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​​​​​​​​Welcome to the LSNJLAWSM website, provided by Legal Services of New Jersey (LSNJ). LSNJ is a 501(c)(3) nonprofit offering free legal advice to low-income people in New Jersey. Find legal information by clicking on a legal topic or typing a few words into the search box. ​

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Taxes
Information to Help You Prepare and File Your 2017 Federal Tax Return

Please note: This is an archived article. It does not apply to current-year tax preparation. Please see our current article to read up-to-date tax information.

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This article gives you information on filing your 2017 tax return and answers some common taxpayer questions.

A new law, the Tax Cuts and Jobs Act, went into effect on December 22, 2017. The law makes sweeping changes to existing tax law. It will affect taxpayers across all income levels in 2018. See The New Tax Law, which explains some of the changes.

Filing Your 2017 Taxes

File your federal tax return for the 2017 tax year by April 18, 2018. If you fail to file a return or ask for an extension for time to file, you may have to pay penalties and interest.

Should I go to a tax preparer?

If your current income is below $54,000, you likely qualify for free tax preparation assistance. There are several programs in New Jersey that will provide free services from a tax professional. One of these ­programs is the Volunteer Income Tax Assistance (VITA) program. Please see Where can I go to get help filing my tax return? for more information about tax assistance programs.

How do I choose a tax return preparer?

If you do not qualify for free tax assistance and must pay someone to prepare your tax return, be careful. You are legally responsible for what is on your return, even if you did not prepare it yourself. You should choose a preparer carefully. Here are some tips:

  • Only use preparers who sign the returns they prepare and include their Preparer Tax Identification Number (PTIN).
  • Check the person’s qualifications. For example, ask the preparer their educational background, or if they belong to a professional organization.
  • Check the preparer’s history. Make sure they have a license and check for disciplinary actions with the state board of accountancy for certified public accountants.
  • Avoid preparers who base their fee upon a percentage of your refund.
  • Make sure any refund due is deposited into your bank account or a check mailed to you. Do not have all or part of your refund deposited into the preparer’s account.
  • Never sign a blank return. Review the entire return and make sure all the information is complete before you sign. Do not be afraid to ask questions.
  • Make sure to keep a copy of the return for your records.

Should I consider a refund anticipation loan?

No. This time of year, tax preparation businesses heavily advertise offers to “get your refund early.” These are not instant refunds issued by the IRS. They are loans, secured by your tax refund, and the lender will likely add high fees and interest rates. The fees and interest are deducted from your refund, and you won’t get the full amount of your ­refund. It is better to be patient and wait for your full refund. In most cases, if you file your return electronically and choose direct deposit, you should get your refund within a week or two.

Do I have to file a return?

The amount of taxable income you can receive before you are required to file a tax return depends upon your age, filing status, and gross income. The amount of taxable income you can receive before you are required to file a tax return is called a filing threshold. Use the table below to see if you are required to file a federal tax return.


2017 Filing Requirements Chart for Most Taxpayers

IF your filing status is. . .

AND at the end of 2017 
you were. . .

THEN file a return if your gross income was at least. . .

Single

under 65

$10,400

65 or older

$11,950

Head of household

under 65

$13,400

65 or older

$14,950

Married filing jointly

under 65 (both spouses)

$20,800

65 or older (one spouse)

$22,050

65 or older (both spouses)

$23,300

Married filing separately

any age

$ 4,050

Qualifying widow(er)
with dependent child

under 65

$16,700

65 or older

$18,000

Note: If you were born before January 2, 1953, you're considered to be 65 at the end of 2017.
See IRS Publication 501 for more information about filing requirements.

Consider filing a return even if you do not have to!

Even if you do not make enough money to have to file a tax return, you should consider still filing one. If you work, but your income is low, you are probably eligible to get a refund of taxes that were withheld from your paycheck during the year. There are also other tax credits for which you might be eligible, such as the Earned Income Tax Credit (EITC). See The Earned Income Tax Credit for more information about EITC. A tax refund means that the IRS will be returning money to you. If you don’t file a return, you won’t get money back to which you are entitled.

