10 Tips for Doing Your Taxes Yourself

W-4 Tax Form

If you’re planning to file your own tax returns this year, you’re in good company. Approximately 33 percent of Americans file their own taxes each year.

As you’re gathering all of your 2017 tax documents and preparing to file your taxes there are some important things to keep in mind. Following these tips will help you avoid common pitfalls and mistakes and ensure you keep as much of your own money in your pocket as possible. After all, the less money you have to give to Uncle Sam, the more you can put towards reaching your financial goals, paying off debt, or otherwise positively impacting your credit score.

Know the filing deadline

We all have April 15 burned in our brains as the last day to file taxes. But if that date falls on a weekend or a holiday the due date can be different by a couple of days. Of course, this is always to the taxpayer’s advantage, as no calendar occurrence move the due date prior to April 15 in any year. If the date is different it will always be later than April 15. For example, the filing deadline this year is April 16, 2018.

Make sure you need to file

If you’re not sure whether or not you need to file, you can find out using the IRS’s online Interactive Tax Assistant. By answering some basic questions about your filing status, gross income and whether you had federal income tax withheld, you will be able to determine whether or not you need to file for a particular tax year.

Review last year’s tax returns

Reviewing the information from the previous year’s federal and state tax returns will make the current year’s filing much simpler. Much of the information will be the same, including employer federal ID numbers, children’s social security numbers, etc.

Gather all necessary income documentation

Make sure to gather all forms that include income information, specifically those from employers and financial institution. These includes:

  • Form W-2 (wages)
  • W-2G (gambling winnings)
  • 1099-INT (interest)
  • 1099-DIV (dividends)
  • 1099-B (investment sales)
  • Combined 1099 (brokerage combined tax statement)
  • 1099-MISC (independent contractor work, royalties)
  • 1099-R (retirement distributions)
  • K-1 (MLP, Partnership or S-Corp share of income)
  • SSA-1099 (Social Security benefits)
  • 1099-G (unemployment benefits and state tax returns)
  • 1099-C (forgiven debt).
  • Income Adjustment Documents, including Form 1098-E (student loan interest); 5498 (IRA contributions); 5498-SA (HSA/MSA contributions); and 1098-T (tuition).

Determine whether or not you should itemize deductions

Itemizing deductions is only beneficial of those deductions will exceed the standard deduction. If you’re using a tax software program it will guide you as to what you should do. If you do opt to itemize your deductions, you will need forms including 1098 (mortgage interest) as well as receipts for expenses such as charitable contributions, unreimbursed employer business expenses, and medical expenses.

Don’t forget your state taxes

Most states require a separate state tax return to be filed. There are seven states that don’t collect state income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Check and double-check your return

Before you drop that tax return in the mail or hit submit when e-filing, make sure that you’ve checked the figures you’ve entered when filing your return. A mistake can mean a filing error that could give you an overinflated refund you’ll have to pay back later.

File on time

Even if you owe an amount you cannot pay in full by tax day, it’s important to file on time and to pay as much as you can. Doing so will allow you to avoid a late filing penalty and to minimize interest charges on any unpaid balance. If you cannot pay your taxes in full, you can request an installment agreement from the IRS.

Tax advantage of free filing

The IRS offers Free File to file your federal taxes without paying any fees. The amount of your adjusted gross income determines the version you will need to use. If it’s $66,000 or less, you can use the free filing software. If your adjusted gross income is higher, you will use Free File fillable forms that are the electronic version of its paper forms.

File electronically

You can still file paper returns and many filers do so because they’re uneasy sending their personal and tax information over the Internet. However, e-filing via the IRS website is very safe and it will expedite your refund if you’re getting one.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.

The post 10 Tips for Doing Your Taxes Yourself appeared first on Credit.com.

Identity Theft and the New Tax Bill

Will Congress Overhaul Credit Reporting Laws?

The 2017 filing season could be the worst yet for tax-related crime. With widespread confusion about the new tax law, IRS budget cuts, and a record-breaking year for data compromises, there’s an opening for fraud that should be serious cause for alarm, but doesn’t seem to be.

