WASHINGTON — In case you forgot to make a note, taxpayers who requested a time extension to file their 2021 income tax return have until Monday, Oct. 17, to get the deed done.
In turn, 10 Free File products are available online, including eight in English and two in Spanish.
The service, which allows individuals to electronically prepare and file their federal income tax returns online for free, using guided tax preparation software, provides two options:
- IRS Partner Sites are for individual taxpayers whose adjusted gross income is $73,000 or less.
- Free Fillable Forms are for taxpayers whose adjusted gross income is greater than $73,000, but anyone using this service should know how to prepare their own tax return.
According to the IRS, filing inaccurate or incomplete returns can result in processing delays, so make certain all of the necessary forms are submitted. Moreover, filing an error-free return online linked to an account for direct deposit may also prevent stalled refunds and future IRS notices.
Forms required to complete an accurate return include the following:
- Proof of each source of income, typically in the form of W-2 forms provided by your employer, as well as 1099-NEC forms for contract work and 1099-G for unemployment income.
- Documentation of each write-off, including Form 1098 for mortgage interest, Form 5498 for individual retirement account deposits and Form 5498-SA for health savings account contributions, among others.
According to CNBC, dotting I’s and crossing T’s on the front end is the best way to avoid complications. The network offered the following tips:
- Just because a taxpayer did not physically receive payment from their investments does not mean they are not taxable. Be sure to include Form 1099-B for capital gains or Form 1099-DIV for dividends and distributions.
- Another common mistake is omitting Form 8606 for nondeductible IRA contributions. The form is required to verify contributions for Roth conversions, a step often taken to bypass income limits for Roth IRA deposits, allowing future tax-free growth. Failure to provide proof of the original deposits may mean you get taxed on the same income twice.
- If you’re over 70 and a half years old, you’re allowed to use qualified charitable distributions, or QCDs, to donate up to $100,000 per year from a pretax IRA. The tactic allows retiree investors to reduce adjusted gross income, but the practice can cause errors on Form 1099-R, which reports retirement plan distributions. Jastrem from Heritage Financial Services told CNBC that brokerages do not separate individual QCD transfers on Form 1099-R, and tax preparers must account for the individual QCDs manually or risk the entire IRA distribution being reported as taxable.
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