If you are still working on filing your taxes this year, you will have another month to file this year. The IRS announced that they will be moving the tax filing deadline from April 15 to May 17, 2021. In addition the deadline for tax payments, like quarterly self-employment taxes, has also been pushed to May 17.

Of course, there are always a multitude of options when filing your taxes. Here’s a few options:

The Best Free Options, $72,000 and under:

If you made less than $72,000 over 2020, you can visit the Free File page on the IRS site. That site provides nine software options on third party sites. Read each option carefully to see if you qualify. Many of the options are limited to a specific age range, state or even dollar figure.

For instance, the TurboTax’s popular software caps the limit at $39,000 rather than $72,000 unless you eligible for the Earned Income Tax Credit. Alternatively, Free1040TaxReturn.com offers the $72,000 limit to anyone under 70, assuming you don’t live in fourteen excluded states.

Some of these sites will also offer free state returns, but others will charge. It’s recommended that you search your state’s website for information regarding free filing options for state taxes.

The Best Free Option, over $72,000:

If you make more than $72,000 in your household, you can also just enter your tax information into the paper forms using FreeFile. Of course, this is significantly more complex as you have to understand how tax forms work rather than answering questions in tax software. However, you can use your tax forms (completed with tax software from previous years) to figure out where to fill out data correctly.

In addition, this is the fifth year that Credit Karma has offered this service. According to the signup page, the service will be completely free. Specifically, they claim to offer free federal & state filing, no additional fees for using the service and have a support staff on hand to answer questions.

The Cheapest Software Options:

If your taxes are very complicated and requires lots of itemizing, you may want to invest in TurboTax. This would be more ideal for anyone that’s a small business owner or has to deal with investments like rental property. The downside is that you will have to pay up to $130 for the right software as an additional $50 when filing your state taxes.

There are also some perks to consider with more expensive software. Some tax software has an auto-import feature that pulls all W2 information in without having to enter it line by line. Other features included in some tax software are audit-checks, saving tax info online and the ability to load your refund onto a Visa prepaid card or a store gift card.

Here’s a quick breakdown on costs for the top five tax software options:

• TurboTax – Federal: $70 to $130
• TaxAct – Federal: $45 to $80
• TaxSlayer – Federal: $25 to $55
• H&R Block – Federal: $50 to $110
• Jackson Hewitt – Federal: $49 (includes state as well)

Bonus Saving Tip!

Check your credit card for % off bonuses or $ off bonuses when using a specific tax software option. For instance, American Express is offering a cardmember perk that offers 30% cashback when filing with TaxAct.

Do You Even Need to File?

Just a reminder, you may not need to file a tax return if you make less than $12,400 per year (under age 65). Here’s a chart that breaks down income thresholds for filing.

However, you may want to considering filing anyway, especially if you can tax advantage of credits like the American Opportunity credit in addition to qualifying for any COVID- related stimulus payments. That could help you get a little extra money back this year.

Are There Deals on Tax Software?

Yes. Turbotax and HR Block software packages will go on and off sale frequently starting in late January through the end of tax season. Look for deals in the Ben’s feed here from retailers such as Amazon and Newegg.

IRS extends 2021 tax filing deadline to May 17

We’ve reached the time of the year where we all have the same thought: Please, please, please don’t let me pay too much on my income taxes!

Another thing on which all Americans can agree: We like (legal) tax deductions. Whether you’re doing your taxes yourself or paying a professional, we can help you make sure you don’t miss any commonly overlooked tax deductions to which you’re entitled. (And don’t forget to check out our list of the cheapest ways to calculate your taxes.)

1. Child Care Tax Credit

This is one of the most confusing rules in taxes. But if you pay for child care while you work, you can take a credit for a chunk of that payment. This credit is better than a deduction, because tax deductions only reduce the amount of income that’s subject to tax, while the credit reduces the actual tax bill. Make sure you take advantage of this credit and calculate it correctly!

2. Donating to a Charity

You may already deduct money you donate to charity, but you can write off other things you do for charity too. If you drive as part of the charity, you can deduct up to 14 cents per mile driven.

