Tax season can feel overwhelming, especially if you’re not sure what to expect or how to maximize your return. Whether you’re filing for the first time or just need a refresher, understanding the basics can make the process smoother and less stressful. Below, we’ve answered some of the most common tax-related questions to help you feel more confident when tax time rolls around.
1. When Is the Tax Filing Deadline?
The typical deadline to file federal income taxes is April 15. However, if that date falls on a weekend or holiday, it may be extended to the next business day. It’s a good idea to confirm the exact deadline each year with the IRS, as extensions can also be granted under special circumstances like natural disasters.
2. Do I Need to File a Tax Return?
Whether you need to file depends on several factors, including your income, filing status, and age.
- If you earned more than the standard deduction ($13,850 for single filers in 2023), you generally need to file.
- Self-employed individuals who earned more than $400 typically must file, even if their total income is low.
- Dependents may need to file if they made more than a certain amount of earned or unearned income.
3. What Documents Do I Need to File?
Gathering the right paperwork is key for a smooth filing experience. Here are some essentials:
- W-2 forms from employers
- 1099 forms for income from freelance work, dividends, or unemployment
- Mortgage interest and property tax statements
- Student loan interest statements (Form 1098-E)
- Receipts for deductible expenses, such as charitable contributions or medical bills
4. What Happens If I Can’t Pay My Taxes?
File your return anyway—even if you can’t pay the full amount. The IRS might charge penalties for not filing, in addition to penalties and interest for not paying. Once your return is submitted, consider these options:
- Set up an installment plan with the IRS to pay over time.
- Pay what you can upfront to reduce penalties and interest.
- Consider financial hardship programs like an Offer in Compromise if you can’t afford to pay at all.
5. What’s the Difference Between a Tax Credit and a Tax Deduction?
A tax deduction lowers your taxable income, while a tax credit reduces the amount of tax you owe dollar for dollar. For example:
- Deduction Example: A $1,000 deduction reduces your taxable income by $1,000.
- Credit Example: A $1,000 credit reduces your tax bill by $1,000.
Some common credits include the Child Tax Credit, Earned Income Tax Credit (EITC), and the American Opportunity Credit for education.
6. Should I Do My Own Taxes or Hire a Professional?
This depends on the complexity of your finances.
- DIY software like TurboTax or H&R Block is a good option if your tax situation is straightforward.
- Hire a tax professional if you’re self-employed, had major life changes (like marriage or a home purchase), or just want peace of mind.
If you earn under a certain income threshold, you may qualify for free tax filing services through IRS Free File or community-based tax prep programs.
7. How Can I Get a Bigger Refund?
While the goal isn’t always a big refund (which means you overpaid during the year), here are some tips to maximize what you get back:
- Adjust your withholding if you consistently owe taxes or get large refunds.
- Claim all eligible credits and deductions, like education expenses, child care costs, and medical expenses.
- Contribute to retirement accounts, such as a traditional IRA for a potential deduction.
Final Thoughts
Taxes may not be the most exciting topic, but understanding the basics can save you time and money. With a little preparation and the right resources, you can take control of your tax situation and make smarter financial decisions all year long. Don’t be afraid to ask for help if you need it—tax professionals and reputable software can go a long way in simplifying the process.