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It's Tax Time! 6 Tips for Survival

It’s that time of year again — tax season. With the April 15 deadline drawing near, it is time to get your taxes filed and start planning for next year. Before you get started, make sure you understand the new tax laws that went into effect in 2014. If you are not using a tax professional and do not have any education on taxes, the 2015 tax season could be especially difficult. Here are six tips to help you survive tax time.

Health Insurance Requirements

The Affordable Care Act went into full effect in 2014. This federal law established minimum essential coverage requirements for all Americans. You will either need to confirm that your healthcare coverage meets those requirements or show why you are exempt. In addition, if you received a tax credit, or did not receive a tax credit but make less than a certain amount based on your household size, you will need to account for that.

Inflation May Help

Tax Form Fallout

Image via Flickr by brianjmatis

Standard deductions went up for tax year 2014, to $6,200 for single taxpayers and $12,400 for married couples who file jointly. Tax brackets were also made wider. Personal exemptions went up as well, to $3,950 per person. All in all, this means that you may qualify for a lower tax bracket than you did last year, even if you are making the same salary. At the same time, a higher standard deduction may help reduce your tax burden even further.

Virtual Currency

Virtual currency, such as Bitcoin, also saw an overhaul in 2014. The IRS ruled that virtual currency is not legal tender. Instead, the tax agency has opted to treat it as property. People who use Bitcoin, and/or other virtual currency, will have to report such spending the same way they do other assets, paying short-term gain or capital gains tax on any profits realized.

Tax Provisions Extended

The Tax Increase Prevention Act was signed into act on Dec. 19, 2014. It retroactively extended over 50 tax provisions that had expired at the end of 2013, so if you thought you may have missed out, you could be in luck.

Reduce Your Income

You can lower your taxable income by paying real estate taxes and personal property taxes before you file. You may also want to consider tax-exempt investment vehicles, like certain bonds. While Alternative Minimum Tax may still come into play, careful evaluation could save you quite a bit on your tax liability.

Same-Sex Rules

The IRS allows same-sex couples who are married to file jointly, but not all states recognize these unions. That said, things could change, as a number of cases are in the judicial system, and the Supreme Court has agreed to rule in June on whether same-sex couples have a constitutional right to marriage or whether states may ban same-sex marriage. If you are part of a same-sex union, remain aware of where your state stands, and re-file if appropriate.

Income tax time can be stressful, but careful documentation and a little knowledge can go a long way. Do your homework and make sure you only pay what you owe.

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