If you make a meal and donate it to your local homeless shelter, you can deduct the cost of the ingredients. Basically, anything that you give to the charity, other than your time, is deductible.

3. Earned Income Tax Credit

As described above, this tax credit is better than a deduction, because it directly reduces your actual tax bill. Still, many people don’t understand the EITC. It’s aimed at providing help for low income earners. You’ll have to go through a series of calculations to see if you qualify, which thwarts some people from seeking the credit, but if you qualify, you’ll be glad you took the time.

4. Mortgage Points

Another confusing deduction for a lot of people concerns points paid to obtain a mortgage rate. At the time you purchase a home, you can deduct all points paid for the year you obtain the loan. But if you refinance the loan later and pay points, you have to deduct those points over the life of the loan, such as 1/30th of the points per year on a 30-year mortgage. If you sell the house before the 30 years are up, you then can take a deduction for the points remaining. Confusing certainly, but important to understand to take deductions at the right time.

5. Recovering from Natural Disaster

If your home was hit by a natural disaster, you will be able to deduct some of the money you spent to put things back together, as long as insurance didn’t reimburse you for those expenses.

Some of the casualty loss calculations are a bit confusing, which means some people just skip the process, but this deduction can ease the sting of the disaster.

6. State Sales Tax

If you live in a state that doesn’t collect income taxes, you can deduct your state and local sales taxes from your federal tax bill. Although this can be a huge hassle to track this over 12 months and save every receipt, it’ll especially be worth your time during years in which you made large item purchases subject to sales tax, such as vehicles or construction materials for a home remodeling.

7. Student Loan Interest

If your parents or another party are helping you pay student loan debt, but the loan is in your name, you must take the tax deductions associated with it. Only the person legally obligated to the debt can take the tax break for the interest paid on the loan. The IRS treats the loan repayment as a gift to the child. In other words, in the eyes of the IRS, the parents are giving the money to the child as a gift, who then uses it to pay toward the debt … even if mom and dad write a check directly to the student loan provider.

It’s Tax Time Again! 7 Commonly Overlooked Tax Deductions

Launched this morning, the IRS has a new section of the IRS.gov site called Get My Payment that lets you check on the status of your stimulus payment as well as enter direct deposit banking info to receive your payment electronically rather than waiting until May (or possibly longer) for a physical check.

You will need your tax information from your most recent filing, either 2018 or 2019. To start, the site will need to verify your identity via your social security number, birth date, and current address.

After the initial verification, the secondary verification will require you to input your adjusted gross income (from your most recent tax return) as well as the amount of money you received as a refund or had to pay. Below that, you input your savings or checking routing / account number for direct deposit.

After that information has been processed (24 hours), you can log back into the site in order to check when payment will be issued into your account. If you did not file taxes in 2018 or 2019, you are still likely eligible for the stimulus payment. Just go to the Non-filers Payment Info page to enter your details.

Who is Eligible?

Payments of $1,200 will be issued to individuals or head of household tax filers; $2,400 for married filing jointly. This is limited to adjusted gross income up to:

• $75,000 for individuals
• $112,500 for head of household filers and
• $150,000 for married couples filing joint returns

If you make more than those limits, you may receive a reduced payment ($5 less for every $100 in AGI you are over the limit)

• $75,000 and $99,000 if their filing status was single or married filing separately
• 112,500 and $136,500 for head of household
• $150,000 and $198,000 if their filing status was married filing jointly

For instance, if you make $85,000 as an individual, you are $10,000 over the AGI limit. Your payment would be $1,200 – (10,000 / 100 * $5) = $700.

Who isn’t eligible?

If you income is above these limits, you won’t receive anything.

• $99,000 if your filing status was single or married filing separately
• $136,500 for head of household
• $198,000 if your filing status was married filing jointly

If you are claimed as a dependent on someone else’s taxes (college students, seniors living with their adult children), you won’t receive anything. If you don’t have a valid social security number, you won’t receive anything. If you are a nonresident alien, you won’t receive anything.

What about kids?

If you have children and you claimed them as dependents on your last tax filing, you will receive an additional $500 per child, assuming they are age 16 or younger. Payments for children are also subject to the same income level requirements as listed above.

