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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Special Message Regarding 2019 Tax Filing—April 2, 2020

Due to the COVID-19 outbreak, the filing deadline for tax returns has been extended from April 15 to July 15, 2020. For more information, visit https://www.irs.gov/newsroom/payment-deadline-extended-to-july-15-2020. The New Jersey State Tax filing deadline is also July 15, 2020: https://nj.gov/governor/news/news/562020/approved/20200401a.shtml​.

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This article will help you understand some of the tax law changes for 2020, inform you about filing your taxes, and answer common taxpayer questions.

The deadline to file federal taxes for the 2019 tax year is April 15, 2020. Failure to file a tax return, or to request an extension for time to file your tax return, may result in added penalties and interest.

Save your money, get your taxes done for free

The average cost of tax return preparation is approximately $225. If your current income is below $56,000, you likely qualify for free tax preparation assistance. Among the programs in New Jersey that provide free services from a tax professional is the Volunteer Income Tax Assistance program. (See Where can I get my taxes done free?.)

What if I don’t qualify for free tax assistance?

If you do not qualify for free tax assistance and do not feel comfortable filing your own return, you may pay someone to prepare your tax return. Be very careful! You are legally responsible for what is on your return, even if it wasn’t prepared by you. While there are many honest and professional tax preparers, there are some who are not well trained or may be fraudulent. 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).
• Use IRS e-file, the quickest way to get your refund, and request direct deposit into your bank account.
• Check the preparer’s qualifications. For example, ask about their educational background, and affiliation with 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 whose fees are based upon a percentage of your refund.
• Make sure any refund due is deposited into your bank account or mailed to you as a check. Do not allow all or part of your refund to be 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.
• Report dishonest or abusive preparers to the IRS. People can report abusive tax preparers and suspected tax fraud to the IRS using Form 14157, Complaint: Tax Return Preparer.
• 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 the refund you are entitled to. 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 return within a week or two.

Do I have to file a return?

Whether you are required to file a tax return and the amount of taxable income you can receive both depend on 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.

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 filing one. If you are working, but your income is low, you are probably eligible for a refund of taxes withheld from your paycheck during the year. There are also other tax credits, for which you might be eligible. For example, the Earned Income Tax Credit (EITC) is a valuable credit you may qualify for if you have low income and are working, or have “earned” credit. (See The Earned Income Tax Credit (EITC).) Even if you do not think that you need to file a return, it is highly recommended you speak to a tax preparer about the benefits of filing. 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 that you are entitled to.

When do I have to file?

The deadline for filing 2019 tax returns is April 15, 2020.

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

If you are unable to file by the deadline (April 15, 2020), you may file for a six-month extension by completing IRS Form 4868 (from IRS.gov). Extension requests are automatically granted, giving you until October 15, 2020 to file. Note that this is only an extension of the time to file, and will not extend your time to make a payment if you owe the IRS at the end of the year. This means if you are self-employed and make estimated tax payments on a quarterly basis, you should still estimate your tax liability for 2019, 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, file the extension request to avoid a late-filing penalty and possible interest on 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. Just input your Social Security number, filing status (explained below), and exact refund amount as stated on your filed return. Filing electronically will yield a faster 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. Your marital status on the last day of the year determines your filing status for the entire year. Choose single filing status if you are divorced or legally separated according to state law. Head of household generally applies to tax payers 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?

An exemption is a fixed amount of money that the IRS determines should be excluded from being taxed. A deduction is typically an expense subtracted from gross income. Each person in a household is eligible for an exemption. An exemption reduces the overall amount of taxable income. As of 2019, the personal and dependent tax exemption has been removed while the federal tax deduction has been increased, as shown in the chart below. The additional tax exemption for the aged or the blind is now $1,300. The additional standard deduction amount increases to $1,650 for unmarried taxpayers. For 2019, the standard deduction amount for an individual claimed as a dependent by another taxpayer cannot exceed the greater of $1,100 or the sum of $350 and the individual’s earned income (not to exceed the regular standard deduction amount). Additionally, new tax law has raised the Child Tax Credit from $1,000 to $2,000 and raised the income eligibility threshold to $200,000 for a single parent and $400,000 for those married and filing jointly.

Example:

David is a single parent with one child. He earned $24,000 in 2019. Since there are no personal tax exemptions, David can only apply the standard deduction rate of $12,200 under federal law. Additionally, he may now apply the Child Tax Credit.

 

$24,000		David’s Adjusted Gross Income
- $12,200		David’s tax deduction
- $ 2,000		Child tax credit
$ 9,800		David’s adjusted gross income, less deductions and credits

As you can see, David will pay tax on only $9,800. This amount will be further reduced by other deductions and tax credits. Since he is a parent, he may also check whether he qualifies for the Head of Household deduction, or for the Child Tax Credit or Child Care Credit, which are new this year.

The chart above shows 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. 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 above the dollar amount of the standard deduction for the 2019 tax year.

We will use our previous example to show how deductions work. Remember, David’s taxable income went from $24,000 to $9,800 when we subtracted his deductions and credits. Now let’s adjust for deductions based upon the following facts:

David rents an apartment and does not have a lot of deductions to itemize, such as mortgage interest, property taxes, or unreimbursed business expenses. He will take the standard deductions. 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 above, David can take a standard deduction of $18,350.

$24,000		David’s Adjusted Gross Income
- $18,350		Standard head of household deduction
$ 5,750		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 and may even be included in your refund in some cases. Several tax credits are available for families, such as the Child Tax Credit, the Child and Dependent Care Credit, and the Earned Income Tax Credit. With the new tax laws, these credits have increased. The Child Tax Credit allows for a $2,000 reduction for single parents with $200,000 or less in annual income or married-filing-jointly couples with income up to $400,000 with a child under 16 at the end of 2019. The Child and Dependent Care Credit allows for a parent to get between 20% and 35% of child care up to $3,000 for a single child under the age of 13, an incapacitated spouse or parent, or another dependent so that you can work. The Earned Tax Income Tax Credit is explained below.

The Earned Income Tax Credit (EITC)

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

• Your status cannot be married filing separately.
• Valid Social Security numbers are required for you and your spouse (if filing a joint return), and for 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).

Where can I get my taxes done free?

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 $69,000 in adjusted gross income in 2019, this program will help you complete and file 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 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 $56,000. In addition, the TCE program offers free tax help for all taxpayers, particularly those 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 both federal and state returns and are located at libraries, senior centers, and other community centers. Most TCE volunteers will assist with electronic filing for a more accurate and timely filing. To find a VITA or TCE site near you, call 1-800-906-9887 or 211, or visit IRS VITA Grant Program (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 15, 2020 deadline approaches, these sites become busier 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 information with you:

• Proof of identification (photo ID).
• Social Security cards for you, your spouse, and dependents.
• An Individual Taxpayer Identification Number (ITIN) assignment letter, which 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-jointly 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 Social Security number or business Employer Identification Number.
• Forms 1095-A, B, and C, Health Coverage Statements.
• Copies of income transcripts from the IRS and the state, if applicable. 

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

This information last reviewed: Feb 17, 2020