Now that 2017 is here, it's time to file your taxes. Although it can be a tedious process that involves digging through paperwork, for some it can mean a nice tax refund. We’re not tax preparation professionals ourselves, but here are some useful tips and information to help you make the most out of tax season (including where to find a professional, should you need one).
Find Free Tax Preparation Resources and Help
According to the IRS, if your adjusted gross income was less than $64,000, you can file for free using one of the online tax preparation services on the IRS website. Before choosing a software program, make sure you meet other requirements (some programs have age and residency requirements, among other conditions).
If you don't want to use a software program, find free tax prep help at a center near you. If you qualify, you can get in-person assistance from a professional who may be able to minimize your taxes and/or maximize returns.
Know Important 2017 Tax Deadline Dates
According to the IRS, the first day to file your 2017 tax return is January 23. If you do qualify for a refund, the sooner you submit your return, the sooner the IRS can get started on getting that refund to you.
If you don’t want to file your taxes immediately, it’s important to remember that the 2017 tax deadline is Tuesday, April 18.
Think you might miss the deadline? Talk to a professional about the process for filing for an extension. You may be able to fill out Form 4868 and send it to the IRS electronically. If you file your extension by mail, it’s recommended that you allow 2-5 business days of lead time.
2017 Tax Refunds May be Delayed So Plan Ahead
If you are depending on your 2017 tax refund to cover monthly expenses, it’s important to note that there could be delays that may affect you.
According to the IRS, tax refunds for families who claim the earned income tax credit and the additional child tax credit will be delayed this year. (The delay is to allow additional processing time the IRS needs to ensure scammers are not trying to claim tax benefits that belong to someone else.)
Plan ahead to account for the delay. As reported by NBC News, typically a direct deposit e-filer who files on day one will usually receive a refund within 21 days. However, with the extra processing time, that refund may be delayed until the end of February.
Protect Your Identity During Tax Season
Tax season is a busy time of year for scammers. A common ploy is phishing, which is when someone misrepresents themselves or impersonates someone else to gain your personal information. If someone contacts you via phone, text message, mail or email stating you are owed a tax refund and asks for your personal information, it should give you pause. To learn more, read our previous post about protecting yourself from scams. The IRS also maintains and frequently updates its own page of consumer scam alerts.
Refunds Are Not Guaranteed So Budget Accordingly
For many, tax time means a refund, but for others, it could mean extra expenses. For example, let’s say you started your own business in 2015. Did you pay quarterly taxes? If not, you may owe at the time of filing. Speak with a tax preparation professional and consider all of your potential costs, even if you don't plan to file until closer to the deadline. That way, if you need to save money for taxes owed or the cost of a tax preparer, you can start now.
What to Do With Your Tax Refund
If you get a tax refund, use it wisely. Consider the following...
- Minimize or pay off debt: First, attack past-due balances. After that, take care of high-interest debt and other balances.
- Save: The IRS makes stashing away your refund easy with forms like Form 8888, which lets you request that your tax refund be directly deposited into a savings account, checking account or even retirement fund.
This tax season, set a reminder for important deadlines and maximize your savings by seeing if you’re eligible for free tax prep help. If you expect to get a refund, think about what’s best for your personal financial situation.
For more financial tips, take our short (about 5 minutes each!), free financial education courses. You can also access free resources for things like local savings on groceries and budget tips from a credit counselor.
Disclaimer: LendUp is not providing financial, legal or tax advice. If you need or want such advice, please consult a qualified advisor.