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Take the Stress out of Tax Season
Tax season is a stressful time of year for most people. Every year tax laws change and sometimes it’s difficult to keep up with what you can and can’t do on your tax return. With 2 months to go before 2019’s tax filing, did you know you can still reduce your tax liability? What’s more, the many taxpayers can get free tax filing for both federal and state taxes. Here are the best tips for filing your 2019 tax returns:
Contribute more to retirement
You have until April 15, 2020 to contribute up to $6,000 to a traditional IRA ($7000 for those 55+ years old) and $3,500 to a health savings account for an individual or $7,000 for a family plan (add an additional $1,000 if you’re 55+). Contributions made before April 15 are considered tax-deductible, but more importantly, the interest compounds as tax-deferred, allowing you to save more quickly than a taxable account.
Take advantage of these specific deductions
- If your child is in college, you may deduct $4,000 a year in tuition costs and other expenses.
- You can deduct up to $2,500 or the amount of interest you paid during the year, whichever is the lesser amount.
- Paying for daycare or after-school care for a child under age 13, may qualify you to be able to collect a credit of up to $1,050 for one kid or $2,100 for two or more kids. However, you will need the tax ID or Social Security number of the care provider to claim this deduction.
- Homeowners who pay private mortgage insurance and itemize on tax returns can deduct the premiums paid during the year.
- If you had mortgage debt on your principal residence canceled or forgiven then you may exclude up to $2 million (for married filers) of that discharged debt from your gross income.
- Medical costs that exceeds 7.5% of your 2019 adjusted gross income can be deducted, however, if you used an HSA to pay these expenses, you may not deduct those costs.
File your taxes for free
Eligible taxpayers can file their federal and state taxes at no cost. Taxpayers whose adjusted gross income was $69,000 or less last year can file their 2019 federal taxes for free this year using IRS Free File. Taxpayers can use their smart phone or tablet to do their taxes. They just need to go to IRS.gov/freefile on their device. All Free File products are enabled for mobile devices. Free File offers the new Form 1040-SR option for seniors over the age of 65.
Many of them can also do their state taxes at no charge. They do so through Free File offered either by the IRS or by states that have a similar public-private partnership.
The states with a Free File program are: Arkansas, Arizona, Georgia, Idaho, Indiana, Iowa, Kentucky, Massachusetts, Michigan, Minnesota, Missouri, Mississippi, Montana, New York, North Carolina, North Dakota, Oregon, Rhode Island, South Carolina, Vermont, Virginia and West Virginia, plus the District of Columbia.
Free File partners will charge a fee for state tax return preparation unless their offer says upfront the taxpayer can file both federal and state returns for free. Taxpayers who want to use one of the state Free File program products should go to their state tax agency's Free File page.
There are also programs where people can go to have their taxes prepared for free. VITA and TCE sites are generally located at community and neighborhood centers, libraries, schools, shopping malls and other convenient locations across the country. Taxpayers can use the VITA locator tool to find a location near them.
Taxes don’t have to be scary so long as you’re prepared. Know before you go — get your paperwork organized, have your dependent ID numbers, and visit IRS.gov to see what you may be qualified to deduct from your 2019 taxes.