10 things you need to know about this year's taxes
by Tony Novak, CPA, MBA, MT
revised February 8, 2015
This year's U.S. income tax filing season is underway and
runs until Aprial 15.
much of the news service warns that this could be a
difficult and expensive experience for many. Yet there are
some bright spots, mostly triggered by ongoing adoption of
new technologies that make tax planning and filing easier
and less expensive. Consumers
need to know these key points that are new this year:
- Paid or self-prepared? About half of all
U.S. tax filers hire a professional preparer and the other
half file their own returns. Clearly There isn't any
consensus on the best filing method. The decision appears to be
primarily influenced by the level of income ($60,000 seems
to be a rough cut-off point especially for the Freefile
program) yet many tax
filers apparently recognize that doing it yourself is not efficient or practical if you have a complicated financial
situation. The great news this year is that you don't have
to decide in advance whether to get help or go it alone if
1040.com, to get started, then later you can bring in
professional help anytime and still get help with
audit more easily if it becomes necessary. I explain the
details of my own audit assurance offered to 1040.com users
- Online or paper? This is an easy
decision; most income tax returns are filed electronically.
It is faster and safer than paper filing. There
has never been any data breech of the federal online tax
filing system known as e-file so we presume that it is safe. Some taxpayers believe that there is some advantage to paper filing but there is no evidence to support this belief.
- What about ACA? The impact of the Affordable Care Act for about 70%
of tax filers will be limited to a requirement to check a block saying that they had health insurance coverage for the whole year.
The other 30% have more work to get through this year's tax
filing. If you used Healthcare.gov to get health
insurance then you will need to log on again to get your
1095A Tax Form needed for income tax filing.
- No health insurance? About 20 million
tax filers who do not have health insurance face additional paperwork
requirements. Somewhere between 4 million and 10 million who do not
meet requirements for an
exemption (some becasue they did not bother to ask) face penalties that will average about $300
this year and over $600 next year.
- Subsidy repayment? About 10 million filers who received a tax subsidy to help pay for individual health insurance have additional paperwork to justify and reconcile the benefit.
About 5 million will owe part of all of the subsidy back to the federal government.
- EIC hassles. Earned Income credit (EIC) documentation is more stringent than ever.
IRS knows this area has been abused by tax cheats. This places an additional paperwork and tax filing cost burden on low income parents. EIC claimants do not qualify for free
online tax filing.
- Is Freefile really free? "Free" tax filing services are not really free for many people
filing a 1040 tax return despite the advertisements. Unfortunately the advertising does not make pricing clear up front. Read the fine print but be prepared for unpleasant surprises.
See my article "When
free tax filing really isn't free".
- Where's my refund? For most people taxes will be higher; refunds will be lower this year. To combat this effect, start now to make plans to reduce 2015 taxes.
IRS.gov now offers an
online refund tracker tool.
Beware theird party sites offering this service; they
primarily exist to collect your personal infirmation for
- What about state taxes? Some states like North Carolina revamped their tax systems this year making it difficult to predict tax liability. Since state taxes may affect federal income taxes it makes sense to create an estimate early and then fill in the details or make adjustments later.
Some states offer free online filing, others do not.
Also new this year: if you need to pay taxes in multiple
states, there is no longer a need to pay for the efile
service seperately in each state.
- How to get help. It is possible to benefit from professional help like CPA tax advice and audit assurance even if you prepare your own tax return.
With more CPAs offering online support for tax services
and more tax filers becoming comfortable with the
concept of remote professional services, this can save
time and money for all. See my
main tax page for more details.
2014 Tax Filing Resources
filing by mobile phone
Tax services flyer
Tax services post card
The easiest way to file your income tax return
10 Things you need to know about this year's taxes
be treated as a 2nd class taxpayer
How to send documents to an online tax preparer
Tax planning made easy
When free online filing really isn't free
2015 National average
tax preparer fees
pricing for CPA-prepared returns
tax preparation fees
How to get
free CPA help with online tax filing