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9 last-minute tax tips to keep in mind
You’re not alone if you’ve waited until the last minute to file your taxes. It’s a tedious process, especially if you have a complicated tax situation. On top of that, it’s not fun if you know you owe money to the IRS. Unfortunately, you can’t ignore the tax-filing deadline—unless you want to subject yourself to penalties. But don’t stress! The following tips will help make filing your 2022 tax return a breeze:
1. File on time
For your taxes to be considered filed on time, you must file or mail your return by midnight on April 18, 2023. This is different from the usual deadline of April 15th, giving you three extra days.
If you fail to submit your tax return by the deadline, the IRS will issue a Failure to File Penalty. That penalty is calculated based on how late you file your return and the amount of unpaid tax as of the original payment due date. The Failure to File Penalty is 5% of the unpaid taxes for each month (or part of a month) that a tax return is late. The penalty will not exceed 25% of your unpaid taxes.
There is usually no penalty if the IRS owes you a refund, or if you don’t owe taxes altogether. But, it’s still good practice to file on time—you have just three years to claim a tax refund.
2. Take breaks
Even if you’re working down to the wire, don’t try to complete your return in one sitting. Get up and take breaks periodically to avoid making any critical mistakes. Stepping away from your return for a few minutes will let you come back with a fresh set of eyes—and hopefully allow you to catch any errors, which brings us to our next point…
3. Check for mistakes
Check for mistakes before you submit your tax return, even if you’re using online tax software. Tax software can usually catch glaring mistakes, but you need to proof for small typos. Be sure to look over the following:
- Your name
- Your Social Security number
- Your employer’s EIN (employer identification number)
- Any calculations if you’re filing a paper return
- Your bank information (account and routing number)
- Whether you signed and dated your return (if filing by mail)
4. File electronically
Filing electronically, also known as e-filing, is the easiest, fastest, and most reliable method of filing your tax return. E-filing will also allow you to receive your refund faster. You can file your taxes for free with IRS Free File if your adjusted gross income is $73,000 or less. If you don’t qualify for Free File, you can still use the Free File Fillable Forms.
5. Send your return to the right address
Despite many e-filing options available, there are still people who prefer to mail their tax returns instead. If you’re one of them, check that you’re mailing your return to the correct address. You can look up the correct address based on your state and return type on the IRS’s website.
6. File an extension (if needed)
If your tax situation is complicated and you won’t be able to file your return on time, consider filing an extension. You can request an automatic extension from the IRS with Form 4868. You can access the form through Free File on the IRS website, even if you make more than the maximum threshold for Free File.
If you file an extension, you should still pay what you owe by April 18th. Filing an extension will give you more time to submit your return and avoid a late-filing penalty, but not paying what you owe by the deadline will result in late-payment penalties and interest.
7. Know what to do if you can’t pay
If you owe the IRS but can’t afford to pay in full, you may be able to pay in installments by applying for the IRS Online Payment Agreement. If you owe $50,000 or less in combined tax, penalties, or interest and have filed your return, you can apply for a long-term repayment plan. You can apply for a short-term repayment plan (180 days or less) if you owe less than $100,000 in combined tax, penalties, and interest.
8. Track your return and refund online
You can create an account with the IRS to track your return and refund status. If you just want to check your refund, you can use the IRS’s Where’s My Refund? tool. To check your refund, you’ll need:
- Your Social Security or taxpayer ID number
- Your filing status
- The exact refund amount on your return
9. Start planning for next year
Let this be a lesson learned—preparing your tax return takes time. Keep tax-related documents and forms organized throughout the year so you don’t have to scramble at the last minute. If you suspect that you’ll owe money, start setting funds aside in a savings account each month. That way, you’ll have the funds needed when the next tax reason rolls around.
Tax time: What’s new for tax season 2023
It’s tax season again! With the pandemic-era tax changes coming to an end, and new rules instituted to battle inflation, there are many changes to be aware of when preparing to file your return—especially if this is your first time filing. The deadline to file is April 18th, which is a few days later than the usual April 15th deadline, but it will be here before you know it. File your taxes with confidence—below are a few things to keep in mind when filing your 2022 tax return.
