Tax season is here with an April 15 deadline. This guide covers essential steps like gathering documents, understanding new deductions for tips, car loan interest, and seniors, plus an increased SALT cap. Learn about potential higher refunds, free filing resources, how to avoid common errors, and protect yourself from scams to ensure a smooth tax filing experience.
Tax season is in full swing, with the deadline to file your return set for April 15. Experts advise starting early to get organized but without rushing. Key best practices include gathering all necessary documents, signing up for direct deposit for refunds, and keeping copies of your tax returns for several years. This year brings significant changes due to a Republican tax and spending bill, potentially leading to higher average refunds, projected to be $1,000 more than last year's $3,167 average. To prepare, gather documents such as your Social Security number, W-2s, 1099s, savings/investment records, and any eligible deduction or tax credit information. Consider creating an IRS identity protection PIN. Several important tax law changes are in effect: * **Standard Deduction:** Increased to $15,750 for single filers, $31,500 for married filing jointly, and $23,625 for heads of households. * **State and Local Taxes (SALT) Deduction:** The cap has significantly increased from $10,000 to $40,000, a change known as the Working Families Tax Cut, benefiting residents in high-tax states. * **Qualified Tips Deduction:** A new deduction, capped at $2,500 annually, is available for voluntary tips in specific industries (e.g., bartenders, food servers). It phases out for higher incomes and requires filing Schedule 1-A. Schedule 1-A is also used for the updated SALT, car loan interest, and senior deductions. For assistance, while IRS Direct File is not available, IRS Free File offers guided preparation for those earning $89,000 or less. Other resources include commercial software like TurboTax, licensed professionals, and free programs like Volunteer Income Tax Assistance (VITA) for low-income, disabled, or limited English speakers, and Tax Counseling for the Elderly (TCE) for those 60 and older. Avoid common filing mistakes such as using an incorrect name not updated with Social Security, missing online tax statements, or failing to report all income, especially from second jobs. The Child Tax Credit is $2,200 per child, with up to $1,700 refundable as the Additional Child Tax Credit for those with at least $2,500 income. Income limits apply ($200,000 single, $400,000 joint). The IRS recommends direct deposit for refunds as paper checks are being phased out. Be vigilant against tax scams, which often come via phone, text, or email – channels the IRS does not use for initial contact. Be wary of preparers promising unusually large refunds. Always keep copies of your tax returns for five to seven years.
