- Personal Finance
Tips on How to File Income Taxes for 2013
Each year, millions of Americans file taxes.
It's Time to File Taxes
It's time to file taxes for 2013, and April 15 is right around the corner. But don't worry, with a little planning, you might be able to squeeze in a few last minute deductions even though the calendar is getting ready to turn to 2014. This article will begin by offering some advice on tax deductions, and continue to answer a few of the most popular tax questions. Remember, April 15th may seem far away, but it really is just right around the corner.
If you have some time now, it's a good idea to start collecting some large envelopes. Label them with common tax categories, such as Income, Medical Expenses, Household Expenses, etc. You can start to place the receipts in the right category now, and find the rest of your receipts before you even begin thinking about filling out the forms. Trust me, it will save you a lot of time and tension later.
You Need to Know
This is the first article in my series on income taxes. Each year, the tax law changes; this year, in particular, you will see many new changes. In this series, I will cover a variety of questions, including the following:
- Do I still have to file taxes if I am unemployed?
- Do I file married or file separately?
- How do I file for an extension?
- Can I file taxes for previous years, even though I will be late?
- How do I file my taxes for free online?
- How do I file taxes without my W2?
- What types of deductions can I take on my 1040 tax return?
Keep reading, and I'll try to answer all of your questions!
Common IRS Tax Deductions
Taxpayers often miss tax deductions allowed by the Internal Revenue Service. In this article, we will cover some of the most common tax deductions that are allowed by the IRS. We'll also cover some new deductions, and some expiring items that you'll want to tackle this year! Here are some easy tax deductions that you don't want to miss:
- You can deduct points if you refinanced your mortgage last year. The Internal Revenue Service has a list of rules regarding points, but you can often write off points even if the seller paid them.
- If you made your home more energy efficient last year, you can deduct some of these expenses.
- You can put away retirement money until the date of this year's tax deadline and deduct it for last year.
- Charitable contributions are a confusing topic to US taxpayers. Frequently, people ask if they can deduct items donated to charity. Yes! However, you can only deduct donations made to an official IRS approved charitable organization as defined by the Internal Revenue Service. Keep your donations under $250 unless you have a detailed receipt signed by a representative of the charity. If your donations exceed $500, you will also have to submit the IRS form 8283, which is easy to complete. Also remember that you can never write off cash.
- Deducting medical expenses can be tricky, so make sure it is worth the effort. You have to do some math to determine the correct deduction. Determine your Adjusted Gross Income on your tax form. Then, you can only deduct medical expenses that exceed 7.5% of that amount. As an added layer of confusion, your total medical and dental costs must be more than 10% of your total adjusted gross income (Source: IRS). Each expense must meet certain qualifications outlined by the Internal Revenue Service. For example, you cannot deduct over the counter weight loss drugs.
- Get help online. You can order Turbo Tax or H&R Block's tax software for a decent price online. Trust me, you can save so much money using these software packages. They saved me from having to hire an accountant.
- You can file an extension. You'll have extra time to file your taxes, but you still have to pay the tax due to the IRS by April 15 to avoid penalties. To file an extension, visit the IRS' website at www.irs.gov and download the Form 4868, the "Application for Extension of Time to File U.S. Individual Income Tax Return."
- Make sure you include your entire family's social security number on the tax form. If you do not have their social security number on the form, then their deduction will not be allowed, and you will lose a good deal of money. Make your life easier and include it on the original form.
Don't Forget These Deductions
1. If you were the victim of a burglary or other property crime, you may be able to deduct the cost of the stolen goods.
2. You can write off the amount of money that you paid for your accountant and your safety deposit box, too.
3. Don't forget about the Earned Income Credit and the Child Tax Credit. Many people forget that they can qualify for these money-saving programs. The Earned Income Credit is available to taxpayers who made less than $48,279.
4. Did you spend money looking for a job? Even if you didn't get the job, you may still be able to write off the expenses you incurred while you were looking for one.
5. People who refinanced their home can write off the points that they paid on the new mortgage. Remember that these points must be spread out over the life of the loan.
6. Did you make your home more energy efficient? The IRS will let you write off certain deductions that reduce your energy consumption. Some of these deductions include the cost of installing solar panels, wind energy equipment, energy efficient windows, a new energy saving hybrid vehicle, etc.
7. Some of your unemployment income is tax-free. You may deduct up to $2,400 from what you received in unemployment benefits.
8. Many of us donated money to Haiti after their devastating earthquake. Although the tragedy occurred in 2010, the IRS is allowing a deduction for all cash donations made before February 28, 2010.
How to Handle an IRS Letter
Some Laws May Be Different Than You Remember
1. The rules for charitable deductions have changed. First, remember that you can only write off donations that are "good" quality or better. Honestly, you probably shouldn't donate lower quality items anyway. Second, remember that you need to have a written receipt for all donations now.
2. Teachers for elementary, middle, and high school can write off expenses that they incurred for their classes. So far, this deduction is only good through 2009, and only allows expenses up to $250.
3. First time home buyers can use a special tax credit up to $8,000. However, there are special rules that apply, and you will want to use tax software such as TurboTax, or call your accountant. Make sure that you only claim what you have earned. The IRS is looking closely at these deductions to make sure they are used correctly.
What Happens if I Miss the Deadline?
Everyone knows that the taxes are due on April 15th. But what can you do if you missed the filing date?
1. First and most importantly, request an extension. You can visit the IRS' website and complete the paperwork. File it as soon as possible.
2. Complete your taxes as soon as possible. If you can e-file, go ahead and do so. If you cannot e-file, then mail your paperwork as soon as possible.