If you are behind on child support payments, be aware that you either won’t receive a stimulus payment or it will be reduced in order to cover delinquent child support payments.

Do I have to pay this money back?

No. The stimulus payment will not be taxed (you won’t be claiming it on your 2020 tax return) and it does not need to be paid back to the federal government.

Want direct deposit of the coronavirus stimulus payment? Go here on the IRS site

Photo by Vladimir Solomyani on Unsplash

If you are a host who uses Airbnb or other short-term rental websites to rent out a spare room or your entire home, you might want to carefully check that your taxes are filed correctly this year.

Safe to say, Airbnb has become the go-to service for consumers looking for an alternative to traditional hotels. At the same time, Airbnb allows hosts to earn additional income by short-term renting a house, apartment or spare room. But many hosts might not know that Airbnb earnings aren’t simply “free money.” In the U.S., hosts are required to pay taxes on short-term renting earnings – even if the host does not own the property.

To help demystify the specific tax rules that apply to Airbnb hosts, Nolo, a resource for legal guides and advice for consumers and businesses, recently published Every Airbnb Host’s Tax Guide. This first-of-its-kind tax guide is specifically written for short-term rental hosts by tax expert and attorney Stephen Fishman.

If your home or room was rented out for less than 14 days, you’re in luck, as any money you gained is completely tax-free. However, the majority of hosts rent rent out their places for longer than two weeks, so if that’s you, here are three of the most valuable takeaways for Airbnb hosts to save money this tax season, according to Fishman.

How the Tax Cuts and Jobs Act affects Airbnb hosts

The new tax law allows you to deduct expenses without it counting toward the personal deduction limit of $10,000. In addition, hosts are also able to deduct rental expenses like fees paid to a rental agency and the cost of cleaning and repairs on the space you are renting out.

What if you don’t report your short-term income to the IRS?

As you might suspect, there are consequences if you don’t report your income accurately, which Fishman warns can leave you with hefty fines.

“If you don’t report your short-term rental income and the IRS discovers it, you’ll have to pay taxes on the income, plus interest and penalties,” says Fishman. “You could have to pay a negligence penalty of 20% of what you underpaid. This can really add up.”

It’s not just Airbnb that is taxed

Lastly, don’t forget that the new tax laws apply to all short-term rental services, such as VRBO and HomeAway – not just Airbnb.

You can get 20% off Every Airbnb Host’s Tax Guide from the Nolo website by adding this code at checkout: bbanb20

Money-saving tips for Airbnb hosts this tax season

The Supreme Court overturned an 1992 decision today, specifically related to the collection of sales tax on online purchases. The new decision declares that states can now collect sales tax from all online retailers, even if the retailer doesn’t have a physical location in the state.

While is is unlikely to impact your Amazon purchases (Amazon has physical warehouses in a vast majority of states, thus you are already paying sales tax), it will likely impact smaller online retailers and raise prices for consumers; companies like Wayfair, Blue Nile, L.L. Bean, Chewy.com, Newegg, Overstock, eBay and Etsy.

In the decision, Justice Anthony Kennedy wrote wrote “Each year the physical presence rule becomes further removed from economic reality and results in significant revenue losses to the States.”

Up to this point, states have had to rely on taxpayers specifically add up their online purchases at non-collecting sites and pay all the required taxes during tax time each year. However, very few people actually do that, either due to forgetfulness or simply not caring.

While this will help level the playing field for companies like Walmart, Target and Apple, it’s still unlikely to stymie the growth of online shopping and reduce the number of retail location closures around the country. The convenience of online shopping is just too great.

The impact of this decision will likely be felt in consumer’s wallets in the coming months. While not immediate, it’s likely states will move to collect sales tax from all online retailers by the start of the 2018 holiday shopping season in November.

Get ready to pay more at checkout, new online sales taxes are coming

It’s almost tax time again! The IRS has been accepting 2017 tax returns for the past couple months. Interestingly, there are a couple additional days to file taxes this year due to April 15 falling on a Sunday as well as the District of Columbia’s Emancipation Day holiday. That pushes the traditional April 15 deadline to April 17, 2018.

