It’s official – the end of tax season is almost here!
The IRS urges taxpayers to file their returns electronically, which is the most efficient and safest way to file your taxes. In 2016, The IRS received more than 131 million tax returns electronically. This year, they are expecting to receive more than 153 million returns!
If you are getting a refund, you should also request direct deposit when filing your return. Again, this is much safer that having the IRS or the State of Michigan mail you a check. Fraudsters are out in full force this year. With email scams, phone scams and US mail being stolen, we have to be more vigilant than ever to protect our information. Having your deposit directly transferred to your checking account, instead of receiving a paper check in the mail, makes it much harder for someone to get a hold of your refund, plus it is much faster.
If you are preparing your taxes yourself, before paying for tax preparation software, you should check to see if you qualify for The IRS Free File Program. The IRS has two Free File programs that allow you to file taxes online, depending on your income. You can use the Free File Software version if your income is $64,000 or less and Free File Fillable Forms if your income is greater than $64,000. Both are accessible at the IRS website at http://www.irs.gov/uac/Free-File:-Do-Your-Federal-Taxes-for-Free.
IRS Free File is a partnership between the IRS and the Free File Alliance, a group of industry-leading private-sector tax preparation companies that have agreed to provide free commercial online tax preparation and electronic filing. The IRS partners with specific tax filing companies such as TurboTax or H&R Block to provide online filing for its Free File program.
Some of the programs will also allow you to file your state income taxes for free, while others may charge a fee for state filing. Check out Michigan’s free E-file options to see which tax service providers have free E-file for both Federal and Michigan and what their qualifications are at: http://www.michigan.gov/taxes/0,4676,7-238-44070_46640-288757–,00.html
The IRS trains and certifies volunteers at thousands of Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites nationwide. VITA offers free tax return services for taxpayers who earn $54,000 or less. The TCE program is mainly for people age 60 or older and focuses on tax issues related to seniors. AARP participates in the TCE program. To locate the closed VITA site, visit the IRS.gov and search for VITA or click on: https://www.irs.gov/individuals/find-a-location-for-free-tax-prep To locate the nearest AARP Tax-Aide site, visit aarp.org and search for tax aide locations or call 888-227-7669.
The tax deadline this year is April 18, 2017 to file your 2016 tax return. The deadline is delayed this year for a couple of reasons: 1) April 15 falls on a Saturday; and 2) Monday, April 17 is Emancipation Day, which is a Washington, D.C. holiday, giving taxpayers an extra day to file their taxes.
Although the 2016 tax year is closed, there are still a couple of things you can do, if you qualify, to reduce your taxes, prior to April 18th:
- Contribute to a traditional IRA. You can contribute $5,500 if you are under 50 or $6,500 if you are 50 or older.
- Contribute to a SEP IRA if you qualify. For a SEP, the calculations are different for an employee versus a self-employed individual, but you have until the due date of your return, including extensions to contribute to this type of retirement account. The maximum contribution (depending on your earnings and/or self-employment income) is $53,000 for 2016.
- If you haven’t maxed out your Health Savings Account, make a contribution, as no income limits apply. For 2016, you can contribute $3,350 if you are single and up to $6,750 for family coverage. Also, if you are age 55 or older, you can add an additional $1,000.