7 Tax Season 2019 FAQ's
It will be April before you know it and soon it will be time to file your taxes. I put together this FAQ that might be helpful as you decide whether and how you should file, what to do with your refund or if you have to pay, what to do about that.
1) Do I need to file a Federal tax return?
If you made more than $12,000 in 2018 and are single ($24,000 if married) and under age 65, you have to file a tax return with the IRS
2) When is the deadline to file taxes for 2018?
April 15, 2019
3) How should I file?
You can either complete your taxes by yourself and file on your own or use a service. That will normally depend on the complexity of your tax situation and whether you are comfortable doing the work, which can be tedious and involve a lot of math.
4) What is a "simple" tax return?
A simple tax return typically includes wage income (your employer sends you a W2 form), simple investments like bank interest and some stock dividends (you receive 1099INT and 1099DIV forms) and basic deductions like mortgage interest, state and local taxes, charitable contributions and maybe an IRA contribution
If you have a simple tax return, you can file it yourself for free at one of these sites:
TurboTax Federal Free Filing Option (Absolute Zero)
TaxSlayer.com Free Federal (Simply Free)
eSmart Tax Free Plan
H&R Block Online Free Edition (More Free)
TaxAct Free Edition
FreeTaxUSA Free Edition
Free File Fillable Forms
5) What is a "complicated" tax return?
A complicated tax return would include investments like real estate, cryptocurrency, alternative investments such as purchased music royalties or peer to peer loans, lots of taxable purchases and sales of stock/bond/other investments, small business or businesses, partnerships or trust investments in which you receive a K-1, etc.
If you have a complicated tax return, you may want to use a paid service like a Certified Public Accountant, H&R Block or a similar type of service - I have a complicated tax situation and I'm very happy using a CPA to do my taxes and help me with my estimated tax payments so I can avoid a big payment (and potential penalties/interest) in April.
6) What do I do with my refund?
Apply to your estimated taxes for 2019 (I like this option since I have to pay estimated taxes and I can avoid writing a check for the first quarter payment)
Pay off high interest rate credit cards
Use the money to fund your IRA contribution for 2019 - here's a retirement planning checklist for 2019 I recently blogged about
Save the money and earn some interest - here's a list of great interest rates I recently blogged about
7) What if I owe money and I don't have it?
Ask a tax professional to help you negotiate a payment plan with the IRS, although you may have to pay interest and penalties (some of which could be waived, depending on how the negotiation goes)
Take out a personal loan to pay the balance in full. Here are some options:
Prosper - a peer to peer lending network that I have used a few; highly recommended
ICashLoans - online lender
GotLoans - online lender
ThriveFinance - online lender
Kabbage - online lender for small businesses
If you're interest in investing your tax refund in other ways, you may want to check out one of my books, click here.
Disclaimer: I use affiliate links where I get paid a small amount if you buy the service or product. This helps support my blog.