimated tax payments due (if you owe) by April 15, and then submit any revisions and your return by October 15.
Can I Still Lower my Tax Liability?
There are a few measures you can still take to lower your 2012 tax liability.
If you contribute to a traditional IRA, Keogh, or SEP IRA, it considered tax-deductible since you’ve already since you’ve already paid taxes on that income. You can do this up until the tax deadline for the 2012 calendar year, and it will lower your overall adjusted gross income (AGI) and potentially bring you a bigger return or cut the taxes you owe.
Make sure to confirm you are eligible to make this contribution by reviewing the Traditional IRA income phaseout limits for deductions.
If your income is low enough, you might also qualify for the Saver’s Credit for contributing to a retirement account.
Should you Itemize or Take the Standard Deduction?
Unless you’re 100% sure, you should run the numbers to see if itemizing your deductions makes sense versus simply taking the easy standard deduction.
If it doesn’t, nothing is lost.
Doing so might even put you into a lower tax bracket so that some of your income isn’t taxed at the higher rate.
If you did any of the following during 2012, it could impact your return:
- Made significant home energy efficiency improvements? You could qualify for a energy tax credit.
- Had self-employment income? You may be able to deduct business related expenses and your home office.
- Made charitable tax donations? You can deduct them.
- Had a child this year or was guardian for at least half a year? You could claim a child tax credit.
- Have out-of-pocket expenses for medical purposes? Deductible, beyond a certain threshold.
- Paid tuition or had other education related expenses? There are education tax credits.
- Contributed to an HSA outside of payroll? Deductible.
- Paid interest on a mortgage or property tax? They’re deductible.
- Made a 2010 Roth IRA conversion? 2012 was the final year to spread out income tax liability.
Submit your Tax Return by E-File
Last year, over 80% of taxpayers e-filed their returns. I’ve used both Turbotax and H&R Block to efile in the past, and they are equally great products (I do like H&R Block a bit more for their charitable donation and audit support).
Both companies offer a free 1040-EZ federal e-file version if you meet certain requirements (For Turbotax: $31,000 or less, $57,000 or less for active military, or to those who are eligible for the Earned Income Tax Credit. For H&R Block, your AGI must be $57,000 or less and you must be age 52 or less to qualify). Both charge $27.95 to file a state return.
If you don’t meet one of those requirements, you’ll probably want to opt for a paid online edition that best suits your needs.
After Filing, Adjust your Withholding Allowances
I remember the days when I thought it was simply awesome to get a big tax return.
Oh, how naive I was. The reality is that a tax return means that you gave the federal government an interest-free loan over the previous year.
If you keep getting huge returns, you may need to make some changes to your withholding tax allowances through your payroll department.
A better goal would be to have a slight amount due back to the government, without having to pay a penalty. That way, you’re the one getting the interest-free loan.
How to Check 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.
Beware of scams – the IRS never will send you an email with this option, so go to www.irs.gov and click ‘where’s my refund‘.
Tax Tips from 20somethingfinance Readers
A few weeks ago I gave away 5 copies of H&R Block to readers, who offered tax tips and stories as part of the contest in the comments. Here are some highlights:
“Always know all the investment accounts are in your name! I first filed my own taxes a few years ago (right after I graduated) and I had no idea that my father had an investment account in my name that was opened when I was 8. Needless to say, I didn’t realized I had an extra 1099 until the very last second and had to adjust my filing on April 15th.”
“I like to set up a folder in my gmail account for tax purposes. This way any donations I make that result in only a email receipt can be found in the same place when it comes tax season and I need to figure out deductions. I also keep a digital copy of past returns there and they are a lot more easily accessible if needed throughout the year than the hard copy that gets filed away.”
“if you own your own business and bought/financed/leased any equipment/software, look into Section 179 depreciation. If your purchases meet the qualifications, you can take 100% depreciation in the year of purchase. While section 179 deductions can’t cause a net loss, bonus depreciation can (and you can carry back your losses for a nice refund, should you decide to amend your past returns)!”
“If you rent out a room in your house, depreciate the carpet due to wear and tear / dirt stains! Also any appliances that break such as ceiling fans or a dishwasher.”
“A bartender may be tempted to underestimate his tips on his tax return. The same bartender may have a very difficult time proving he has sufficient income for a loan a few months down the road.”
That’s all, folks. Hunker down, grab a drink, throw on some tunes, and rip that band-aid off with one quick pull.
2012 Tax Discussion:
- What are you dreading or looking forward to with your 2012 taxes?
- What tax tips do you have for the 2012 tax year?