A Special Financial Education Center Update from State Treasurer Janet Cowell
Tax season is upon us and refunds may provide some relief to many North Carolina residents who are struggling financially.
As State Treasurer, I want to help North Carolinians take advantage of state, local, and national resources that can not only help them save money when filing their taxes, but also boost our state’s economy. Here are five tips to make this tax filing season a success:
1. Take advantage of free resources
When it comes to tax preparation, more expensive does not necessarily mean more accurate or better service. Free tax preparation services are available to households earning $51,000 or less per year, military or the elderly.
Free Tax Preparation
To find a free tax preparation site, call 800-906-9887 or view a listing of sites
in your area.
Free Online Filing
Individuals who wish to prepare their own tax returns can file for free through The Benefit Bank
™ of North Carolina (income limit of $60,000) or IRS FreeFile
(income limit of $57,000). Some providers also offer free or low cost filing of state returns.
2. File a complete return
It is important to make sure you have all the necessary documents before beginning the filing process. Make a list of all sources of income and potentially deductible expenses for the year. Did you make payments on a student loan? Receive an early distribution from a retirement account?
These are commonly missed items that can impact your total tax liability. Avoid having to file an amended return by waiting for all relevant documentation.
3. File a timely return
The tax filing deadline this year is April 15th. If you cannot file your return on time you may request an extension. Remember, the extension to file is not an extension to pay a balance due. If you cannot pay the full amount of taxes you owe, you should still file your return by the deadline and pay as much as you can to avoid penalties and interest.
4. If you have a balance due – know your payment options
If you have a balance due on your federal tax return you have payment options. Contact the IRS immediately at 1-800-829-1040 or visit irs.gov
to review your options. You may qualify for a short-term extension, an installment agreement, or an offer in compromise.
For a balance due on your North Carolina tax return, contact your nearest NCDOR service center
or call 1-877-252-4983 to discuss payment options.
5. Start planning for next year
Start planning now for the impact that major life changes may have on your tax liability next year. Changes in the status of dependents, income, employment or marital status can have a significant impact on your tax refund or balance due. To avoid an unexpected tax bill, consult with your payroll department and tax advisor to make sure you are having enough taxes withheld throughout the year.
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is both a federal and state income tax credit that benefits low-to-moderate-income working families. Families with income of $50,270 or less may be eligible for a federal credit of up to $5,891. The state credit is equal to 5% of the federal credit amount.
To see if your family is eligible or to get more information, visit the EITC website
or call 1-800-829-1040.