Even though the IRS will not begin processing tax returns until late January, many Americans are already thinking about what this year's filing season will mean for them. A few vigilant taxpayers are taking it a step further and creating a comprehensive checklist to ensure every last detail is covered. While you don't have to be a fanatic to get the most out of your tax return this year, it's not a bad idea to review the fanatic's checklist to see what you might be missing.
In addition to a few changes in tax policies this year, there are also a handful of essential items to review before you roll up your sleeves and tackle the latest tax preparer's software. Depending on the nature of your work, how many dependents you have and where you're residing, you may have quite a bit to consider on your return. At the very least, you can say that you're not losing money and you're taking every opportunity afforded to you from our complicated and often lamented tax code:
- Insurance Exemption Requests – As you're probably aware, 2014 marks the first year that the Affordable Care Act insurance requirements will be enforced. As such, you had to have had some form of qualifying insurance for at least nine months out of the year to avoid a penalty. On the other hand, you may be eligible for an exemption, meaning you would not be held liable for this penalty. Examples of qualifying exemptions include financial hardships, unmanageable medical expenses, below-the-threshold income levels and religious and/or tribal considerations. The trick with obtaining the exemption is to make your request at least a few weeks before you plan on filing, since your approval may take some time. Once approved, you will be given an exemption certificate number to include on your return.
- Form W2 and Form 1099 – Anyone who employed you in 2014 will be required to mail out your applicable tax forms no later than February 2nd, 2015. If you had only one employer or you were unemployed for 2014, there won't be much for you to do. But if you worked as a subcontractor or held several jobs throughout the year, you may be expecting several tax forms. If this is the case, make sure you double-check your annual work history to ensure they all get filed. This might sound like an obvious suggestion, but it's easy to overlook an employer – especially if you had several. If you're missing a form, you can request it from your employer sooner rather than later to make sure you have plenty of time to file.
- Reviewing Deductions and Credits – A key component to reducing any potential tax liability is taking advantage of every applicable deduction and credit. Whether you have qualifying expenses as a student, suffered a storm or disaster with your family or you're simply a teacher who needs to write off classroom costs, there are plenty of opportunities to check. The IRS offers a valuable resource for exploring credits and deductions here: http://www.irs.gov/Credits-&-Deductions
- Time and Location – You're well aware that the normal tax deadline is April 15th, but did you know it might be extended depending on where you're living? If you're living outside the country during tax time, you're given an automatic filing extension of June 15, 2015. It's also a good idea to review any applicable foreign tax credits for which you may be eligible. No matter where you live, you can request an extension to file no later than October 15, 2015.
- The Professional Touch – Depending on how complicated your taxes are going to be this year, you may consider enlisting a licensed tax professional to help. This is especially true if you're already dealing with a tax liability or back taxes, as this year's filing could have an effect on any existing IRS agreements. Regardless of whether you need help putting together a payment plan or simply need assistance filing, a licensed tax professional can ensure all of your bases are covered. And he or she has a checklist, too, just in case you missed anything on yours.