Of course, there are always a multitude of options when filing your taxes. While free is always preferred for Americans under a specific income threshold, we are also going to break down the top software options for knocking out those pesky taxes on a lazy Sunday.

The Best Free Options, $66,000 and under:

If you made less than $64,000 over 2017, you can visit the Free File page on the IRS site. That site provides thirteen software options on third party sites. Read each option carefully to see if you qualify. Many of the options are limited to a specific age range, state or even dollar figure.

For instance, the TurboTax’s popular software caps the limit at $33,000 rather than $64,000 unless you eligible for the Earned Income Tax Credit. Alternatively, Free1040TaxReturn.com offers the $64,000 limit to anyone under 70, assuming you don’t live in five excluded states.

Some of these sites will also offer free state returns, but others will charge. It’s recommended that you search your state’s website for information regarding free filing options for state taxes.

The Best Free Option, over $66,000:

If you make more than $66,000 in your household, you can also just enter your tax information into the paper forms using FreeFile. Of course, this is significantly more complex as you have to understand how tax forms work rather than answering questions in tax software. However, you can use your tax forms (completed with tax software from previous years) to figure out where to fill out data correctly.

In addition, this is the second year that Credit Karma has offered this service. According to the signup page, the service will be completely free. Specifically, they claim to offer free federal & state filing, no additional fees for using the service and have a support staff on hand to answer questions.

Disclaimer: Credit Karma has some issues during 2017 with tax returns, but it’s likely the service has worked out the issues over the past year. Here’s a Reddit review thread for this year.

The Cheapest Software Options:

TaxAct remains the champion for the least expensive, basic tax software at between $15 for federal filing and $17 for state filing. It’s also highly competitive (feature-wise) to H&R Block as well as TurboTax, particularly ideal for anyone that’s filing a simple return. It’s a little less intuitive for people that are self-employed or have lots of investment income, but it will do the job with a little digging. It’s our pick for the best option for most users.

If your taxes are very complicated and requires lots of itemizing, you may want to invest in TurboTax. This would be more ideal for anyone that’s a small business owner or has to deal with investments like rental property. The downside is that you will have to pay up to $120 for the right software as an additional $37 when filing your state taxes.

There are also some perks to consider with more expensive software. Some tax software has an auto-import feature that pulls all W2 information in without having to enter it line by line. Other features included in some tax software are audit-checks, saving tax info online and the ability to load your refund onto a Visa prepaid card or a store gift card.

Here’s a breakdown on costs for the top five tax software options:

• TurboTax – Federal: $60 to $120 / State: $40
• TaxAct – Federal: $15 to $70 / State: $17 to $40
• TaxSlayer – Federal: $24 to $47 / State: $29
• H&R Block – Federal: $50 to $95 / State: $40
• Jackson Hewitt – Federal: $55 to 75 / State: $40

Do You Even Need to File?

Just a reminder, you may not need to file a tax return if you make less than $10,350 per year (under age 65). Here’s a chart that breaks down income thresholds for filing. However, you may want to considering filing anyway, especially if you can tax advantage of credits like the American Opportunity credit. That will help you get a little money back this year.

Are There Deals on Tax Software?

Yes. Turbotax’s software packages will go on and off sale frequently starting in late January through about early April. Look for deals in the Ben’s feed here from retailers such as Amazon and Dell.

The Cheapest Ways to File your Taxes this Year

Ever since the first tax filing day on January 31st, the tax season has been in full swing. For the next eight weeks, tax professionals will be hard at work digging through old receipts and looking for ways to increase your refund (or minimize your payments!). Of course, the average citizen is also accomplishing the same task with advanced tax software programs.

While taxes are often dreaded by many, we decided to conduct a survey to determine how dreaded taxes are compared to other uninspired activities. Collecting responses from 1,986 respondents, we’ve got some interesting data points explained below as well as a full infographic linked here. We have also included groups of helpful tips and links from tax experts to help you make tax time easier.

There are some things that are actually worse than taxes?!

Despite the stereotype that taxes are a grueling process that nobody likes, our survey data indicates that people actually prefer doing their taxes over heading into the DMV or helping a friend move.