The bottom line: you should be concerned.

Last tax year, the IRS stopped 787,000 confirmed identity theft returns, totaling more than $4 billion. For the same nine-month period in 2015, the IRS stopped 1.2 million confirmed identity theft returns, totaling about $7.2 billion. There were many other widely reported wins. But what did not get reported was how much money scammers stole. Given the IRS’s estimate that 2016 would see a loss of $21 billion via fraud, one wonders.

That was then. The compromise of 143 million people in the Equifax breach changed all that. It included Social Security numbers—compromised SSNs being the most common “pre-existing condition” of crimes committed against the U.S. Treasury, and as such that breach poses a significantly increased threat difference over previous years.

We’re looking at a far more significant threat of tax-related fraud in the 2017 filing season than ever before. Compounding this situation, the IRS is less able to fend off the threat of identity-related tax fraud than it was last year.


I know it’s risky to publicly sympathize with the nation’s most hated federal agency, but I can’t imagine it’s been much fun to work at the Internal Revenue Service since Congress passed its new tax bill (note that I’m not suggesting there was ever a time I could imagine it might be fun to work at the IRS).

With the new tax year just begun, the agency is racing to find real-world applications for the numerous changes to the tax code conceived in the hothouse of Congress, where ideas do not always (or perhaps even very often) jibe with real life, and the daily concerns of actual Americans has more the feel of an annoyance than a matter of, say, central importance.

There are significant logistical challenges posed by the new tax bill. First order of business is getting the changes in place that need to be implemented now, for instance the coding to adjust withholding, which the IRS hopes will make its first appearance on pay stubs as early as February. There are other provisions that affect the here-and-now, like the new trigger for healthcare deductions, as well as a decent-sized punch list of smaller changes—all of which needing the immediate attention of a greatly diminished staff in the coming months.


Remember those cuts back in 2010? The agency was denuded of $900 million, which led to the loss of 21,000 jobs. That’s a major problem right now.

The last time there was tax overhaul like the current one, “Walk Like an Egyptian” was on the radio and cable TV was just finding its way into the suburbs. Today, Twitter feeds are reloaded continually, and late-show hosts joke about the size of the presidential button.

In 1986, the IRS got a budget increase to accomplish the increased workload, but this time around, “the House and Senate appropriations bills for 2018 would cut the IRS budget by an additional $155 million and $124 million, respectively,” according to the National Treasury Employees Union.

What You Can Do

Wait times were more than an hour last year. The helpline matters because people don’t read tax bills, or even news stories about them. The questions will be many—far more than usual. They will be on a host of topics. People will call in reaction to good, bad and neutral information.

Is there nothing to worry about till this time next year? Do I need to fill out a new W4? Is my tax bracket the same?

The only question that matters is this one: What’s the best way to avoid becoming a victim of tax-related fraud. The answer: file your tax return as soon as you have all the necessary documents to get the job done.

While it’s important to sort out what’s what with regard to the coming changes in our nation’s tax code, it’s crucial to take a look at the simple fact that people are confused, and that creates a beneficial state for fraud to flourish.

For time being, the only “solution” is beating scammers to the punch.

With everything that the IRS needs to do to function well, budgetary issues necessarily come to the fore. We should all be voicing concern about the agency’s ability to safeguard taxpayers from refund fraud given the current situation. And we should all be doing everything we can to protect ourselves in a hostile environment.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.


Image iStock

The post Identity Theft and the New Tax Bill appeared first on Credit.com.

January Best Buys

Best Buys

Now that the Holidays are over, you might need a break from shopping. But, just in case you still have a touch of the shopping bug or you have to visit a store or two to return things any way, this month happens to be a strong month to save while you shop. Retailers bring in a lot of merchandise in anticipation of the holiday rush, and they will be anxious to clear space for spring merchandise if they have excess stock. While there will be sales on and off all month, the experts at deal site Slickdeals.net, found the majority of the deals peaking around mid-January during Martin Luther King weekend. Here’s what we know right now.

