Starting January 27, 2020 the IRS began accepting 2019 tax returns. The IRS stated in a recent news release that they are expecting to receive more than 150 million returns this year and are prepared to assist filers to ensure a manageable transition. Despite the large volume of expected returns, the IRS anticipates that a majority of tax returns will be filed early, prior to the April 15 deadline.
In preparation for the April 15 deadline, the IRS is encouraging taxpayers, especially seniors, to take advantage of the IRS Free File program. This software allows individuals to file their taxes online and from the comfort of their home. When using the program, taxpayers will have most of the work done for them as the program will generate the correct forms, calculations, and individual benefits to include in the returns. Further, the program catches any errors or missed information and prompts the individual to correct the filing. In doing so, the IRS ensures accuracy in each filing.
The IRS made their pitch to seniors in a separate publication, encouraging them to use the online software. Claiming more than $1.7 billion in savings for seniors who have used the program to file their taxes. The IRS also made sure to note that use of the software is free. Seen as a significant benefit for retirees, they can save money by not having to pay for advisors or accountants to prepare and file their taxes. Ken Corbin, commissioner for the IRS Wage and Investment Division, stated that “When you’re on a fixed income, every penny matters.”
By filing taxes early, taxpayers will collect their refund sooner and may even receive a larger refund as a result. For those who file their taxes electronically or through the IRS Free File program, they can collect their refund via direct deposit in as little as a week after filing. Submitting a return early has several significant benefits that are useful, especially for seniors. In the event that money is owed on a tax return, submitting early gives ample time to the taxpayer to save and generate the necessary funds to pay the bill by April 15. Seniors who live on a fixed income benefit the most from filing early for this reason. Instead of having to dip into savings accounts or scramble to find another way to pay the money owed on their taxes, filing early lets seniors take their time. Further, if an extension is required, the online Free File provided by the IRS remains available until October.
Seniors who file their 2019 taxes will have the option to use a new simplified tax form. The new 1040-SR form was developed in part in the Bipartisan Budget Act of 2018 (BBA) and carries a few distinctions from the 1040-EZ tax form. Most notably, an individual must be 65 years old or older in order to file the 1040-SR. While they will still have the option to file the 1040-EZ form, the 1040-SR seeks to simplify the process while expanding on what an individual reports in their return. Unlike the 1040-EZ, seniors who file with the new form can report several different streams of income including Social Security. Individuals using the 1040-EZ have never been able to report income derived from Social Security benefits. This form will also be available using the IRS Free File online program.
Combining the benefits of filing early and online with the new forms for retirees over the age of 65, there is much to be happy about if you are a senior filer this tax season. Even if you are not a senior, filing your taxes using the free IRS program can save you money this tax season. With the resources available, everyone should take advantage of filing their returns early. If filing online does not sound appeasing, taxpayers still benefit significantly from scheduling a meeting with their financial advisor or accountant early in the season to ensure accuracy in their return and refund.