Ready, Set, File: The IRS Awaits
The IRS wants to be your Valentine. That’s right. Today, Valentine’s Day, is the first time this tax season that the IRS will be accepting 2010 tax returns from the approximately 50 million taxpayers who itemize their deductions, plus some others who don’t itemize but who want to take advantage of the last-minute tax breaks that Congress approved just before Christmas.
One of those changes allows taxpayers to choose between deducting state income taxes or state sales tax. That meant the IRS had to revise Schedule A -- the form used by itemizers. Do you need to itemize? Should you? See When It Pays to Itemize.
Millions of non-itemizers were affected by the delay, too. Those who can claim the $250 deduction available to teachers and teachers’ aides who spend money for classroom supplies or the deduction for up to $4,000 of qualified college costs could not file their 2010 tax returns until today. These “above the line” deductions expired at the end of 2009 but were reinstated retroactively by the legislation that President Obama signed in December.
The remaining two-thirds of taxpayers who claim the standard deduction rather than itemizing have been able to file since January 14, when the IRS started accepting 2010 returns. If you’re due a refund -- as most Americans are -- the sooner you file your return, the sooner you’ll get your money back. Of course, you'll need all your paperwork in hand. Here's what to do if you need to track down a lost W-2.
If you’re a procrastinator, you’ll be happy to know that you have an extra weekend to sweat the details: Your 2010 tax return is due April 18, 2011 -- three days later than usual. The reprieve is because Emancipation Day, a holiday celebrated in the District of Columbia, falls on Friday, April 15.
Who must file
Of course, the tax-filing deadline matters only to people who have to file a tax return. Some don’t. But once your income reaches a certain threshold, you have to file a federal income-tax return. The income limits depend on your filing status -- single, married, widowed or head of household -- and your age.
Generally, if you are single and your gross income is $9,350 or more, or if you are married filing jointly and your gross income is $18,700 or more, you must file a tax return. If you are a head of household, you must file a tax return if your gross income is at least $12,050. Widows and widowers must file a return if their gross income is at least $15,050.
If you’re 65 or older, the threshold for filing your taxes is higher. (If you turned 65 on January 1, 2011, you are considered 65 for the entire 2010 tax year.) Some dependents with their own income, either from part-time jobs or investment earnings, have tax-filing requirements with thresholds that are lower than most. And, all this will affect which form you need to fill out..
But even if you don’t have to file a tax return because your income is too low, you might want to so that you can collect a refund for federal taxes that were withheld from your paycheck or pension. Or you might want to file a tax return to claim some of the refundable tax credits available for 2010.
These credits include the Earned Income Tax Credit, for low-income workers and their families; the Making Work Pay Credit, worth up to $400 for individuals and up to $800 for married couples; a credit for first-time or repeat home buyers; the American Opportunity Tax Credit, for college expenses; and the Health Coverage Tax Credit, available to certain unemployed workers receiving Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation.
What’s new for 2010?
Federal income-tax rules have changed every year for the past decade, and this year is no exception. Make sure that you’re armed with the latest information when you tackle your 2010 tax return to take advantage of every deduction and credit in your quest for a smaller tax bill or a bigger refund.
One other key change: The IRS is no longer mailing tax forms to individuals. More reason than ever to consider e-filing.