Men’s apparel

We expect the most robust sale category to be men’s apparel. Last year, more than 30% of the top deals at Slickdeals were in this category, from retailers like Nike, J. Crew Factory, Macy’s and Walmart.


Macy’s: 20% off holiday sale with code TWODAY. Valid 1/14-1/15

REI – holiday clearance up to 50% off  

Target – Extra 20% off Clearance Apparel

Jos A Bank: Clearance sale – suits $79, dress shirts for $15 – valid through 1/11

Men’s WearhouseSave $30 off orders over $100. Through 1/11

Bonobos Men’sSave up to 50% off final sale items. Through 1/14

Land’s End – Save up to 50% off during the Great Winter Sale. Through 1/31

Tax Software

If you’re ready to start thinking about tax time this early in the year, it could be to your advantage. There are typically an abundance of tax prep and tax software deals from retailers like Staples, Amazon and Costco.


TurboTax: Get TurboTax Deluxe for $39.99 (coupon is for $20 off TurboTax Deluxe – expires 1/31

Liberty Tax: Take an Extra 20% Off Every Liberty Tax Online Tax Filing Solution. Use Code: LTOCJ20

eSmartTax.com: 20% off Tax Solutions with code ESTCJ20.

H&R Block and United Way: United Way and H&R Block offer 2017 Federal and State Tax Return Filing for those with Adjusted Gross Income of $66,000 or less for Free

White Sales

Since the late 1800s, January has been the month of “white sales”, when all manner of linens go on sale. Many retailers participate, which means you can find bed and bath items slashed up to 60% off from stores like Kohl’s, Target, and Macy’s.


Macy’s: 25% off winter weekend sale with code STYLE 1/18-1/21

Bloomingdales: Save up to 50% off select home items in the January home sale. Ends 1/15

The Company Store: End of Season sale – save 20% with code X17SAVE through 1/9

Bed, Bath & Beyond: Get up to a $50 gift card with select Aerobed purchases. Through 1/12

Burlington: Save 50% off any order with code AJER587W. Through 1/10

West Elm: Save up to 20% off bedding collections. Through 1/11

Pottery Barn: Annual White Sale – 20% off bedding and towels

New Year, New You

It sounds cliché, but this is the time of year that we think about taking better care of ourselves. Last years’ resolutions may have fallen by the wayside throughout the year, and the snacks, drinks and sweets at all those holiday parties compounded the issue. It’s the perfect time to get back up on that horse!


My Protein: New Customers, 30% off. No expiration

Vitamin Shoppe: $8 off 5lb Optimum Gold Standard Whey

Sweaty Betty: Save 20% off your purchase. Expires 1/17

Yoga Download: Save 40% off your order. Expires 1/23

Gold’s Gym: Save 50% off select apparel. Through 2/24

Athleta: Save 20% off your next order with code L1B9B9BHBXTW. Through 1/11

What not to buy


Toys were hot during the holidays, but you probably won’t see many worthwhile toy deals this month. The good news is your little ones are probably set for a while with all of their holiday gifts.


Great deals on mattresses occur in February, when Presidents Day sales bring discounts. For instance, in 2017, Mattress Firm offered up to $500 off storewide. This year, Presidents Day is Feb. 19, so wait another month if you’re in the market for a new mattress.

If February is too soon for your budget, mattress deals will return in May, over Memorial Day weekend, and in September, over Labor Day weekend.

If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated each month.

You can also carry on the conversation on our social media platforms. Like and follow us on Facebook and leave us a tweet on Twitter.


Image: iStock

The post January Best Buys appeared first on Credit.com.

16 States Offering Sales Tax Holidays in 2017

The back-to-school season can be an exciting but expensive time.

Buying school supplies adds up, even before new clothes, backpacks, and shoes join the list. Needs such as a new laptop, textbooks, or graphing calculator can cause costs to escalate.

The good news is that for the last 20 years, some states have offered holidays on which they don’t collect state sales taxes on many items on your back-to-school shopping list.

Craig Shearman, vice president for government affairs public relations for the National Retail Federation, a retail trade federation, says consumers can save about 5% to 10% during sales-tax holidays. Actual savings for consumers depend on the state sales tax rate in their state.

