The IRS began accepting e-filed tax returns last week, officially kicking off the 2015 tax season! Historically, taxpayers file their tax returns as soon as they receive their W-2 or other tax forms in the mail.
If getting your refund as soon as possible isn't enough motivation, here are four reasons why you should start your tax return earlier this year.
You may be eligible to file your taxes for FREE
If you are one of the 60 million hard-working Americans with simple, straightforward tax returns (those who file a 1040A or 1040EZ), right now you can file both your federal AND state returns for absolutely nothing with TurboTax Federal Free Edition. As in totally free - no strings attached.
To qualify, you must have a taxable income of $100,000 or less and you claim the standard deduction rather than itemizing deductions. A few examples of people who don't qualify: homeowners, independent contractors, or those with medical expenses.
An offer like this doesn't come around often, and may not last forever, so take advantage of it and don't wait to file.
Get your refund sooner
Last tax season, about 73 percent of taxpayers received a tax refund close to $2,800. That's a lot of money to put to good use. You may be able to pay down some credit card debt, student loans, or save it for a rainy day, but you need to file your taxes as soon as possible to get it. The IRS expects to issue 9 out of 10 tax refunds within 21 days from accepting your tax return if you e-file with direct deposit and they begin processing on a first-in, first-out basis so you want to file today so you can get closer to your refund.
You may see new tax forms
Each year, there are a few common tax forms you can expect to get in the mail, like your W-2 or 1099, which you'll need to file your taxes. However, when you file your taxes this year, you may notice new tax forms to help you verify your health coverage in order to comply with the Affordable Care Act (ACA).
Here's an explanation of the new tax forms you may see this year:
- Form 1095-A: You will receive this tax form if you purchased health insurance through the Health Insurance Marketplace.
- Form 1095-B or 1095-C: If you have insurance coverage from agencies outside the Marketplace or from your employer, you may receive one of these forms. However, the IRS has provided a transition period for Form 1095-B and 1095-C, so these will not be required for tax year 2014.
- Form 8965: New this year, if you didn't have health insurance coverage in 2014 and you qualify for an exemption from purchasing health insurance and a tax penalty, your tax return will include "Reporting of Exemptions From Coverage" to report the exemption certificate number you received from the Marketplace.
- Form 8962: If you purchased health insurance in the Health Insurance Marketplace and received a premium tax credit, that information will be reported and the actual premium tax credit will be determined on Form 8962.
If you applied for an exemption
The ACA requires that most Americans have health insurance starting in 2014. Those who chose to not have health insurance in 2014 will have to pay a tax penalty unless they qualify for an exemption. For the estimated 20 million Americans who might qualify to waive the tax penalty when they file their 2014 taxes, there are about 30 reasons you may be exempt from the penalty. You can check out TurboTax Exemption Check, a free, online tool to help you determine if you're eligible to waive the tax penalty entirely and apply for an exemption.
A few exemptions, such as if your income does not meet the IRS filing requirement, are claimed through your tax return. However, most exemptions should be applied for in the Marketplace since you have to receive approval and provide documentation to verify your claim.
Approval of your exemption may take a couple of weeks, so apply as soon as you can to make it easy to file your taxes as soon as possible. Once approved, the Marketplace will issue an exemption certificate number that is required when you file your taxes.
Early filers are already starting to see their tax refunds so there is no reason for you to delay filing your taxes.