With 80 percent of taxpayers getting a tax refund and last year's average federal tax refund topping $2,700, there's no reason to wait to file your taxes. The IRS opened e-file at the end of January, which means tax season is officially here. Remember the faster you act, the sooner you'll see YOUR money! And yes, it is your money and has been all along, so get going!
With changes from Congress on the much-discussed fiscal cliff tax law legislation behind us and pending health care reform, it's normal to wonder how these circumstances may affect filing your taxes this year. For most people, these two events change little about filing your return. But, if you have questions, TurboTax has experienced tax professionals, including CPAs and tax attorneys who can help answer them for free.
Here's a quick breakdown of some of the most commonly asked questions:
• Who can I claim as a dependent?
Taxpayers may be surprised to find out who they can claim as a dependent, including a boyfriend, girlfriend, domestic partner, adult child, or parent. Tax deductions are often missed due to confusion around who qualifies as a dependent. As long as the "qualified child" or "qualified relative" meets the IRS-defined 5 or 6 tests, you may find yourself with a valuable $3,800 dependent deduction. That could fatten your refund by more than $1000 for some people!
• What about tax deductions for students in college?
To help decrease the cost of pursuing a college education, the government provides incentives through education tax credits and deductions. You may qualify for some of these tax benefits if you paid eligible education expenses for yourself, your spouse, or a dependent. Also, don't overlook student loan interest, which can be written off even if you don't itemize your deductions.
• What about the cost of searching for a new job, any deductions that job seekers can take advantage of?
With so many people looking for work these days, it's important to know that the costs of finding a new job may be deductible. So don't overlook resume preparation costs, outplacement agency fees, career seminars and even business related travel. Additionally, moving expenses related to a new job may be tax deductible if you are able to meet distance and time qualifications. If you started your own business, there are many home office expenses that entrepreneurs should take advantage of.
• How does the fiscal cliff or recent tax law changes impact my taxes?
Recent changes to tax law will not impact a majority of tax refunds for 2012. In fact, under the American Tax Relief ACT of 2012, Congress extended most of the existing, family friendly provisions. Taxpayers can still claim the Earned Income Tax Credit, Child Care Credit, Teachers Deduction and Education benefits.
• How do new health care reforms affect my 2012 return?
The requirement to purchase health insurance will not affect your tax returns in 2012 or 2013. Health insurance exchanges will open October 2013 where you can choose health insurance if you don't already have it and are required to purchase it. At that time, information from your 2012 tax return will help determine your eligibility for an insurance subsidy from the government, which will be applied to your health insurance premiums in 2014.
With tax laws in place to help keep more money in your pocket, you can go online, e-file with direct deposit or even ask a tax expert your tax question to help boost your refund this tax season.