What if I am unable to file my tax return on time?

If you are unable to file by April 18, 2018, you may file for a six-month extension by completing IRS Form 4868 (from IRS.gov). Extension requests are automatically granted. Submitting this form gives you until October 18, 2018, to file. Note that this is only an extension of time to file, not the time to pay. So if you are self-employed and make ­estimated tax payments on a quarterly basis, you should still estimate your tax liability for 2017, and pay any amount due. Failure to do so may result in a penalty. If you do not have the money to pay what you owe, you should still file the request for the extension. You will avoid the late-filing penalty, and may also reduce or eliminate interest and late-payment penalties.

How do I find out the status of my tax refund?

The Refunds tool (from IRS.gov) allows you to instantly check the status of your refund.

What does filing status mean?

Filing status is a term used by the IRS to determine your tax filing obligations, standard deductions, and eligibility for certain credits and deductions. It is based mainly upon marital status and family situation. There are five types of filing status: Single, Married Filing Jointly, Married Filing Separately, Head of Household (HOH), and Qualifying Widow(er) with Dependent Child. Note that your marital status on the last day of the year determines your filing status for the entire year. You can choose Single filing status if you are divorced or legally separated according to state law. Head of Household generally applies to unmarried taxpayers. To qualify for HOH status, you must have paid more than half the cost of maintaining your household for yourself and a qualifying person. For more information about filing status, see IRS Publication 501: Exemptions, Standard Deductions and Filing Information (from IRS.gov).

What is the difference between an exemption and a deduction?

An exemption is a fixed amount of money that the IRS determines should be excluded from being taxed. Each person in the household is eligible for an exemption. The exemption reduces the amount of overall income on which you are taxed. The exemption for 2017 is $4,050. This is unchanged from 2016.

Example:
David is a single parent with one child. He earned $24,000 in 2017. David can take a personal exemption of $4,050 for himself and a dependent exemption of $4,050 for his child. Therefore, he can take a total of $8,100 in exemptions.

$24,000
 
David’s Adjusted Gross Income
- 8,100
 
Exemptions
$15,900
 
David's Adjusted Gross Income, less exemptions

As you can see by our example, David will only pay tax on $15,900. This amount will be further reduced by other deductions and tax credits.

You can also claim deductions, which are amounts subtracted from your taxable income. Generally, deductions are eligible expenses that taxpayers are allowed to report. You can choose whether to take a standard deduction or to itemize (list) your deductions. You should choose the option that is best for you. A standard deduction is a set, flat amount determined each year by the IRS. Each household can take one standard deduction. When you itemize your deductions, you specify item by item what was spent, such as mortgage interest, unreimbursed business expenses, medical expenses, state taxes, and charitable deductions. The dollar amount of your standard deduction depends on your filing status. The standard deduction chart below lists the dollar amount of the standard deduction for the 2017 tax year.


2017 Standard Deduction Chart for Most People*

If your filing status is...

Your standard deduction is:

Single or Married filing separately

$ 6,350

Married filing jointly or Qualifying widow(er) with dependent child

$ 12,700

Head of household

$ 9,350

*Do not use this chart if you were born before January 2, 1953, are blind, or if someone else can claim you (or your spouse if filing jointly) as a dependent. Use Table 7 or 8 instead, which can be found in IRS Publication 501 (from IRS.gov).

Remember, in the previous example, David’s taxable income went from $24,000 to $15,900 when we subtracted his exemptions. Now let’s adjust for deductions based upon the following facts:

David rents an apartment and does not have a lot of deductions, such as mortgage interest, property taxes, or unreimbursed business expenses, to itemize. He will take the standard deduction. Since he is a single parent who provides all the support for his daughter, his filing status is Head of Household. Based upon the table below, David can take a standard deduction of $9,350.

