(FOX 9) - Whether you like it or not, it's that time of year again: Tax season. FOX 9 put together a list of useful information with some tips before you sit down and complete your return.
How to get your W-2 form
To file your return, you will need a W-2, a form provided by your employer showing your pay and tax withholding for the year.
Businesses are required by law to provide a W-2 for each employee where they withheld income, Social Security, or Medicare taxes by Jan. 31.
These days, along with mailing the form, you usually can find a digital copy from your employer. Even easier, some tax preparers will be able to import your W-2 information automatically. But that will usually come at a cost.
While some may suggest you can just use your final paycheck in place of a W-2 form, most preparers recommend not using a paystub – since paystubs are not guaranteed to contain accurate information, which in turn could result in your having to file an amended return.
How to file your taxes for free
If you make $79,000 or less in yearly salary, you are eligible to file your 1040 form for free.
The IRS Free File program is a partnership between the federal government and tax preparers to offer free filing.
The IRS website lists the companies it partners with for free service on its website -- though note some have lower thresholds for the free service.
As of 2024, the Free File partners include:
- 1040Now
- Drake (1040.com)
- ezTaxReturn.com
- FileYourTaxes.com
- On-Line Taxes
- TaxAct
- TaxHawk (FreeTaxUSA)
- TaxSlayer
When choosing a preparer, be wary. Many popular services promise free filing but end up tacking on fees for basic services, like filing your state return.
The Minnesota Department of Revenue recommends 1040NOW, FreeTaxUSA, On-Line Taxes, and 1040.com for free state returns. Click here for more information.
When should you use a standard deduction versus itemizing?
When it comes to deductions, you have two options, either a standard deduction or an itemized deduction.
The standard deduction varies per person based on their age, filing status, and other factors. To figure out your standard deduction, you can use this IRS tool.
For instance, a single person under age 65 would see a standard deduction of $13,850. Whereas a married couple under 65 filing jointly could see a $27,700 standard deduction.
You would only file an itemized deduction if you believe your itemized deductions would exceed the total for your standard deduction. You may also want to itemize your deduction if you are being claimed as a dependent by another taxpayer. Some people are also not eligible for standard deductions,
What you can deduct (from the IRS)
You can deduct these expenses whether you take the standard deduction or itemize:
- Alimony payments
- Business use of your car
- Business use of your home
- Money you put in an IRA
- Money you put in health savings accounts
- Other business expenses
- Penalties on early withdrawals from savings
- Student loan interest
- Teacher expenses
- For some military, government, self-employed and people with disabilities: work-related education expenses
- For military servicemembers: moving expenses
If you itemize, you can deduct these expenses:
- Bad debts
- Canceled debt on home
- Capital losses
- Donations to charity
- Gains from sale of your home
- Gambling losses
- Home mortgage interest
- Income, sales, real estate and personal property taxes
- Losses from disasters and theft
- Medical and dental expenses over 7.5% of your adjusted gross income
- Miscellaneous itemized deductions
- Opportunity zone investment
Do I need to report my cryptocurrency trades?
Yes, the IRS requires taxpayers to report all income from cryptocurrency trades.
You are required to report crypto trades if you received cryptocurrency as a service payment or reward, earned money through mining coins, through a hard fork, sold coins for money, other digital assets, or property.
You don't need to report crypto being held in a wallet throughout the year, transferring coins between wallets you own, or simply purchasing digital assets with fiat currency you haven't sold.
For further information on cryptocurrency and your taxes, you can click here.
What do I do if I owe money?
For many taxpayers, you're likely to get a refund from your tax return. However, if you end up owning money to the IRS, you have some options.
If you can, you should pay the amount you owe before the deadline. Failing to pay owed taxes by the deadline – or underpaying what you owe -- could result in fines. If you are unable to pay the full tax debt, the IRS does offer payment plans.
A short-term payment plan gives you 180 days to pay back the owed money, plus penalties and interest.
The long-term plan sets up installment payments, where you can pay off the debt month-by-month. However, the long-term plans do come with added fees for setup.
To apply for a payment plan, you can click here.
How do I get my tax return?
Your preparer should offer the option for a direct deposit refund or through a mailed check. The refund could take up to 21 days – while an amended return might take four weeks or more.
Some preparers will offer instant refunds, but it's best to avoid these option, because they usually come at a cost.
You can check the status of your return by clicking here.
When is the tax deadline for 2023 returns?
You have until April 15, 2024 to file your 2023 tax return.
What happens if I miss the deadline?
You could face a penalty if you don't file your return by the deadline.