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If you can’t afford to pay your taxes, it’s imperative you still file tax a return and decide to pay what you owe. Failing to file and/or pay your taxes on time will result in interest and penalties.
If you can’t afford to pay the full amount you owe by the deadline, the IRS has multiple payment options that could help, including installment agreements. Keep in mind that you’ll still owe interest, and possibly penalties, even if you enter into a payment arrangement.
Costs and fees of payment plans vary depending upon the duration of your plan and whether you apply by mail or online.
According to the IRS, most refunds are issued within 21 days for taxpayers who e-filed and who are having their refund directly deposited. Refunds take up to six weeks if you submitted paper returns. Claiming certain credits or deductions might delay your refund. You can check the status of your refund on the IRS “Where’s My Refund?” website.
You have multiple options to file your return.
- Mail: The address to mail in your return will depend on the state you live in (the IRS offers a list of addresses)
- IRS e-file, is free if your income is $66,000 or less
- Free online tax filing.
- DIY, with fee-based tax-preparation software
- Paid tax professional, if your situation is more complex
However, you choose to file, be aware that submitting your return electronically has several advantages. If you’re owed a refund, you could get it sooner via e-file, since the IRS processes e-filed returns more quickly than paper returns.
Each year, you’re required to file your federal income tax return for the previous calendar year by Tax Day. Usually, the filing deadline is on or around April 15, though if the 15th falls on a weekend or holiday the deadline can be bumped to the next business day.
The deductions and credits you’re eligible to claim vary depending upon your situation. Here are some deductions that you can claim even if you don’t itemize.
- Contributions to individual retirement arrangements, including IRAs, SEP-IRAs, Simple IRAs and solo 401(k)s (these phase out at higher incomes)
- 50% of self-employment taxes
- Student loan interest up to $2,500
- Tuition and fees for higher education up to $4,000 if you fall within income limits (it’s not yet clear if this deduction will be available for the 2018 tax year)
- Health savings account contributions made with personal funds
- Deductions you may be eligible to claim only if you itemize:
- $10,000 maximum for the aggregate of state and local taxes paid (SALT taxes)
- Interest on up to $1 million of eligible home mortgage debt for loans taken out before Dec. 15, 2017, and up to $750,000 of eligible home mortgage debt for loans taken out after that
- A deduction for medical expenses, but only if they cost at least 7.5% of your income (a threshold applicable for tax years 2017 and 2018)
- A deduction for charitable contributions that don’t exceed a set percentage of income
- And finally, here are credits you may be eligible to claim.
- The earned income tax credit provides a credit for lower-income Americans.
- The child tax credit provides a credit of up to $2,000 per qualifying child for tax years 2018 to 2024. As much as $1,400 of this credit is refundable. Eligibility begins phasing out at $200,000 in income for single filers and $400,000 in income for married couples filing jointly.
- The child and dependent care tax credit is valued at 20%–35% of the costs of allowable care expenses, up to $3,000 in expenses for the care of one qualifying person. A taxpayer caring for two or more dependents could claim a maximum credit of $6,000.
- The American opportunity tax credit provides a maximum credit of $2,500 for qualifying educational expenses paid for eligible students. The credit is available only for tuition paid for the first four years of post-secondary education and there are income limits.
- The lifetime learning credit provides a maximum credit of $2,000 per year for postsecondary educational costs. There are also income limits, and the credit is worth only 20% of qualifying expenses, up to a $10,000 maximum.
Both tax credits and tax deductions can reduce the amount of tax you must pay. Deductions reduce the amount of income you pay taxes on, which in turn can reduce your tax. Credits are a dollar-for-dollar reduction in the amount of tax you owe.
Deductions reduce taxable income. You have a choice between taking a standard deduction or itemizing your deductions. When you itemize, you reduce taxable income by the value of certain expenses deductible under U.S. tax law. For example, if you pay mortgage interest, you can deduct the interest paid — but only if you itemize.
To decide which deductions to take, compare the value of the standard deduction versus the total value of your itemized deductions. The standard deduction was raised for tax years 2018 to 2025. For 2019, the standard deduction amounts are:
- $12,200 if you file as single or married filing separately
- $18,350 if you file as head of household
- $24,400 if you file as married filing jointly
Because tax reform significantly increased the standard deduction, you may find your itemized deductions don’t exceed the standard deduction amount for your filing status.
The U.S. has a progressive tax system, so not all your income is necessarily taxed at the same rate.
Tax brackets refer to the range of incomes taxed at specific rates, while your marginal tax rate is the highest tax bracket applicable to your income. There are seven tax brackets under current tax law.
A dependent is a person you’re responsible for supporting. If you can claim a dependent, you can become eligible for certain tax breaks, including the child tax credit. You may also qualify for head-of-household status.
You may have a dependent if:
- You have a qualifying child younger than 19, or under 24 if they’re attending school full time. Your child must either live with you for more than half the year — or qualify for an exception — and must not provide more than half their own support. Your child also can’t file a joint tax return, except to claim a refund.
- You have a qualifying relative. Your qualifying relative either must share a specific family relationship with you or must live with you all year long. You must provide more than half their support, they must earn very little, and they can’t be claimed as a dependent by anyone else.
Tax filers are treated differently based on household status. There are five: single, married filing jointly, married filing separately, head of household and qualifying widow(er) with dependent child. Your filing status affects your tax rate, standard deduction, and eligibility for certain deductions and credits.
According to the IRS, income includes money, property or services. Any income is taxable unless the law specifically exempts it, and all taxable income must be reported on your tax return. Some nontaxable income must be reported, too, even though you won’t pay taxes on it.
Unearned income, like child support or Social Security benefits, isn’t subject to payroll taxes, but you do pay federal and sometimes state income tax on it. And some types of unearned income are taxed at a lower capital gains rate, rather than your normal tax rate.
Whether you’re required to file a tax return will depend on several factors, including your gross income, filing status, age, and whether you’re a dependent on someone else’s federal income tax return. And you may have to file even if you don’t owe any tax.