Pandemic-era tax credits
Economic Impact Payments
No new Economic Impact Payments (also known as stimulus checks) were issued in 2022. This also means you will not be able to claim any Recovery Rebate Credits.
Child Tax Credit
The American Rescue Plan increased the Child Tax Credit (CTC) in 2021 and made it fully refundable. In 2022, the CTC returned to its previous nonrefundable status and was reduced to $2,000 per qualifying child. It will also once again be limited to dependents under the age of 17.
Child and Dependent Care Credit
If you pay for the care of a qualifying person in order to work, you can still receive a credit for some or all of your expenses. The IRS, however, has significantly reduced the child and dependent care credit cap for 2022—to a maximum of $2,100. In addition, the credit has reverted to its previous nonrefundable status, and the amount of employment-related expenses you can claim has been lowered to $3,000 for one qualifying person or $6,000 for two or more.
Charitable deduction changes
Another big change this year revolves around charitable deductions. For those filing 2022 tax returns, any charitable contributions must be itemized using the Schedule A form to get a deduction. That’s a big change from the last two years when the IRS offered an above-the-line deduction for contributions.
Inflation Reduction Act changes
The Inflation Reduction Act signed into law in August of last year provided a few new tax breaks that filers could take advantage of in the 2022 tax year.
Increased credit for solar energy products
The act increased the Residential Clean Energy Credit—you can now subtract 30% of the installation costs for solar heating, solar electricity (such as panels), and other solar products for the home. There is also no cap on the credit or income limitations. Additionally, the act removed the principal residence restriction, meaning homeowners who installed solar products on second or vacation homes are also eligible for the credit.
Eligibility for electric vehicle (EV) Tax Credit
Consumers who bought a new electric vehicle (EV) may be eligible to receive the Qualified Plug-in Electric Drive Motor Vehicle Credit up to a maximum of $7,500 depending on the capacity of the battery. While that credit isn’t new, those who bought the vehicle between Aug. 17, 2022 and Dec. 31, 2022, must show that the vehicle underwent final assembly in North America to qualify. This requirement doesn’t apply to vehicles purchased earlier in 2022 before the act was signed.
Income tax brackets have changed for 2022
For the 2022 tax year, income tax brackets were also raised to account for inflation. Your income bracket refers to how much tax you owe based on your adjusted gross income, which is the money you make before taxes are taken out, excluding itemized exemptions and tax deductions.
Interest on refunds
In 2022, some taxpayers received interest payments on their federal refund if they received their refund late. Refund interest payments are taxable and must be reported when filing your 2022 federal income tax return. The IRS sent Form 1099-INT to anyone who received $10 or more in interest. If you did not receive the form, you must still report your interest income earned. Check your account statement or contact your financial institution to get your interest-earning amounts.
If you were self-employed in 2022, there are various deductions you can claim on your tax return, like travel expenses or the home office deduction. The home office deduction covers mortgage interest, insurance, utilities, repairs, and depreciation. However, if you, like millions of Americans, worked remotely, you cannot claim these deductions. The Tax Cuts and Jobs Act suspended the business use of home deductions through 2025. Home office deductions are reserved for independent contractors or other self-employed individuals who regularly and exclusively use their homes to conduct business and their work. So, employees who receive a paycheck or W-2 from an employer are not eligible to claim the deduction—even if they currently work from home.
How to Stay Ahead
Last quarterly payment for 2022 is due on January 17, 2023
Taxpayers may need to consider estimated or additional tax payments due to non-wage income from unemployment, self-employment, annuity income, or even digital assets. The Tax Withholding Estimator on IRS.gov can help wage earners determine if there is a need to consider additional tax withholding to avoid an unexpected tax bill when they file next year
Gather 2022 tax documents
With the end of the month comes an influx of tax forms in the mail or your email inbox. Be on the lookout for your W-2 from employers, Forms 1099 from banks or other payers, Form 1099-K from third-party payment networks, Form 1099-NEC for nonemployee compensation, Form 1099-MISC for miscellaneous income, or Form 1099-INT if you were paid interest. Additionally, if you have health insurance through the Marketplace, you will need Form 1095.
