Filing your federal income tax return can be a stressful and complicated task. Even if you hire a professional tax preparer, you still need to make sure you have all of your ducks in a row. So we’ve put together this handy guide to set you on the right path and to prevent you from running around like a chicken with its head cut off when April rolls around.
Of course, you should always consult a professional with any questions you may have about filing your 2018 return. This guide is intended to be only a handy overview.
Important Dates for 2019
First off, mark your calendar with these important dates for the tax season.
How Early Can You File Your Taxes?
For 2018, you can begin filing on January 29, 2019. Prior to that date, the IRS will not accept or process returns filed either electronically or via the mail.
Why file early? The biggest benefit is that you’ll likely receive your refund sooner.
What Is Tax Day 2019?
Tax Day 2019 is April 15. By that date, you must have already filed your return or an extension. The extension will give you until October 15, 2019, to e-file your return.
Who Needs to File a Tax Return for 2018?
Believe it or not, there are some folks who are not required to file a federal tax return. In general, individuals or households that don’t meet certain income thresholds are exempt from filing. The limit varies depending on factors including age and filing status.
For 2018, you will need to file a federal tax return if the income on your W-2 meets or exceeds the following limits:
- Single and under 65: $12,000
- Single and 65 or older: $13,600
- Head of household and under 65: $18,000
- Head of household and 65 or older: $19,600
- Married, filing jointly and under 65: $24,000
- Married, filing jointly and 65 or older: $25,300
- Married, filing separately (any age): $5
- Qualifying widow(er) with dependent children and under 65: $24,000
- Qualifying widow(er) with dependent children and 65 or older: $25,300
What if you’re self-employed? No matter your age or marital status, you must file if you are self-employed and earned $400 or more in 2018.
You must also file if you meet any of the following criteria:
- You received unemployment income
- You owe household employment taxes
- You owe the Alternative Minimum Tax
- You owe taxes on a retirement plan such as an IRA
- You’re still repaying the 2008 Homebuyer Credit
- You received $108.28 or more from a tax-exempt religious organization
- You received an advanced payment with the Premium Tax Credit
- You have unreported tip income
- You received distributions from a Health Savings Account
It’s advisable that you check with a tax professional to see if you are indeed exempt from filing. However, even if you are not required to file for 2018, there are a variety of reasons why you may want to do so. For example, you may still be eligible to receive certain tax credits.
Should You DIY or Hire a Professional Tax Preparer?
The eternal question: Should you save money and file your taxes on your own or hire someone to make sure all you’ve dotted all the ‘i’s and crossed all of your ‘t’s?
Of course, this choice is entirely up to you. And if you decide to do it yourself, there is plenty of great software to help.
However, if you answer “Yes” to any of the following, you should consider calling a pro:
- Are you self-employed?
- Do you have any “weird” tax situations such as a property sale, an inheritance, a Roth IRA conversion or an early pension distribution?
- Do you earn more than $100,000 per year?
- Are you a real estate investor?
- Do you need to file any complicated tax forms such as a K-1?
- Are you completely clueless when it comes to taxes? (Sometimes, you should go with your gut!)
Here’s a more in-depth discussion of whether or not filing by yourself is the right choice for you.
What’s Your Tax Filing Status?
If you’re single, married or somewhere in between, there’s a status for you. Here are the five filing statuses when it comes to federal returns:
- Single: If you are not married or legally separated as of December 31, 2018, and do not have any qualifying dependents you must use this status.
- Head of household: If you are a single or legally separated person (or if your spouse did not live at your address during the second half of 2018) and you have a qualifying dependent or child for whom you paid at least half of their support, you are eligible to claim this status.
- Married, filing jointly: You can claim this status if you were married as of December 31, 2018.
- Married, filing separately: If you were married as of December 31, 2018, you can claim this status, which usually results in higher tax liabilities (but not always).
- Qualifying widow(er): This status can confer the same benefits as if you were married and filing jointly. However, you must have a qualifying dependent and are eligible only if your spouse passed away in 2017 or 2018.
Federal Income Tax Rates and Brackets for 2018
In December 2017, Donald Trump signed into law the Tax Cuts and Jobs Act. This made some changes to the rates. Here’s a table that breaks it all down:
|Rate||Single||Head of Household||Married, Filing Jointly||Married, Filing Separately||Qualifying Widow(er)|
|10%||Up to $9,525||Up to $13,600||Up to $19,050||Up to $9,525||Up to $19,050|
Deductions for 2018
Here are the standard deduction amounts for 2018:
|Filing Status||Standard Deduction Amount|
|Head of Household||$18,000|
|Married, Filing Jointly||$24,000|
|Married, Filing Separately||$12,000|
What Information Do I Need?
Here’s a list of some information you’ll need to file a 2018 federal income tax return successfully. (Note: Not all items will apply to your situation.)
- Your Social Security number
- Your spouse’s Social Security number (if you’re married)
- Your dependents’ Social Security numbers (if applicable)
- W-2 Forms from all employers you worked for
- 1099 Forms if you worked on contract and earned more than $400
- Investment income information
- Federal and state tax forms from the prior year
- Records of business income
- Records of unemployment income
- Records of rental property income
- Records of Social Security benefits
- Records of miscellaneous income
- Records showing charitable contributions and donations
- Records of qualified business expenses
- Records of medical expenses
There could be other paperwork that can help you save even more on your taxes. Consult with a professional as to what documentation you’ll need to supply.
Also, investors have special needs at tax time. Here’s a checklist of information investors should gather.