Tax Filing in 2015: 4 Important Things to Know
The year is coming to an end, and before you know it, it will be time to start working on your taxes. No matter whether you have a refund coming and will be itching to file as soon as possible, or you plan to wait until the last minute to delay paying a hefty tax bill, tax season always involves collecting necessary documents and then using them to prepare a timely return. Let's look at four important things you'll need to know to make your tax filing in 2015 go smoothly.
1. Don't jump the gun.
Many people figure they can file their tax returns as soon as the new year begins. If you have a pay stub that indicates your total income for the year, it's tempting to get a jump on the filing season by grabbing an online copy of the tax forms you need and sending them in.
But each year, the IRS sets an opening date before which it will not accept tax filings. In 2014, the IRS originally set that date for Jan. 21, but last-minute revisions to the tax laws forced the agency to push back the date to Jan. 31. Similarly, in 2013, major tax law changes tied to the expiration of tax cut provision passed in the early 2000s required the IRS to delay accepting returns until Jan. 30.
For tax filing in 2015, IRS Commissioner John Koskinen warned that delays from lawmakers in passing provisions extending many well-established tax breaks could push the tax filing date back again. Although those extensions were largely renewed earlier this month, that might nevertheless come too late for the IRS to start on time, especially with reduced resources for the government agency.
2. Know when your tax documents are coming.
To file your taxes, you need accurate information, which employers and financial institutions are required to provide. However, the government gives them time beyond the end of the year to prepare those documents, which can force you to hold off on tax filing as early as you might like.
Employers have until Feb. 2 to send W-2 forms to their personnel. The same date applies to many of the 1099 information returns that you receive on interest and dividend income. Those with brokerage accounts, though, might have to wait until mid-February to receive information returns covering sales of assets. Moreover, those who invest in master limited partnerships and other specialized investments could wait much longer to get their necessary tax information, with due dates running from mid-March to mid-April in some cases. Investors should watch closely to ensure all their income is reflected on statements before filing a final tax return.
3. Dealing with erroneous information.
Often, you'll get information returns that have mistakes on them. Because the IRS also receives a copy of those returns, it's critical that you not just fix the mistake on your own taxes, but have your employer or financial institution file an amended information return. Otherwise, the discrepancy between what the form says and what you put on your return could trigger a red flag that could lead to an audit.
Some financial institutions realize on their own that they have made mistakes in the information provided to you. That can lead to you receiving an amended information return; if you have already filed your taxes, then you'll need to amend your own tax filing to reflect the new information.
4. Rein in your expectations for a speedy refund.
Many people have high expectations about how soon they will receive their tax refund after they file their taxes. But before you make plans for your refund money, keep in mind that the IRS makes no claims about when you should expect to see a check. In fact, the IRS says, "Don't count on getting your refund by a certain date to make major purchases or pay other financial obligations."
That said, the IRS has traditionally been good about making speedy refunds to those taxpayers who file electronically. According to IRS figures, more than 90% of taxpayers receive their refunds within 21 days. The more complex your return is, the more likely it will need additional review that could delay your refund.
By Dan Caplinger for The Motley Fool