Georgia’s Own mailed out 1099-INT to all eligible members on January 20th, 2023. Those who received less than $10 in interest will not receive a 1099-INT.
Ensuring your tax records are complete before filing helps you avoid errors that could lead to processing delays.
Get refunds faster with direct deposit
The fastest way to get a tax refund is by filing electronically and choosing direct deposit. Direct deposit is faster than waiting for a paper check in the mail. It also avoids the possibility that a refund check could be lost, stolen or returned to the IRS as undeliverable.
In need of a new checking account? Georgia’s Own has a variety of checking account options so you can be sure to find the right one for you. Plus, through the end of February, members are eligible for a $200 bonus* when opening a NEW Perks+ Checking account with online banking (new accounts only, not converted).
- Several pandemic-era tax credits returned to their previous caps, such as the Child Tax Credit and the Child and Dependent Care Credit.
- The Inflation Reduction Act implemented changes, like the increased Residential Clean Energy Credit.
- Gathering all your tax documents ahead of time can help you get the biggest refund and avoid errors that could lead to processing delays.
Remember—if your adjusted gross income (AGI) is less than $73,000 annually, you qualify to file your return for free using the IRS’s Free File Program. Additionally, Georgia’s Own members are eligible for a discount on TurboTax®** and H&R Block®.***
Once your return is accepted by the IRS, you can use Where’s My Refund to track when you’ll receive your refund. April will be here before you know it, so allow yourself plenty of time to file to ensure there are no errors. Keep these tips in mind, and tax season will be a breeze.
Tax time: what’s new for tax season 2022
The COVID-19 pandemic has impacted our day-to-day lives for the past two years—including our taxes. And tax season is here again. This year, there are various changes to be aware of before you file—especially if this is your first time filing. The deadline to file is April 18th, which is a few days later than the usual April 15th deadline, but it will be here before you know it. File your taxes with confidence—below are a few things to keep in mind when filing your 2021 tax return.
Economic Impact Payments
In 2020 and 2021, taxpayers were issued Economic Impact Payments (also known as stimulus checks) as part of the CARES Act. However, many people were left out, receiving only partial payments or no payment altogether. If you did not receive the entire amount you qualified for in 2021, you can claim the Recovery Rebate Credit. The Recovery Rebate Credit is for individuals who did not receive stimulus checks or full payments. If you file electronically, the tax software you use will help you determine your Recovery Rebate Credit. The Form 1040 and Form 1040-SR instructions can also help determine your eligibility.
Advanced Child Income Tax credit
The IRS advanced Child Income Tax Credits as part of the American Rescue Plan Act. Families that made less than a certain amount with a qualifying child under 18 met the requirements for these advance payments. Half the total credit was paid in monthly payments, and the other half can be claimed when you file your 2021 tax return. If you qualified for the advanced payments, compare what you received with the amount of Child Tax Credit you can claim on your 2021 return. Those who received less than the amount they’re eligible for can claim a credit for the remaining amount. If you received more than you’re eligible for, you might need to repay some or all of the excess amount. The IRS will send Letter 6419 with the total amount of advance Child Tax Credits you received—be sure to file that with your tax records. If you did not receive any advanced payments, you can get a lump-sum payment by claiming the Child Tax Credit on your return.
Interest on refunds
In 2021, some taxpayers received interest payments on their federal refund if they received their refund late. Refund interest payments are taxable and must be reported when filing your 2021 federal income tax return. The IRS sent Form 1099-INT to anyone who received $10 or more in interest. If you did not receive the form, you must still report your interest income earned. Check your account statement or contact your financial institution to get your interest-earning amounts.
Charitable deduction changes
Taxpayers can take standard or itemized deductions. Most taxpayers take the standard deduction, which increased slightly this year—$12,550 if filing single, $18,800 if filing head of household, and $25,100 if filing jointly. Taxpayers who do not itemize deductions can take a charitable deduction of up to $300 (if filing single) for cash contributions made to qualifying organizations. If you’re married and filing jointly, you can deduct $600. This means the deduction lowers your adjusted gross income (AGI), which is your total income minus any deductions already taken, and taxable income—translating into tax savings for you. Cash contributions are donations made by check, credit card, or debit card. Keep in mind that every situation is different as to whether you should take the standard deduction or itemize. For more information on claiming charitable deductions, you can read Publication 526, Charitable Contributions.
Unfortunately, because of the pandemic, many families continued to struggle with medical bills. You can deduct medical expenses above 7.5% of your AGI. For example, your AGI is $50,000, and you incurred $8,000 in medical expenses. You would take $50,000 and multiply that by .075 (7.5%) to get $3,750. In this case, everything above $3,750 would be deductible—meaning you could deduct $4,250. The lower your AGI, the more deductions you will receive. Most medical expenses can be deducted unless you funded them with a flexible spending account (FSA) or health savings account (HSA). However, if you wish to deduct any medical expenses, you’ll need to itemize, which takes longer.
If you were self-employed in 2021, there are various deductions you can claim on your tax return, like travel expenses or the home office deduction. The home office deduction covers mortgage interest, insurance, utilities, repairs, and depreciation. However, if you, like millions of Americans, worked remotely, you cannot claim these deductions. The Tax Cuts and Jobs Act suspended the business use of home deductions through 2025. Home office deductions are reserved for independent contractors or other self-employed individuals who regularly and exclusively use their homes to conduct business and their work. So, employees who receive a paycheck or W-2 from an employer are not eligible to claim the deduction—even if they currently work from home.
Earned Income Tax Credit
While this isn’t new, the Earned Income Tax Credit (EITC) often goes unclaimed. Around 20% of eligible taxpayers don’t claim the benefit or file a return because they don’t realize they qualify. The EITC helps low- to middle-income workers and their families receive a tax break. If you’re eligible, that money earned can reduce the amount you owe or go towards your tax refund. You can determine if you meet requirements through the IRS’s EITC Assistant.
Remember—if your adjusted gross income (AGI) is less than $73,000 annually, you qualify to file your return for free using the IRS’s Free File Program. Once your return is accepted by the IRS, you can use Where’s My Refund to track when you’ll receive your refund. April will be here before you know it, so allow yourself plenty of time to file to ensure there are no errors. Keep these tips in mind, and tax season will be a breeze.
6 ways to make the most of your tax refund
You’ve finally received your tax refund! While it’s exciting to have some extra cash, it can be tempting to spend it on whatever, whenever—after all, it does seem like free money. However, it’s crucial you use your refund wisely, rather than spending it on frivolous things. Here are some ways you can make the most of your tax refund:
Pay off existing debt
It sounds obvious, but if you have student loan or credit card debt, use your refund to help pay it off. It might not sound fun, but putting money towards paying your debt gets you closer to financial freedom. Interest rates can snowball and make payments seem overwhelming, so any amount you put forward helps. Start by paying off debts with the highest interest, and then trickle down from there. Later on, once you’ve finally eliminated your debt, you’ll be thankful you were responsible and used that refund.
Save it for emergencies
Again, another obvious choice—save your refund! According to CNBC, 30% of households have less than $1,000 saved. That isn’t nearly enough to cover your costs if you were to have an emergency like your car breaking down or any unexpected medical bills. Ideally, you should have three to six months’ worth of living expenses saved. Open a savings account if you don’t have one already, and save your refund. Even if you can’t put away that much, use a portion of your refund—just a little is better than none.
Start home improvements
Have you been dying to give your home some much-needed improvements but had to put your funds elsewhere? Well, now that you have your tax refund, you can start your home renovation plans now! There are dozens of projects you can do for under $1,000—from painting to landscaping, those little improvements can all help your home drastically. Not only will it make you happier, but it will also add value to your home.
Use towards big purchases
Does your child need braces, or are you looking to buy a new car? Maybe even a home? Your tax refund is perfect for offsetting those costs. Use it to save for a down payment on a car or house. Every little bit helps when it comes to these purchases, so make your refund count where it should. Open a high-yield savings account, like a money market savings account, so you can earn the most from your money.
Donate to charity
Earn some good karma—donate part of your refund to charity. It feels nice to give back to the community, and using part of your refund to help your favorite organization is the perfect way to do so. Be sure to save your receipts, too, so you can write off the donation on your taxes next year.
Lastly, if you’ve done all of these things, help yourself! We all need self-care sometimes. Go on the trip of your dreams, or simply treat yourself to a new wardrobe—either way, don’t forget about making sure the most important thing is taken care of: you!
How to file taxes for first timers
It’s tax season, which means now is the time to start thinking about how and when you’re going to file your taxes, so you can secure that refund. According to a TaxAct poll, more than a third of millennials rely on their parents to prepare their taxes. However, doing your taxes without your parents’ help has its advantages—you can better understand your finances, and you’ll know how to file your taxes in the future. Are mom and dad making you bite the bullet and file taxes on your own this year? Not sure where to start? Here are the steps you should take to file your taxes for the first time.
Determine your filing status
The first, and most critical step, is to determine your filing status. Your status defines your filing requirements, deductions, eligibility for credits, and your correct tax. It’s based on your age, marital status, and other factors.
Determining your filing status is vital because it impacts how much you owe the Internal Revenue Service (IRS) or how much of a refund the IRS owes you. If you’re unsure of your status, the IRS has a tool that can help you.
Gather necessary paperwork
You can’t file your taxes unless you have the proper paperwork. You need personal information, like a valid Social Security number, income and receipts, meaning any Social Security benefits or Unemployment Compensation, if applicable, as well as receipts from royalties, partnerships, or trusts.
You will also need your W-2 from employers, or a 1099 form, if eligible—for example, if you had any freelancing opportunities or side gigs. If you’re a college student, you might need a 1098-T form, which should be provided by your school. This includes information you’ll report to claim education credits, like tuition, scholarships or grants, and other related expenses. There are dozens of forms you potentially need, so be sure to review this list of some the most commonly used forms.
Decide how you want to prepare
You can prepare your taxes using online software or on your own. There are copious benefits to using online software—it’s very affordable, user-friendly, and fast. When you use online software, you can finish your taxes in as little as 30 minutes. Each software also has various tiers you can pick from based on your necessities and price levels.
Preparing taxes on your own can be beneficial, too. You save money, you can file anytime, and you gain a better comprehension of your finances. However, it leaves room for more error, so be patient and be thorough.
If your adjusted gross income (AGI) is less than $73,000 annually, you qualify to file your return for free using the IRS’s Free File Program, which enables you to use popular tax software for free. Simply use the Free File Online Lookup Tool at irs.gov, and the eligible programs are listed.
From there, you have two filing choices. You can file electronically, known as e-Filing, or by paper. e-Filing is fast, reliable, and has a faster processing time, allowing you to receive your refund promptly.
Paper filing has its advantages, too. There are fewer security risks because you aren’t entering personal information online, meaning you can avoid the possibility of identity theft. It’s also simple—all you do is fill out a form. However, paper filing has a longer processing time—it could take up to six weeks to receive your refund.
Select a standard deduction or itemized deduction
Deductions are expenses incurred throughout the year that can be applied to your taxes. They lower your taxable income and vary by federal and state level. There are two categories: standard and itemized.
Standard deductions are the most prevalent. The amount varies each year and is based on filing characteristics. Standard deductions are the most popular because the amount is already set, so there is no need to calculate anything.
Itemized deductions are expenses allowed by the IRS that reduce your taxable income. When you itemize on your tax return, you can select from several deductions rather than taking a flat-dollar amount. You can deduct on medical expenses, property taxes, or charitable contributions—just to name a few.
If you’re having difficulty deciding if you want a standard or itemized deduction, you’ll need to do some math. Add up your expenses you wish to itemize. If the value of the expenses you can deduct is more than the standard deduction, then you should itemize. Itemized deductions take more time to prepare, but they could potentially save you money in the long-run. However, you must have proof of your expenses—it’s imperative to keep records and save receipts.
Other important tips
So, now that you have the basics down, it’s essential to keep a few things in mind. First, file only one tax return, no matter how many jobs you’ve held in the last year. Also, be sure your parents aren’t claiming you as a dependent—if you’ve been claimed twice, it could result in an audit by the IRS, meaning they’ll need to verify you’re reporting information correctly and not committing tax fraud.
Lastly, and most importantly, give yourself enough time. When you scramble at the last minute, you could make potential errors that you otherwise would’ve caught. It’s best to start prepping at least two months before the tax deadline, which is April 18, 2023.
- The first, and most critical step, is to determine your filing status, because it impacts how much you owe the Internal Revenue Service (IRS) or how much of a refund the IRS owes you. If you’re unsure of your status, the IRS has a tool that can help you.
- The most common tax forms include your W-2 from employers, or a 1099 form if you had any freelancing opportunities or side gigs. If you’re a college student, you might need a 1098-T form, which should be provided by your school. Additionally, if you have health insurance through the Marketplace, you will need Form 1095-A.
- Gathering all your tax documents ahead of time can help you get the biggest refund and avoid errors that could lead to processing delays.
Once your return is accepted by the IRS, you can use Where’s My Refund to track when you’ll receive your refund. So, go ahead and start filing—that deadline will be here before you know it. Plus, the sooner you get started, the sooner you can score that refund.
Tax Refund Touchdowns
So, you got a tax refund – now what? While you might have morphed into a human version of the “money-mouth face” emoji (🤑), fight the urge to treat yourself. Unless you’re debt free and have a nice chunk of change in your savings and retirement accounts, getting financially fit should be your priority over splurging on big-ticket items.
Here are five ways to use your refund responsibly:
Tackle your debt. If you’re carrying high-interest debt, paying it off should be your top priority. Paying interest sucks, and if you’re carrying a large balance on a credit card but only making the minimum payment each month, you may never feel like you’re getting ahead. Use your tax refund to pay off any debt you have. If your refund doesn’t cover everything, it’s time to figure out a debt-payoff plan.
Save it. More than half of Americans don’t have enough in savings to cover a $1,000 emergency, according to Bankrate. If you’re just starting out, money might be a little tight, making it even harder to build up your savings. Think about tossing your tax refund into your savings account so you’re better prepared for life’s little surprises. If your emergency fund already has enough money to cover at least 3–6 months of expenses, consider setting up another savings account for a specific goal, such as a travel fund or a down payment for a new car.
Donate it. Helping others gives us the warm-and-fuzzies, so why not use your refund for good? When your budget is tight, it can be hard to find extra money throughout the year, so donating the cash from your refund is a perfect opportunity to make a difference. Plus, your charitable donation could be tax-deductible next year.
Spend it (on something you need). The keyword here is need. If you’ve been putting off car repairs or minor medical or dental procedures, your tax refund could help you cover these larger, but necessary, expenses.
Spend it (on something you want). Okay, okay…I know I cautioned against splurging, but if you’ve stuck to your budget, saved, and stayed out of debt all year, you’ve earned the right to buy yourself something nice. Just don’t get carried away, of course!
I didn’t get a huge refund. Did I do something wrong? Nope, not at all! Your tax refund isn’t free money; it’s money you overpaid to the government over the course of the year. If you owe money on your taxes, it means you didn’t pay enough out of each check. Take the time to periodically check your withholding and adjust if necessary (the IRS has a handy calculator on their website that can help you out). Paying attention to your withholding is important for two reasons: 1) if you don’t pay enough from each paycheck over the year, you could face an unexpected bill when you file your taxes, and 2) if you normally get a large refund, you can opt to have less withheld up front—your paychecks will be a little higher, giving you more flexibility each month.