Of course, there are a number of ways to make the process of doing taxes even less painful. For instance:

• Try expense tracking software: Offered up by ReadWriteWeb, start tracking your future expenses online using a site like Mint.com. When combining that with shifting away from using cash, you will have a vast record of all your costs and expenses for next year. This is especially ideal for anyone that needs to itemize expenses rather than take the standard deduction.
• Adjust Your Withholding: Detailed by CNBC, the IRS offers withholding calculators that allow you to see how changing your paycheck withholds will alter your tax liability for the next year. Some people prefer to see a big refund at tax time while others prefer to use that money gradually through the year. Withholding adjustments will help with this process.
• Use Tax Preparation Software: As as tax professionals will look for any potential issues within your tax forms, tax software will also check for errors as you progress through the program. Mentioned by Kiplinger, the software also checks for all possible deductions and credits in order to maximize your return.

But taxes certainly don’t beat everything

We also asked a collection of questions related to tasks that men and women stereotypically don’t enjoy. Surprisingly, taxes started to lose out when it came to tasks like having dinner with your in-laws or watching types of media like romantic comedies or sports.

Of course, there are many advantages to getting hitched when in regards to tax time. Perhaps these perks will help alleviate the stress of tax time and make it more delightful than sitting through hours of stifled conversation with your in-laws.

• Understand what marriage means for your taxes: Detailed by NBC’s TODAY, research shows that more citizens are likely to benefit from getting married rather than suffer from the much discussed Tax Penalty. You can find a Marriage Bonus and Penalty calculator at the Tax Policy Center in order to calculate your own future tax liability.
• Contribute to an IRA, even if you don’t have a job: As noted by Charles Schwab, a spouse that’s currently doesn’t have a part-time or full-time job can still have an IRA opened up in their name and funded by the other spouse. This is ideal for full-time moms or dads (which is a major job in of itself) and the tax benefits are wonderful.
• Investigate the benefits of filing jointly versus separately: Mentioned by U.S. NEWS, the obvious benefit to getting married is that only one joint return has to be filed as opposed to a return from each person in the marriage. While there are some situations were filing separately will provide a greater return, the joint return will be of greater benefit to the majority of Americans.

Take your hand off my smartphone now!

As time consuming as taxes can be each year, the majority of our survey respondents are not willing to lose connectivity to the world to escape those pesky 1040’s. In this scenario, we proposed that they simply wouldn’t have to do their taxes if they would give up different types of technology for just 7 days.

It’s obvious that consumers are addicted to their devices and their digital connection to the outside world. Of course, the combination of technology with taxes has led to increased simplification of the tax process for millions of Americans each year. The rise of computers led to tax software and the rise of the Internet led to e-filing. Technology even allows us to track the status of our refund online, which is much quicker due to the popularity of direct deposits. With that trend in mind, here are some tech tips for tax season:

• Apps! Apps! Apps!: Compiled by CreditCards.com, this collection of nine smartphone and tablets apps will help you knock out your taxes quicker. One of the more notable apps is IRS2GO, the official app for the IRS. It’s easy to pop into the app to check the status of your filing as well as track when your refund will be deposited.
• Try going paperless: Mentioned by CNBC, a service like Showbox will take all your paper receipts, scan them and send you the digital copies for a small fee. You can combine that with a digital file storage service like FileThis in order to save all those important docs in the cloud, just in case your hard drive at home is corrupted for any reason.
• Deduct Those Fancy New Gadgets!: Detailed on the TurboTax blog, technology like your computer, smartphone and Internet connection are deductible if you use them exclusively for business. This could even include the additional cost of Wi-Fi service on an airplane, assuming that you are working the entire time.

Time for Taxes

We also asked our survey takers questions related to timing as well as their preferred tax software. Interestingly, nearly half file before March even starts and more than 70 percent favor using tax preparation software over traditional filing.

If you are in the group that still hasn’t filed your taxes yet, be sure to check out our most recently posted deals on tax software below. You should also sign up for a Deal Alert to be notified the moment that the next tax software deal goes live.

Check for Tax Software Deals on Ben’s Bargains

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What Would You Rather Do Than Your Taxes?