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.

The deadline to file your federal taxes for the 2014 tax year is April 15, 2015. If you fail to file a tax return or ask for an extension for time to file, you may have to pay penalties and interest. This article will give you basic information about filing your taxes and answer some of the most common questions taxpayers ask.

Do I have to file?

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

Even if you do not make enough money to have to file a tax return, you should consider filing one. This is because at lower income levels, you may be entitled to a refund of taxes that were withheld from your paycheck during the year. You may also be eligible for other refundable tax credits, such as the Earned Income Tax Credit (EITC). The EITC will be discussed in greater detail later in this article. A tax refund means that the IRS will be returning money to you. If you don’t file a return, you won’t get any money back.

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

If you are unable to file by April 15, 2015, you may file for a six-month extension by going to the IRS website and filling out IRS Form 4868. These requests are automatically granted. But note that this is only an extension of time to file, not the time to pay if you owe. Thus, you should still estimate your tax liability for 2014 and pay any amount due by April 15. Filling out this form gives you until October 15, 2015 to file. You will avoid a late-filing penalty, and may also reduce or eliminate interest and late-payment penalties.

What if I was supposed to file a return in previous years but did not?

If you were required to file a tax return for past years but failed to do so, you should still file your tax return for 2014. Because you have not filed a return in previous years, this does not mean you cannot still file for the current year. It is important for you to get current with your past-due filing obligations as required under the law.

In some cases, the IRS will file a Substitute for Return (SFR) on your behalf based upon an estimate of your income. This may occur several months, or even years, after the return is due. An SFR will likely use a single filing status and will not include additional exemptions or expenses that you might be eligible for. This will result in a higher tax liability than you would have had if you filed your own return. Another important reason to file is that you only have three years from the original due date to file a tax return in order to get your refund. This is called the statute of limitations for claiming a refund. If you need help with having past returns prepared free of charge, contact the Tax Legal Assistance Project (TLAP) at Legal Services of New Jersey. Our staff can help you get current with your filing obligations, including having past returns prepared.

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

The IRS website tool allows you to instantly check the status of your refund. See Where’s My Refund? (from IRS.gov). You will need to have your Social Security number or Employer Identification Number (EIN), the refund amount filed on your return, and your filing status. If your return has been processed and the refund has been approved, you will see the date when you can expect to receive it.

What does filing status mean?

This term is used by the IRS to determine tax filing obligations, standard deductions, and eligibility for certain credits and deductions. It is an important factor in determining what your taxable income will be. 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 taxpayers who are unmarried. 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.

What is the difference between an exemption and a deduction?

Exemptions

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 amount of the exemption for 2014 is $3,950. Let’s see how this works:

Example:
Mary is a single parent with one child. She earned $24,000 in 2014. Mary can take a personal exemption of $3,950 for herself and a dependent exemption of $3,950 for her child. Therefore, she can take a total of $7,900 in exemptions.

$24,000		Mary's Adjusted Gross Income
- 7,900		Exemptions
$16,100		Mary's Adjusted Gross Income, less exemptions

As you can see by our example, Mary will only pay tax on $16,100. This amount will be further reduced by other deductions and tax credits.

Deductions
You can also claim deductions, which are amounts subtracted from your taxable income. Generally deductions are eligible expenses taxpayers are allowed to report. You can choose whether to take a standard deduction or to itemize your deductions. You should choose which is the most beneficial to you. A standard deductions is a set, flat amount determined each year by the IRS. Each household can take one standard deduction. You itemize your deductions when 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 on Table 20-1 lists the dollar amount of the standard deduction for the 2014 tax year.

We will use our previous example to show how deductions work:

Remember, Mary’s taxable income went from $24,000 to $16,100 when we subtracted her exemptions. Now let’s adjust for deductions based upon the following facts: Mary rents an apartment and does not have a lot of deductions such as mortgage interest, property taxes, or unreimbursed business expenses, to itemize. She will take the standard deduction. Since she is a single parent who provides all the support for her daughter, her filing status is Head of Household. Based upon Table 20-1, Mary can take a standard deduction of $9,100. In our example:

$24,000		Mary’s Adjusted Gross Income
- 7,900		Exemptions
$16,100
- 9,100		Standard Deduction
$ 7,000		Mary'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.

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 2014 EITC 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, including:

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

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

Where can I get free help filing my tax return?

If you are a low-income taxpayer, there are several 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 $60,000 in adjusted gross income in 2014, these programs will help you complete and return your tax return at no cost. Go to Free File (from IRS.gov). You will need to 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 information, a tax return will be prepared on your behalf and filed electronically. Note that 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 $53,000. The TCE program offers free tax help for all taxpayers, particularly those who are 60 years of age and older, and specializes 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)

Free Assisted Self-Help Tax Preparation (FAST Program). The FAST program combines the IRS Free File Program with VITA sites and can be a good way for people to prepare their own returns with some on-site personal assistance. Some VITA sites now make computer terminals available to taxpayers who can prepare their own taxes at no cost using a free tax preparation website.

If I don’t qualify for a free tax preparation service, how do I choose a reputable tax preparer and avoid preparer fraud?

Tax return preparer fraud involves the preparation and filing of a false income tax return by preparers who claim false personal or business expenses, deductions, credits, and exemptions. For example, a fraudulent preparer may falsify income amounts to qualify for tax credits such as the Earned Income Tax Credit.

In some situations, the taxpayer may not know of the false expenses, deductions, exemptions, and/or credits shown on his or her tax return. However, when the IRS detects a fraudulent return, it is likely that the taxpayer will have to pay additional taxes and interest and be subject to penalties.

Be careful when choosing a tax preparer because you will likely be responsible for the information on the return. See Avoid Taxpayer Fraud.

Note: A reputable preparer will ask to see receipts and will ask multiple questions to determine whether expenses, deductions, and other items qualify.

Tax-Related Identity Theft

The IRS has noted a significant increase in cases where an identity thief fraudulently obtains someone’s Social Security number and other personal information and falsely files a refund claim. Typically, a taxpayer will discover this when they go to electronically file their valid return and discover that one has already been filed. When this occurs, it can be complicated to clear up the situation and causes a delay for the innocent taxpayer’s refund. Here are some tips to prevent this from happening to you:

• Do not carry your Social Security card or other documents with your SSN or ITIN with you.
• Do not give your SSN or ITIN to a business only because they ask. Give it only when required.
• Check your credit report every 12 months.
• Secure your personal information in your home.
• Make sure your computer has protection from viruses, hackers, and spies.
• Don’t disclose personal information over the phone, through the mail, or on the Internet unless you are sure it is a trustworthy contact.

If you believe you have been a victim of tax related identity theft, you may contact the TLAP for help, or the IRS Identity Protection Specialized Unit at 1-800-908-4490. You can also complete and submit an IRS Identity Theft Affidavit (from IRS.gov).

For more information, see Taxpayer Guide to Identity Theft (from IRS.gov).

Contact LSNJ-LAW^SM or visit our website

If you have further questions, please contact the Tax Legal Assistance Project at Legal Services of New Jersey at 1-888-LSNJ-LAW (1-888-576-5529) (see box below). More tax information and a series of informational tax videos are also available.

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This information last reviewed: Mar 4, 2015