Tax Procrastinators, It’s Not Too Late
With the April 18 tax deadline just around the corner, it can be intimidating to even start the filing process if you haven’t already. Americans tend to procrastinate filing their taxes, so you’re definitely not alone. In fact, more than halfway through the 2017 filing season, the U.S. Internal Revenue Service reported receiving 5.7 million fewer individual returns than at a comparable point last year. That’s an 8.5% drop from 2016.
But it’s not too late! With the help of the free tax resources listed below, it can actually be less stressful than you might think. Below you’ll find tips on how to do your taxes yourself, where to file an extension if necessary, which documents you need to get started, tax credits you may be eligible for, resources to help you file, and ways to de-stress during the process.
Online DIY Tax Resources
There are lots of effective resources available online to help make the tax preparation process more efficient.
One of the best resources available to file your taxes is MyFreeTaxes. Available to those who make under $64,000, MyFreeTaxes is an easy, safe, and free way to file your taxes online. Available for residents in all 50 states and the District of Columbia, you can file your federal and state returns for free. United Way promotes MyFreeTaxes to help support the health, education, and financial stability of every person in every community, and maximizing your tax refund is a key step towards that goal.
TaxSlayer is another free service available to U.S. Citizens and/or Resident Aliens who have an Adjusted Gross Income of $63,000 or less and are age 52 or younger to prepare and e-file their federal tax returns. Active duty military members with an Adjusted Gross Income less than $64,000 are also eligible.
For those who prefer working with an individual and are looking for a free service, visit MontanaFreeFile.org to find a free tax site near you. They also provide a checklist of items to bring to your first appointment.
You might want to consult a professional CPA for their tax preparation and filing. You can find a list of Montana CPA’s at mscpa.org/find_a_cpa.
Finally, when you have a simple legal question, the Montana Legal Services Association provides free resources at MontanaLawHelp.org. This helpful site can provide clarity for basic legal questions.
Filing an extension
Need more time to prepare your federal tax return? Forms are available from the IRS, and this page provides information on how to apply for an extension. The requirements are different for individuals and businesses, so make sure to review those before filing an extension. You still have around a month to file, so follow the steps below to get your documents in order and your filing underway.
Please be aware that an extension of time to file your return does not grant you any extension of time to pay your taxes. April 18 is the deadline for most to pay the taxes they owe to avoid penalty and interest charges.
Get going by gathering the correct documents
You’ll need the following to get started.
- Personal Information
- This is the most basic of all information to gather in preparation for completing tax forms. Gather social security numbers, identification, and addresses for all family members, including your dependents. It is also a great idea to have the previous year’s tax return.
- You may qualify for tax deductions if you paid for childcare or before/after school care that was necessary for you or your partner to go to work. The childcare provider or school can provide an annual statement that can be used for tax purposes. Include the provider’s name and taxpayer identification number with your documents if it is not already listed on the statement.
- Any and all income you received during the year must be reported for tax purposes. This includes any job income as noted on your W-2 from your employer, as well as any miscellaneous income that will be stated on a Form 1099.
- Housing — Purchases, Sales, and Debt
- Homeowners receive tax deductions for interest paid as well as property taxes. And if you purchased a home or refinanced during the year, the costs for obtaining the mortgage may also be deductible. During the closing of a home or refinance loan, you should have received final documentation stating the costs of the loan along with the loan terms. This is sufficient documentation.
- Both saving for education and paying for education are items to note in tax returns. During the year, if you contributed to a state-sponsored Education Saving Program (ESP), you’ll be able to claim that as a deduction on your State taxes.
- As part of the Affordable Healthcare Act (Obamacare), everyone is required to carry health insurance or there is a tax penalty assessed. Form 1095 is the documentation needed to prove health insurance coverage. If you’re covered by a plan purchased through the Health Insurance Marketplace, Form 1095 will be mailed to you. If you purchased a qualified plan on your own, directly through an insurance company, you will receive a Form 1095-B and should you be covered by your employer, they will provide a Form 1095-C. You only need to provide one of these forms.
- Charitable Donations
- During the year, you might have donated to charitable organizations, such as churches, food banks and other non-profit organizations and these contributions may be tax deductible.
For more detailed information, see our post about tax preparation.
You may be eligible for tax credits you’re not even aware of.
- Homeowner Credits
- There are several tax deductions that homeowners can take advantage of:
- Mortgage interest
- Property taxes
- Renewable-energy tax credits
- Elderly Homeowner/Renter Credit
- There are several tax deductions that homeowners can take advantage of:
- Child and Dependent Care Credit
- If you’re a working parent paying for childcare for dependents under the age of 13, the Child and Dependent Care Credit can help to offset the costs. This credit also works for costs associated with caring for a spouse or dependent (of any age) who is mentally or physically unable to care for themselves.
- Depending on your gross income, this credit provides up to 35% of qualifying expenses. To file for this credit, your filing status must be either single, married filing jointly, head of household, or qualifying widow or widower with a dependent child.
- Saver’s Tax Credit
- If you invest in a 401k or another eligible retirement plan, you could be entitled to the Saver’s Tax Credit. To file, you must be at least 18 years old and not a full-time student or a dependent on another person’s tax return. Taxpayers with the least income qualify for the greatest credit, which is up to $1,000 for those filing as single or $2,000 if filing jointly. The maximum income for single filers is $30,750 and $46,125 for heads of household. For those who are married and filing jointly, the maximum income is $61,500.
- American Opportunity Tax credit
- The American Opportunity Tax Credit helps families pay the costs of higher education, covering four years of post-secondary education for students that are enrolled at least half-time for at least one academic period.
- Lifetime Learning Credit
- For those with a lower income limit, there is the Lifetime Learning Credit, which also helps to offset the costs of post-secondary education. This credit differs from the American Opportunity Tax Credit in that you can use it for any years of post-secondary education, not just the first four. This credit is also available if you’re not pursuing a degree. If you make less than $55,000 as a single individual or $110,000 as a married couple filing jointly, you could be eligible for full credit, which may be as high as $2,000 per student.
For more detailed information on tax credits, see our post about available tax credits.
Take a deep breath
The most important thing to remember when preparing your taxes is to remain calm. While it can be a daunting task, our resources and guides will help. When all else fails, focus on our Top 10 Ways to De-stress During Tax Season.