Conn. (WTNH) — It’s tax season, and whether you do your taxes yourself or hire a professional, navigating the tax system can be complicated and stressful. We are Stretching Your Dollar with some advice to make the process easier.
If you’re expecting a tax refund, filing your taxes early and electronically means you’ll get your money sooner, but the IRS is warning that those refunds may be smaller this year because COVID-related tax perks have expired.
For example, there are no more stimulus payments.
“That was something that juiced a lot of refunds last year,” Ted Rossman, Senior Industry Analyst, of Bankrate.com, said. “Also last year, the child tax credit was expanded and the child independent care credit was expanded. And there were some additional credits that no longer exist.”
Rossman said a large tax bill or an outsized tax refund, may be signs that you need to change your number of tax withholdings.
“Keep in mind, if your lifestyle is changing or has changed, like you got married, you got divorced, you had a child,” Rossman said. “These are all things that can affect your withholdings.”
Avoid late fees and penalties by filing your taxes by the April 18 deadline. If you need more time, file for an extension. If you can’t pay your tax bill on time, Rossman said that it might be best to work out an extension with the IRS, especially if you owe under $50,000.
When choosing a tax preparer, look for a credentialed certified public accountant or tax attorney and be sure they have a personal tax ID number. If you get a tax refund, experts said to use at least some of that money to pay down credit card debt. With credit card interest rates now averaging 20%, paying down debt quickly is a good return on your money.
If you earned $73,000 or less last year, you may be eligible to get your taxes done for free online through the IRS free-filer program. Resources like Cash App taxes and Turbo Tax also offer free filing options.