Sales Tax Holidays 2017

This year, 16 of the 45 states that collect sales taxes are offering tax holidays, according to the Federation of Tax Administrators, an organization that provides research, training, and other resources to state-tax administrators. Most of these holidays revolve around school-related purchases, though some states also have other tax holidays throughout the year for things like disaster preparedness items, firearms, hunting supplies, or energy- and water-saving appliances.

Here’s a schedule of upcoming tax holidays by state:

How does a tax holiday work?

Sales-tax weekends are a set period of time in which the state doesn’t collect typical sales tax on certain items up to a certain dollar amount. Each state defines what will be exempt during the holiday, but common items for July and August holidays include clothing, shoes, school supplies, and personal computers.

Eight states holding tax holidays this year are doing so during the first weekend of August to help families buy back-to-school items. For example, Florida isn’t collecting sales tax on school supplies that are less than $15, clothing, footwear, and certain accessories that are less than $60, and personal computers and computer-related accessories less than $750.

Things to watch out for: Timing and spending caps

Just because a state offered a tax holiday in the past doesn’t mean its residents can expect to get one in the future. Georgia is not having tax holidays this year, after having two in 2016 that covered back-to-school supplies and Energy Star and WaterSense appliances. It’s the first time since 2012 Georgia will not have a tax holiday.

Previous sales-tax holidays in Georgia have helped mom Cheri Melone, 45, save on school supplies, lunchboxes, and backpacks for her sons, ages 11 and 3. Melone, who lives in Watkinsville, Ga., estimates she saved about $10 to $20 per child each year.

“It’s disappointing,” Melone says. “I know a lot of my friends that have big families, they wait for that weekend to go shopping.”

Massachusetts lawmakers are still determining whether the state will have a tax holiday this year. The state canceled its 2016 holiday after a Department of Revenue report found that the 2015 holiday caused it to miss out on $25.51 million in revenue.

In addition to double-checking if and when a state’s holiday is happening, shoppers will want to familiarize themselves with the holiday’s limits: The holidays only apply to certain items and often impose tax-free spending limits. And even though a state isn’t collecting sales tax during this period doesn’t mean that shoppers won’t see taxes added to their bill at checkout. Some states allow counties, cities, and districts to choose if they want to stop collecting their specific sales taxes during the holiday. In 2017, 49 of Missouri’s 114 counties will collect county sales taxes during the state’s back-to-school sales-tax holiday.

Beyond that, not all retailers may participate. Retailers in Alabama, Arkansas, Iowa, Ohio, Oklahoma, South Carolina, Tennessee, Texas, and Virginia are required to participate in the tax holidays. New Mexico does not require retailers to participate. Missouri lets retailers opt out if less than 2% of their merchandise would qualify for the tax exemption. Florida lets retailers opt out if less than 5% of their 2016 sales were from items that would be exempt during the 2017 back-to-school tax holiday.

Guides to the sales tax holiday in Connecticut, Louisiana, Maryland, and Mississippi don’t specify if retailers are required to participate.

What are the pros and cons of tax holidays?

Shearman says the events benefit retailers by bringing customers into the store and help consumers by saving them money.

“Because [consumers are] excited about the prospect of what amounts to a sale going on, they’ll be in that frame of mind, and they will buy other things that are there that are not tax exempt,” Sherman says. “So the boost in sales per items that are still being taxed very often offsets the tax revenue lost from the tax-free items.”

However, economists like Ron Alt from the Federation of Tax Administrators says he thinks it is a bad tax policy because states lose the revenue. Also, retailers may mark up prices for the holiday to make money off the hype of a tax-free weekend, says Alt, senior manager of economic and tax research.

A March 2017 study from economists at the Board of Governors at the Federal Reserve System found that tax holidays boosted retail sales throughout the whole month.

Shearman says that while 5% to 10% saved is “relatively small,” it can help families that are financially stretched.

Georgeanne Gonzalez, 32, an Athens, Ga., mom who buys school supplies for her two children and her niece, says the state’s tax-free weekends helped her out a lot in the past as the school supply lists grew.