In our example:

$24,000
David’s Adjusted Gross Income
- 8,100
 
Exemptions
$15,900
 
 
- 9,350
 
Standard Deduction
$ 6,550
 
David's Taxable Income

What is a tax credit?

Unlike exemptions and deductions, which reduce the amount of income on which your tax is calculated, tax credits reduce the actual amount of your tax. There are several tax credits available for families, such as the Child Tax Credit, the Child and Dependent Care Credit, and the Earned Income Tax Credit.

The Earned Income Tax Credit (EITC)

This is one of the most valuable credits because it is fully refundable. This means that you will still get money back, even if you did not owe any tax. See the table below. The amount of the EITC depends upon income and family size. You must meet the following requirements in order to claim the EITC:

  • Your status cannot be Married Filing Separately.
  • You must have a valid Social Security Number for you and your spouse (if filing a joint return) and any qualifying child.
  • You must have earned income. Earned income means you are paid in wages, are self-employed, have farming income, or receive disability income.

For more information and to see if you qualify, see Use the EITC Assistant (from IRS.gov).

2017 EITC

 
Maximum Income
Single/Head of Household
Maximum Income
Married Filing Jointly

 

Maximum
Credit

 

No qualifying children

$15,010

$20,600

$ 510

With one qualifying child

$39,617

$45,207

$3,400

With two qualifying children

$44,007

$50,597

$5,616

With three or more qualifying children

$48,340

$53,930

$6,318

Where can I go to get help filing my tax return?

If you are a low-income taxpayer, there are a number of resources to help you file your taxes for free.

IRS Free File Program: This program makes commercial tax preparation software available to low-income taxpayers at no cost. If you had less than $62,000 in adjusted gross income in 2017, these programs will help you complete and file your tax return at no cost. Go to Free File (from IRS.gov). Select the tax software that best suits your needs. Once you choose a preparer, you will leave the IRS website and be taken to the commercial preparer’s site. Based upon your answers to income and family questions, a tax return will be prepared on your behalf and filed electronically. Note: This may not be an option for filing your state tax return, so you may want to consider one of the other in-person tax preparation options listed below.

Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE): The VITA program generally offers free tax preparation services to people with incomes below $54,000. In addition, the TCE program offers free tax help for all taxpayers, particularly those who are age 60 and older, specializing in questions about pensions and retirement-related issues unique to seniors. VITA and TCE sites are staffed with volunteers trained to prepare returns and are located at libraries, senior centers, and other community centers. To find a VITA or TCE site near you, call 1-800-906-9887 or 211, or visit Free Tax Return Preparation for Qualifying Taxpayers (from IRS.gov).

These centers are now open in every county in New Jersey. You should contact the sites as soon as possible to find out how to make an appointment. As the April 18, 2018 deadline approaches, these sites become busy and you might not be able to secure an appointment.

What should I bring to my VITA or TCE appointment?

Save time by being prepared for your appointment with VITA or TCE. Bring the following with you:

  • Proof of identification (photo ID).
  • Social Security cards for you, your spouse, and dependents. An Individual Taxpayer Identification Number (ITIN) assignment letter may be substituted for you, your spouse, and your dependents if you do not have a Social Security number.
  • Proof of foreign status, if applying for an ITIN.
  • Birth dates for you, your spouse, and dependents on the tax return.
  • Wage and earning statements (Form W-2, W-2G, 1099-R,1099-Misc) from all employers.
  • Interest and dividend statements from banks (Forms 1099).
  • Health Insurance Exemption Certificate, if received.
  • A copy of last year’s federal and state returns, if available.
  • Proof of bank account routing and account numbers for direct deposit such as a blank check.
  • To file taxes electronically on a married-filing-joint tax return, both spouses must be present to sign the required forms.
  • Total paid for daycare provider and the daycare provider’s tax identifying number such as their Social Security number or business Employer Identification Number.
  • Forms 1095-A, B, and C, Health Coverage Statements.
  • Copies of income transcripts from IRS and state, if applicable.

