Tax season is well upon us! Don’t lose out by overpaying for tax preparation assistance with these tax-filing tips. You don’t want to leave a possible refund or stimulus money on the table.
Tax Preparation Assistance
Be sure you are taking advantage of community resources for tax preparation, rather than paying high fees at a tax preparer. If you are self-employed, have a lot of investments or other complications, it can be well worth paying a professional. But if, like most of us, your taxes are fairly straightforward then you may be able to file on your own by visiting the irs.gov [see “File Your Taxes For Free”] or use a local assistance program. Find a provider near you via treasury.gov, call AARP at 888-227-7669, or call your local United Way by dialing 2-1-1. Your local library is also a great source of information about tax preparation resources.
Don’t lose a precious portion of your tax refund by requesting a rapid refund. This is a loan with fees and interest that reduce the amount of money you should be getting in your pocket! The higher your refund, the higher your costs. If you file electronically with direct deposit, you will usually get your refund very quickly in any case. You also run the danger of borrowing more than you end up getting refunded. This could be due to a miscalculation by the preparer or an unexpected offset of your refund. In that case, you now have a loan to repay out of pocket.
COVID-19 Stimulus Economic Impact Checks
If you received your two rounds of stimulus checks, don’t worry about having to pay taxes on them. They are essentially a tax credit. However, if you did not receive either or both, your 2020 tax return is an opportunity get them by claiming the Recovery Rebate Credit on your 1040 form.
Earned Income Tax Credit
25 million Americans qualify for the EITC, which is a tax break for low-to-moderate income workers. It can reduce the taxes you owe or even provide refunds exceeding the amount of tax withholding you have paid. Unfortunately, about 20% of those who qualify apply for this benefit! If your household income was $56,844 or less be sure that you or your preparer run the calculations. While filers with children could qualify for a higher credit, single filers are also eligible.
For more tax-filing tips, check out: