5 Easy Tips for Smoother Tax Prep.

If you haven’t done your taxes yet, you’re not alone. According to the Internal Revenue Service, they receive a majority of Americans’ returns the week taxes are due. But with this year’s due date of Tuesday, April 18, coming up quickly, you don’t want to wait too much longer. If you are feeling overwhelmed by the thought of doing your taxes, or simply have no idea hot to start getting organized, these tips will help.

Set Goals and Break Down Tasks- Large projects are always easier to handle when you break them down into manageable chunks. Rather than looking at ‘doing taxes’ as one overwhelming job, break it down into small tasks that are easier to complete. Give yourself a day or two between tasks to regroup and get ready for the next thing.

Focus and Avoid Distractions- We have been conditioned to believe that multi-tasking is the key to being productive. But more and more, studies show that it can actually make us less efficient and produce higher levels of stress than focusing on and completing a single task at a time. Preparing for and doing your taxes takes focus. Set aside time specifically devoted to those tasks and eliminated distractions. You’ll accomplish your goals quicker and be less likely to overlook details and make mistakes when you’re focused.

Gather All Information- The key to getting your taxes done accurately is having all the necessary information and paperwork together and organized. While each person’s paperwork will vary depending on their unique situation, every filer will need the following basic information to get started:

Social Security numbers and dates of birth for yourself, as well as your spouse and dependents (if applicable)
Copy of last year’s tax return
Your electronic filing PIN
All statements relating to earned income, such as W2 and 1099 forms and records related to investment, rental and retirement income.
Receipts for charity donations, medical expenses, HAS contributions, ect.
Interest paid on mortgages
Interest earned on savings accounts

Talk with your tax preparer or review a complete list of necessary documents included with your tax prep software for a comprehensive list. Once you know what you need, keep the list handy so you can refer to it frequently and collect the paperwork you need throughout the year to get a head start on next year’s re tune.

Allow Enough Time- Once you have all your information together, it’s time to actually do your taxes and file your re tune. Be sure to allow enough time to have them prepared and filed before the deadline. With most people waiting until the last minute, you could find yourself unable to get an appointment, or may find an online-based tax preparation software an overload if you wait until the day before. Plus, you never know if you’ll run into a glitch that could set you back. Better to give yourself some wiggle room so you’re sure to file on time.

Don’t Spend Your Refund Before You Have It!- You’ve heard the expression that says there are only two sure things in life: death and taxes. But what is not guaranteed is that you’ll be getting a tax refund. Even if you regularly received a refund, changes in your income and circumstances, along with differences in the tax code, could mean you’re not getting one this year. As tempting as it might be to overspend thinking you’ll make up for it with a refund, resist that temptation.

Score Free Tax Help During March’s tax Madness

The month of March can be Madness for everyone. While the nation’s best college basketball teams sweat it out on the court, millions of Americans sweat to file their tax returns before the clock runs out. Here are eight elite tips for scoring free tax help before this year’s tax filing deadline.

Tax Counseling for the Elderly: TCE offers free tax assistance to low-income taxpayers and seniors age 60 and older. IRS-certified volunteers specialize in tax questions like pensions and retirement issues. Click here to find an AARP Tax-Aid site or call 1 (888) 227-7669.
IRS Facilitated Self-Assistance Program: IRS-certified volunteers guide you through the process of preparing and filing a simple tax return, free of charge. Find a facilitated self-assistance site .
Armed Forces Tax Council: The IRS provides free tax help to military personnel and their families. Volunteer tax counselors address tax issues specific to the military including combat-zone tax benefits. Learn more about the Armed Forces Tax Council.
IRS Free File Program: This free, federal income tax preparation and e-filing program is available to people whose household income is $57,000 or less. Qualified taxpayers can access commercial web software through IRS.gov to complete their federal returns for free.Some Free File Alliance companies offer free state returns, too.
IRS Free File Fillable Forms: Even if you don’t qualify for the IRS Free File Program, you can still complete your federal return for free using IRS fillable forms, electronic versions of paper IRS tax forms
Volunteers for Tax Assistance: The VITA program provides free tax help to people who earn $50,000 or less. IRS-certified volunteers provide basic income tax return preparation and ensure taxpayers take advantage of special credits like the Child Tax Credit and the Credit for the Elderly and Disabled. Take Charge America serves as a qualified VITA filing site in Phoenix, Arizona. Click here to find a VITA location near you or call 1 (800) 906-9887.
Tax Preparation Services: Companies like H&R Block and Jackson-Hewitt provide free tax preparation and filing of simple (1040EZ) federal returns. If your return is not considered “simple,” you can opt to pay your tax prep fee directly out of your refund.
Online Tax Software: Taxpayers can file free federal returns at numerous tax-preparation websites including taxact.com, etax.com, turbotax.com, freetaxusa.com and hrblock.com . Such websites offer complimentary preparation and filing of 1040EZ forms. Taxpayers can “upgrade” for live web or phone tax support, or to prepare complex returns. State returns are also available for a fee.

Have you looked into the Student Loan Tax Break Yet?

Your student loans may be able to get you a tax break – here’s how.

Paying interest is no fun. But if you have student loan debt, you don’t have much of a choice.

Wouldn’t it be great if the government gave you a break on the student loan interest you pay each year?

Well, here’s some good news: You might be able to deduct a portion of student loan interest from your taxable income – up to $2,500 – thanks to the student loan interest tax deduction.

How the Student loan interest tax deduction works.
The IRS lets you claim the student loan interest tax deduction on From 1040, Line 33. Because it’s considered an “above the line” deduction (i.e., an adjustment to your income), you don’t have toitemize your taxes in order to claim it.

Keep in mind, this is a deduction and not a credit. That means, claiming this deduction will reduce your taxable income by up to $2,500. In terms of real dollars saved, your total tax bill could be reduced by up to $625, depending on your income and how much student loan interest you pay.
who qualifies for the deduction?
There are 3 qualification criteria you need in order to claim the student loan tax deduction:

Have a Qualified Student Loan: First, you need to have a qualified student loan. The IRS says that the loan must be taken out to pay for qualified education expenses. Not only that, but it can’t be a loan from someone related to you, or provided as part of a qualified employer plan. So, if your grandma offers you a loan for your education, and you pay interest to her on top of making principal payments, you can’t deduct that interest. The same is true if your employer offers student loans as part of a company benefit. Only loans from the federal government or a private lender will qualify.
Be a Qualified Student: Next, the loan must be taken out on behalf of a qualified student in order to deduct the interest. The student can be you, your spouse, or dependent. So, you can still deduct student loan interest from your income, even if the loan is financing your spouse’s or child education and not yours. However, no matter who that student is, they must have been enrolled at least half-time in a program at an eligible educational institution when the loan was taken out. The program should lead to a degree, certificate, or other recognized credential.
Meet Income Requirements: Finally, there is an income requirement. The IRS won’t let you claim the student loan interest deduction if your modified adjusted gross income (MAGI) is more then $160,000 (married filing jointly) or $80,000 (other filing statuses).

To see if you qualify and find out how much you might personally save on your taxes, you can use a student loan interest deduction calculator to run the numbers. The IRS also offers a handy tool to determine if you qualify for the deduction. It takes about 10 minutes to complete.
How the deduction impacts your tax bill.
Realize that a tax deduction reduces your income; it doesn’t mean a dollar-for-dollar reduction in what you pay in taxes (that’s credit). With a tax deduction, your tax bill is smaller because your taxable income is lower.

In the case of the student loan interest tax deduction, the maximum tax benefit is $625. Your actual tax benefit is determined by your income, filing status, and how much you paid in student loan interest.

Let’s say you file single, your MAGI is $45,000, and you paid $800 in student loan interest. Your income might be reduced by $800, but the actual impact on your taxes is to lower what you pay by $200.

It is still a reduction in what you owe, and when you combine the student loan interest tax deduction with other deductions and credits, it can make a big difference in your final tax bill (or refund).
How to claim the student loan interest tax deduction.
Start by taking a look at how much you paid in interest (not your total student loan payments). That information can be found on Form 1098-E. Each of your student loan services should send you a copy. You con find the interest you paid in Box 1.

Add up the amounts from all your forms and enter it on your tax form in the appropriate place. However, you might need to make sure you meet the income requirement.

According to the IRS, your MAGI is basically your adjusted gross income (Line 37 of the Form 1040) after adding back in certain deductions. Some of the deductions you add back include:

Student loan interest
One-half of your self-employment tax
Tuition and fees deduction
IRA contribution deduction
Certain investment losses
Exclusion for adoption expenses

For example, your adjusted gross income might be $40,000. However, you claimed $3,000 in IRA contributions and $1,000 in student loan interest. Plus, your side gig meant a self-employment tax deduction of $500. That’s $4,500 in deductions. To calculate your MAGI, add that $4,500 back to your adjusted gross income. You end up with a MAGI of $44,500

As long as your MAGI meets the IRS income requirements, you can still claim the deduction. If all those deductions you’re claiming put your MAGI over the top, you have to erase the deduction from your form.

The student loan interest deduction can be a great way to reduce your taxable income and lower your tax bill. It’s best used in conjunction with other tax breaks, so consider consulting a tax professional to find out how to best take advantage of your options.