For more information, visit What to Bring to Your Local VITA or TCE Site (from IRS.gov).

Is there still a penalty for not having health insurance?

If you could afford health insurance in 2017 but chose not to buy it, you may have to pay a fee called the individual shared responsibility payment. You would owe the fee for any month you, your spouse, or your tax dependents didn’t have qualifying health insurance. But note that there are many exceptions to this requirement, discussed below.

How much is the penalty for 2017?

The penalty is calculated in two ways. The first way is by calculating 2.5% of your household income. The second way is a penalty of $695 per person. Your penalty will be the higher of the two amounts.
However, many people qualify for an exemption from this requirement. If you qualify, you won’t have to pay the fee. Some of the exemptions are:

  • Financial hardship or other circumstances prevented you from getting health insurance.
  • The lowest priced coverage available to you would cost more than 8.16% of your household income.
  • Your income was low enough that you did not have to file.
  • You lived in a state that did not increase its Medicaid eligibility amounts, and your household income was below 138% of the federal poverty level. Go to Federal Poverty Level (FPL) (from Healthcare.gov) for the federal poverty guideline amounts.
  • You were incarcerated in 2017.

For more details and a complete list of the exemptions, visit Health coverage exemptions, forms & how to apply (from Healthcare.gov).

The New Tax Law

The tax law changes created by the Tax Cuts and Jobs Act of 2017 will affect your 2018 tax return. Some of the biggest changes are to the income tax rate, the standard deduction, and personal exemptions. As explained above, deductions are amounts subtracted from your taxable income. Personal exemptions are the fixed amounts of money that the IRS determines should be excluded from being taxed.

The income tax rate: The changes are in effect until 2025. Across all income levels, the tax rates have been lowered. For example, if you file jointly with your spouse and your income is $40,000, your rate will decrease from 15% in 2017 to 12% in 2018. See the chart below.

2018 Income Tax Rate Chart

Income Tax Rate

Income Levels for Those Filing As:

2017

2018-2025 

Single

Married-Joint

10%

10%

$0-$9,525

$0-$19,050

15%

12%

$9,525-$38,700

$19,050-$77,400

25%

22%

$38,700-$82,500 

$77,400-$165,000

28%

24%

$82,500-$157,500

$165,000-$315,000

33%

32%

$157,500-$200,000 

$315,000-$400,000 

33%-35% 

35%

$200,000-$500,000

$400,000-$600,000

39.6%

37%

$500,000+

$600,000+

Standard deduction: The new tax law doubles the standard deduction. For example, if you file as single, your deduction increases from $6,350 to $12,000. If you file jointly, it increases from $12,700 to $24,000.

Personal exemptions: Previously, you could deduct $4,150 from your income for each person you claim. Under the new law, this has been eliminated.

Itemized deductions: Under the old law you could subtract from your income payments such as alimony, moving costs, tax preparation costs, and job expenses (such as licensure fees or continuing education costs). The new law eliminates many of these, but some important ones (discussed below) remain.

Student loan interest: This remains unchanged. You can still deduct up to $2,500 per year.

Home mortgage interest deductions: Under the old law, you could deduct the mortgage interest you pay on mortgage debt up to $500,000 for single filers, $1 million for joint filers. For homes bought on December 15, 2017, or later, you may deduct interest on mortgage debt up to $375,000 if you are a single filer, $750,000 if filing jointly.

Child tax credit: The child tax credit doubled to $2,000 for children under 17 and is available to more people. The credit can be claimed by single filers who make up to $200,000, and up to $400,000 for joint filers.

How will the new law affect me?

How the new law will affect you depends on many factors, including your household size, income, the type of job you have, and whether or not you own your home. You should see the new tax cuts show up in your paycheck in early 2018. Because of the changes in deductions, employers have started using new IRS income tax withholding tables, and hopefully you will see an increase to your take-home pay.

For more detailed information about the new tax law changes, see Tax Reform (from IRS.gov).​​​​​​​​​​​​​​​​​​​​

2/19/2018