As you check off your New Year's resolutions for 2015, don't forget an important one: plan and file your taxes as early as you can. While this is a good strategy for any year (and everyone knows fighting procrastination is a resolution unto itself), 2015 is special. Why? There are a number of reasons, but a few in particular relate to you and millions of other taxpayers.
2014 has been a busy year for the IRS, which has been the subject of dozens of investigative and even inflammatory news articles. It's important, however, for the sake of what pertains to your tax return, to waft away the smoke and concentrate on the fire. There are several flare-ups to be on the lookout for as you negotiate your new and improved tax forms.
IRS Operational Constraints
The first thing to understand is that the Internal Revenue Service has cited recent budget cuts as a major contributing factor to what promises to be a challenging 2015 tax season. What does this mean for you? For starters, if you rely on IRS taxpayer services, such as suggestions or assistance in completing your returns, you may be in for a bit of a wait. It's estimated that hold times will be 34 minutes on average, and phone assistance could drop to a projected 53%. Another major consideration in making tax prep plans is that your wait time for tax refunds will likely increase. While there are no definite projections on timeframes for refunds, the IRS has made it clear Americans will be waiting longer to get their money. If you're estimating a healthy refund, filing early will be a smart move for this reason alone.
Health Care Considerations
Whatever your current insurance status is, the implementation of the Affordable Care Act means a slightly more complicated return for you. You'll be required to verify your 2014 insurance coverage when you file; whether it was through an exchange, otherwise known as the Marketplace, or private or employee-provided. If there were gaps in your coverage, you may owe a penalty, which will be $95 for each uninsured adult and $47.50 for each uninsured child OR 1% of your household income. If you received advanced credits which became overpayments, you'll be responsible for paying this back. While the IRS does not have enforcement power to collect on gap penalties, they can use collection action for credit overpayments. And in either scenario, anything outstanding can be withdrawn from any tax refund money you're due. The added complication of calculating your insurance reporting is one more reason to file sooner rather than later.
Take Time to Review the Breaks
The transition from 2014 to 2015 nearly saw the end of some pretty important tax breaks. Fortunately, the Senate and the House approved the extension of numerous provisions just in time. This may mean some serious savings for you this tax season. Some of the breaks include deductions for mortgage premiums, classroom supply deductions for teachers, tuition deductions, and IRA stipulations for seniors. You'll want to review the complete list of tax provisions to help offset any potential liability you may have. Make sure you take your time to review these and other deductions and credits you qualify for and don't leave any money on the table.
Maximize Your Potential
A good strategy to prevent lost money when you file is to enlist the help of a licensed tax professional. He or she can ensure that no applicable credits or deductions are overlooked, and all of your reporting requirements for your insurance are met. The last thing you want is to wind up with a debt because something was not filed correctly. Make sure you research any specialist you're considering working with and confirm that he or she is a licensed professional. Choosing the right person will be well worth your time and money. With all the changes going into place this year, determining your tax plan now isn't just smart; it's essential.