“It made it a lot easier when having three children to buy school supplies for,” she says.

The post 16 States Offering Sales Tax Holidays in 2017 appeared first on MagnifyMoney.

File Taxes Jointly or Separately: What to Do When You’re Married with Student Loans

Married couples with student loans must make a difficult decision when they file their tax returns. They can choose to file jointly, which often leads to a lower tax bill. Or they can file separately, which may result in a higher tax bill, but smaller student loan payments. So which decision will save the most money?

First, let’s discuss the difference between the two filing statuses available to married couples.

Married filing jointly

Married couples always have the option to file jointly. In most cases, this filing status results in a lower tax bill. The IRS strongly encourages couples to file joint returns by extending several tax breaks to joint filers, including a larger standard deduction and higher income thresholds for certain taxes and deductions.

Married filing separately

Because married couples are not required to file jointly, they can choose to file separately, where each spouse is taxed separately on the income he or she earned. However, this filing status typically results in a higher tax rate and the loss of certain deductions and credits. However, if one or both of the spouses have student loans with income-based repayment plans, filing separately could be beneficial if it results in lower student loan payments.

For help figuring out which filing status is better for married couples with student loans, we reached out to Mark Kantrowitz, publisher and Vice President of Strategy at Cappex.com. Kantrowitz knows quite a bit about student loans and taxes. He’s testified before Congress and federal and state agencies on several occasions, including testimony before the Senate Banking Committee that led to the passage of the Ensuring Continued Access to Student Loans Act of 2008. He’s also written 11 books, including four bestsellers about scholarships, the FAFSA, and student financial aid.

Two Advantages to Filing Taxes Jointly:

  • Most education benefits are available only if married taxpayers file a joint return. This can affect the American opportunity tax credit, the lifetime learning credit, the tuition and fees deduction (which Congress let expire as of January 1, 2017, but is still available for 2016 returns), and the student loan interest deduction.
  • Couples taking the maximum student loan interest deduction of $2,500 in a 25% tax bracket would save $625 in taxes. But this “above the line” deduction also reduces Adjusted Gross Income (AGI), which could yield additional tax benefits (e.g., greater benefits for deductions that are phased out based on AGI, lower thresholds for certain itemized deductions such as medical expenses, and miscellaneous itemized deductions).

However, there is a potential downside to filing jointly for couples with student loans.

Income-driven repayment plans use your income to determine your minimum monthly payment. Generally, your payment amount under an income-based repayment plan is a percentage of your discretionary income (the difference between your AGI and 150% of the poverty guideline amount for your state of residence and family size, divided by 12).

  • If you are a new borrower on or after July 1, 2014, payments are generally limited to 10% of your discretionary income but never more than the 10-year Standard Repayment Plan amount.
  • If you are not a new borrower on or after July 1, 2014, payments are generally limited to 15% of your discretionary income, but never more than the 10-year Standard Repayment Plan amount.

Because filing jointly will increase your discretionary income if your spouse is also earning money, your required student loan payment will typically increase as well. In some cases, the difference is negligible; in others, this can add up to a pretty significant cost difference.

“Calculating the trade-offs of income-driven repayment plans versus the student loan interest deduction and other benefits is challenging,” Kantrowitz says, “in part because the monthly payment under income-driven repayment depends on the borrower’s future income trajectory and inflation, not just the inclusion/exclusion of spousal income.”

Fortunately, some tools can help you run the numbers.

An example: Meet Joe and Sally

Here’s a simple scenario that shows how a change in filing status can save on taxes but cost more on student loans:

  • Joe and Sally are married with no children.
  • They live in Florida (no state income tax).
  • Joe is making $35,000 per year and has $15,000 of student loan debt with a 6.8% interest rate.
  • Sally is making $75,000 per year and has $60,000 of student loan debt with a 6.8% interest rate.

First, we can estimate Joe and Sally’s tax liability for filing jointly versus separately. TurboTax’s TaxCaster tool makes this pretty easy. Here’s what we get when run their numbers using 2016 tax rates:

  • Filing jointly, Joe and Sally would owe $13,249 in federal taxes.
  • Filing separately, they would owe $15,178.

