Fire up the calculator. Starting Tuesday, you can officially file your federal income taxes for 2014.
It’s the first time in two years that the IRS has opened its tax-filing season on time. Given recent IRS hiring cuts and new federal tax law changes, opening promptly is a “stunning achievement,” said IRS Commissioner John Koskinen, in a conference call last week with reporters.
This year, the IRS expects about 150 million taxpayers will file a federal return. If you’re among them, there are some changes and tips worth noting:
Health care compliance
One of the biggest changes this year is that all U.S. taxpayers and their dependents must declare that they had 2014 health care coverage, as required under the federal Affordable Care Act.
“Most people – more than 80 percent – will only be required to just check a box and file as normal,” Koskinen said.
There are three possible scenarios:
▪ If you have health care coverage, check the “full year coverage” box, which is on Line 61 of the regular Form 1040.
▪ If you’re not covered, you must request an exemption, generally limited to those who are incarcerated, are Native Americans, of certain religious faiths or have other special circumstances. (See IRS Form 8965 for details.)
▪ For each month that someone in your household did not have health care coverage, you’ll be required to make a “shared responsibility payment,” part of the penalties designed to encourage more Americans to get health care coverage. For 2014, that annual payment is $95 per adult and $47.50 per child, capped at a family maximum of $285.
▪ If you bought ACA health care coverage for the first time, such as through a marketplace like Covered California, and received a tax credit to subsidize your premiums, you’ll need to report that at tax time. Some taxpayers received advance payments of their tax credit, which typically went directly to their health care provider to reduce their monthly premiums.
In those cases, you’ll be receiving a new IRS Form 1095-A in the mail. Use it to reconcile what was received in premium assistance with annual income. You might owe more; you might be due a refund.
Don’t file any tax return until you’ve received the new Form 1095-A from your health care marketplace, such as Covered California, the IRS commissioner urged last week. Otherwise, your tax return could be inaccurate and you might face penalties or have to file an amended return.
Surf, don’t call
The IRS is blunt this year in urging taxpayers to get federal tax help online, rather than picking up the phone.
“We expect our phones to be extremely busy, and there will frequently be extensive wait times of a half-hour or more, so I would caution taxpayers to use our phone lines only as a last resort,” Koskinen said. Instead, he said, consumers should use the IRS website, www.irs.gov, to get answers to basic questions, request forms and find free tax-preparation help.
Also, starting in February, there will be more than 12,000 sites across the country where seniors and those earning less than $53,000 a year can get free help in preparing their federal tax returns. (See box.)
This year the IRS has 14 companies offering Free File, the no-cost tax preparation and e-filing program for those earning $60,000 or less. About 70 percent of all taxpayers qualify to use Free File, the IRS says.
Avoid the audit
Despite budget and staffing cuts, Koskinen said the IRS still expects to conduct about 1 million audits of taxpayer returns. The best way to avoid being one of them, he said, is to file as accurately as possible.
“The roulette wheel spins and you don’t want the white ball to land on you,” he said. If you’re making a conscious decision to cheat on your taxes, “We’re not going to be happy with you.”
The IRS says 90 percent of tax refunds will be issued in less than 21 days. “The best way to ensure a quick refund is to e-file your return,” said Koskinen. “That’s because we expect processing delays for paper returns as a result of our budget constraints.”
To receive a refund promptly, request “direct deposit” into a savings or checking account, rather than a paper check that’s mailed.
Call The Bee’s Claudia Buck at (916) 321-1968 or read her Personal Finance columns at sacbee.com/claudiabuck.
Where to get IRS tax help
Starting Tuesday, you can file your IRS income tax return for 2014. (California’s Franchise Tax Board started accepting tax returns earlier this month.)
Basic tax questions: Call (800) 829-1040 or use the IRS website: irs.gov.
Affordable Care Act questions: If you have questions about complying with the new requirements, go to irs.gov/Affordable-Care-Act.
To get tax forms: Visit a local IRS office (4330 Watt Ave. in Sacramento), call (800) TAX-FORM for mailed copies, or go online.
Free tax-filing help: Seniors and moderate-income taxpayers can get help from Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) sites, most of which open in February. Search for a VITA site by ZIP code on the IRS website or call (800) 906-9887.Or use the “IRS2Go” mobile app.
To check your refund: Use the online “Where’s My Refund?” tool, download the mobile app, or call (800) 829-1040. You’ll need your Social Security number, filing status and refund amount.
Fastest way to a refund: Use direct deposit when filing; submit an error-free return.