Tax Season Officially Opens January 20, 2015
Following the passage of the extenders legislation (called the Tax Increase Prevention Act of 2014), the Internal Revenue Service anticipates opening the 2015 filing season as scheduled in January. The IRS will begin accepting paper tax returns and electronically filed returns January 20, 2015. Keep in mind, there is no advantage in filing a paper return before the official opening date of January 20.
The decision to open the filing season on January 20 follows Congress renewing a number of "extender" provisions of the tax law that expired at the end of 2013. These provisions were renewed by Congress through the end of 2014. The final legislation was signed into law Dec 19, 2014.
"We have reviewed the late tax law changes and determined there was nothing preventing us from continuing our updating and testing of our systems," said IRS Commissioner John Koskinen. "Our employees will continue an aggressive schedule of testing and preparation of our systems during the next month to complete the final stages needed for the 2015 tax season."
The IRS reminds taxpayers that filing electronically is the most accurate way to file a tax return and the fastest way to get a refund.
What are Tax Extenders?
In case you're wondering what "tax extenders" are and what the Tax Increase Prevention Act of 2014 is all about, its simple. Last December 31, 2013, a variety of tax breaks, which had already been extended for 2013 tax returns, expired. So, to continue to allow these tax breaks for 2014 tax returns, Congress passed the extenders legislation referred to above.
Some of the tax breaks being extended include:
- The Educator Expense Deduction - Teachers can deduct up to $250 of their own out-of-pocket expenditures for classroom supplies, books, materials, and software. You don't have to itemize to claim this deduction. You claim it on the first page of Form 1040 (for 2013 it was on line 23).
- Tuition and Fees Deduction - You can deduction expenses related to education, including tuition, books and other supplies, up to $4,000. Keep in mind, if you pay next quarter's tuition before December 31, you may be able to get a valuable education tax deduction or credit on you 2014 return.
- Mortgage Debt Relief - If your mortgage debt was canceled on your principal residence, you can exclude up to $2 million of the canceled debt from your 2014 income.
- Mortgage Insurance Premiums - If you purchased a home in 2014 and were required to pay mortgage insurance, you may claim a deduction for the mortgage insurance paid.
- Energy Tax Breaks - If you made energy efficient improvements to your home during 2014, you can claim the Residential Energy Property Credit. This credit could be as much as $500.
- State and Local General Sales Taxes - If you itemize your deductions, you have the option to deduct either your state income taxes paid during 2014 or sales tax paid during 2014, whichever is greater.
For taxpayers who live in a state that does not have a personal income tax, like Nevada, Texas, or Florida, you can deduct sales taxes if you itemize. Keep in mind, when figuring the sales tax deduction, there are two components to consider:
First, there is the general sales tax amount, which is based on your income. If you use tax software, such as TurboTax, this amount is automatically provided after you have checked off a few boxes on the tax worksheet.
The next component to consider is big ticket purchases, such as a vehicle, boat, or plane. It's up to you to enter this amount on the same tax worksheet where the general sales tax amount was automatically provided. Check your sales contract to get this amount. The tax software will add these two amounts and automatically enter the total on Schedule A.
- Qualified Charitable Distributions - Individuals at least 70-1/2 years of age can exclude from income, qualified charitable distributions made from an IRA directly to a qualified charity.