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Tax season hits some of us like a ton of bricks. For others, it’s not so bad. But, for those of us that find it a necessary evil that is both tedious and headache-inspiring, finding ways to make the process go as smoothly as possible is ultra important.
We looked into how to make tax filing an easy-going process and came up with a few things. We also found out when you can file out your 2018 taxes and when you can’t. So now, we’re going to share what we found with you.
First, the Changes:
This year there were a lot of changes made to the tax laws. We won’t get into all of them, but let’s go over some of the biggest ones that will affect the most people.
The tax brackets and tax rates changed more than they have in quite a long time. You should take a look at the newest tax tables so you can see what the changes were and know what the rate is that you are taxed at. Knowledge is always powerful, no matter what the subject is. Knowledge about your financial environment could be something that saves you, or makes you, money.
Standard deductions are another area that saw significant changes. For instance, if you’re married and filing jointly with your spouse, your standard deduction increased from $13,000 to $24,000. The other tax status categories had changes to their standard deductions as well. It’s very important that you know what your standard deduction is for your tax filing status.
The Child Tax Credits increased also. It was set at $1,400 last tax season. Now it has been increased to $2,000 per qualifying child. The level of income at which the phase-out for this credit starts was adjusted as well. It’s now at $200,000 for single or filing separately and $400,000 for married and filing jointly.
A Major Change
With the big adjustments to the tax laws that were made in 2018, some people who may have had to file a tax return last tax season do not need to this season, even though they make the same amount of income as they did last year. All of these changes may have you asking when can you file your 2018 taxes and when can you not?
Raising the amounts of the standard deductions also raises the amounts of income you need to be bringing in to warrant having to file a tax return. The income thresholds are all higher than they were before. There are other circumstances that may cause you to have to file even if your income for 2018 falls below the threshold though. You’ll want to make sure you look into what the other reasons are before deciding that you don’t need to file.
File Under the Right Tax Status
You need to consider which tax status is right for you. Filing as single is simple. If you’re single, then you file as single. This is anyone who is not married.
There are two married statuses. You can file as married filing jointly or married filing separately. So how do you know which one to choose? Well, look at the tax brackets and see how each scenario will affect your return. Sometime, a couple may still be married, but not actually be a couple anymore. That would be cause for filing separately. You also can have situations where one spouse doesn’t trust that the other spouse is filing completely legally and honestly. When you file jointly, you’re both responsible for what is on the forms. By filing separately, each spouse can only be held accountable for what is on their individual returns. For the most part, married couples stand to come out better if they file jointly, but all situations are different and should be assessed based on their own specific information.
The Head of Household status is misunderstood sometimes. This one is meant for someone who is not married but provides for others as the head of the household. The amount they are providing has to exceed 50% of what the household needs. Only then can someone claim to be a Head of Household.
Look for a Good Tax Preparation Software Package
There are many options when it comes to choosing a good tax preparation software package. You can use the free versions that help guide you through the basics of filling out your tax form. These are good for people who have very simple tax situations.
If your situation is more complicated, you can look for a more complex version like TurboTax Deluxe. It’s reasonably priced and gives you good guidance and instruction on how to move through your tax form smoothly.
There are also software packages that are made with all of the add-ons that you may need like Schedule E for investments or Schedule C for self-employment. If you need to include more forms for your return, there are tax software packages that let you do that.
Finally, you can choose a package that has a Live option included. You get all the benefits that you would with the downgraded versions of the software packages, and you get the guidance of a CPA. You can ask questions, get advice and have your return looked over by a qualified professional. This option is helpful for people who have very complicated tax situations or those who just want more peace of mind.
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This content is sponsored by Erica Johnson.
Photo: iStockPhoto