So they would save just over $1,900 in federal taxes by filing jointly. But how would filing jointly affect their student loan payments?

We can use a student loan repayment estimator like the one provided by the office of Federal Student Aid to find out. Here’s what we get when we run the numbers and choose the Income-Based Repayment option, assuming they are new borrowers on or after July 1, 2014:

  • Filing jointly, Joe’s minimum required monthly student loan payment under a standard repayment plan would be $143, and Sally’s would be $571, for a total of $714 per month.
  • Filing separately, Joe’s minimum required monthly student loan payment would be $141, and Sally’s would be $474, for a total of $615 per month.

Over the course of a year, Joe and Sally would only save $1,188 on their student loan payments by filing separately. Even with the additional loan payments they would have to make, filing jointly would save them $712 more than filing separately.

What’s best for your situation?

Every situation is different. The simple example above comes out in favor of filing jointly, but you will need to run your own numbers to figure out what is right for you. Here are additional tips to help you figure it out:

  1. Know how much you owe. Make a list of all loan balances, interest rates, and the type of each student loan you have. You can find your federal student loans on the National Student Loan Data System. You can find information on your private student loans by looking at a recent statement.
  2. Estimate your student loan payment options. Using a student loan repayment estimator like the one mentioned above, determine your required payments when filing separately versus jointly.
  3. Calculate your tax liability. Use a tool like TurboTax’s TaxCaster or 1040.com’s Free Tax Calculator to calculate your federal and state tax liability when filing separately versus jointly.
  4. Be aware of long-term consequences. Filing separately might result in lower monthly payments today but more interest paid over time. If you make it to the 20- or 25-year forgiveness point, that could have tax implications down the line. Kantrowitz points out that “forgiveness is taxable under current law, causing a smaller tax debt to substitute for education debt. The main exception is borrowers who will qualify for public student loan forgiveness, which occurs after 10 years and is tax-free under current law.” Keep those long-term consequences in mind as you make a decision.
  5. Consider steps to lower your AGI. Your eligibility for income-driven student loan repayment plans depends on your AGI, which is essentially your total income minus certain deductions. You can reduce this number, and potentially lower both your tax bill and your required student loan payment, by doing things like contributing to a 401(k), IRA, or Health Savings Account.
  6. Keep the big picture in mind. These decisions are just one part of your overall financial situation. Keep your eyes on your big long-term goals and make your decision based on what helps you reach those goals fastest.

Other unique situations

There are a few unique situations that make deciding whether to file jointly or separately a little more complicated. Do any of these situations apply to you?

Divorce and legal separation

Sometimes, determining marital status to file tax returns isn’t cut and dried. What happens when you and your spouse are separated or going through a divorce at year end? In this case, your filing status depends on your marital status on the last day of the tax year.

You are considered married if you are separated but haven’t obtained a final decree of divorce or separate maintenance agreement by the last day of the tax year. In this case, you can choose to file married filing jointly or married filing separately.

You and your spouse are considered unmarried for the entire year if you obtained a final decree of divorce or are legally separated under a separate maintenance agreement by the last day of the tax year. You must follow your state tax law to determine if you are divorced or legally separated. In this case, your filing status would be single or head of household.

Pay as You Earn repayment plans

Pay as You Earn (PAYE) is a repayment plan with monthly payments that are limited to 10% of your discretionary income. To qualify and to continue to make income-based payments under this plan, you must have a partial financial hardship and have borrowed your first federal student loan after October 1, 2007. Kantrowitz says the PAYE plan bases repayment on the combined income of married couples, regardless of tax filing status.

Unpaid taxes, child support, or defaulted federal student loans

If you or your spouse have unpaid back taxes, child support, or defaulted federal student loans, joint income tax refunds may be diverted to pay for those items through the Treasury Offset Program. “Spouses can appeal to retain their share of the federal income tax refund,” Kantrowitz says, “but it is simpler if they file separate returns.”

The post File Taxes Jointly or Separately: What to Do When You’re Married with Student Loans appeared first on MagnifyMoney.