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Don't forget that refunds for returns claiming Earned Income Tax Credit or Additional Child Tax Credit are automatically held until mid-February due to the PATH Act, regardless of when you file. The IRS does this to prevent fraud. So even if you file on day 1, if you're claiming these credits, you won't get your refund until at least February 15th.
Thanks for mentioning this! I'm not claiming either of those credits, just getting back over-withheld taxes from my bonuses. So hopefully I won't be affected by those delays.
You should be fine then! Since you're just dealing with over-withholding on bonuses and not claiming those particular credits, your refund should follow the standard timeline. Just make sure to file electronically with direct deposit selected for the fastest processing.
Pro tip: File on a Monday or Tuesday early in the morning if possible. The IRS systems get backed up later in the week and especially on weekends when everyone has time to file. I've done this for years and consistently get my refund faster than friends who file on weekends.
Do NOT skip filing!! I did that for 2 years when I first started freelancing and it was the worst financial mistake ever. By the time the IRS caught up with me (they always do), my original $4k tax bill had ballooned to over $9k with penalties and interest. Plus they can hold your future refunds, put liens on your property, and even levy your bank accounts if you ignore them long enough. The stress of wondering when they'd come knocking was horrible. Just file and set up a payment plan - it's super easy online and the minimum payment can be as low as $50/month depending on how much you owe. Way better than the alternative!
Was there any trouble with the IRS beyond the financial penalties? Like did they treat you differently or make things harder because you skipped filing?
No actual trouble beyond the financial hit, but they did put me on a shorter leash for a few years. They processed my refunds more slowly the next couple years and seemed to scrutinize my returns more carefully. I also couldn't qualify for their streamlined payment plans for a while - had to provide more financial documentation. The biggest issue was honestly just the unnecessary stress and the fact that I ended up paying more than double what I would have if I'd just filed on time and set up a payment plan from the start. The interest and penalties stack up way faster than most credit cards.
Another option nobody's mentioned - you could file your taxes on time but pay with a credit card. The processing fee is around 2%, which is probably less than the IRS penalties would be. Then you can continue with your debt payoff strategy while avoiding IRS penalties. Not ideal to add to credit card debt, but if you're close to paying off your cards anyway and the interest rate on the remaining one isn't terrible, it might be mathematically better than IRS penalties + interest.
My brother got audited for not reporting his side business income (about $12k yearly from personal training). The penalties and interest ended up being way more than if he'd just paid the taxes originally. Plus he had to go back and try to recreate expense records from 2 years earlier which was a complete nightmare.
How did they catch him? Was it also through payment apps or did someone report him?
It was actually through social media. He was advertising his training services on Instagram and Facebook, and someone (probably a competitor) reported him to the IRS. They have a whistleblower program where people can report suspected tax fraud. Once they started looking into him, they found the payment app transactions didn't match his reported income. It was really stressful for him, and he ended up having to hire a tax professional to help sort everything out, which was another expense on top of the penalties.
Does anyone know if buying equipment (like small soccer goals, training cones, etc.) would count as business expenses? I've spent like $600 on stuff for my similar setup.
I work at a university international student office and see this EXACT situation at least 5 times every tax season. International students/scholars get terrible advice from "recommended" preparers who claim false credits. DO NOT PAY THIS PERSON. File your amended return correctly, specifically noting that the original was filed incorrectly by the preparer without your knowledge or consent. Include Form 8275 (Disclosure Statement) with your amended return explaining the situation in detail. For future reference, many universities offer free VITA (Volunteer Income Tax Assistance) programs that specialize in nonresident tax returns. Many can help remotely even if you're no longer in the US.
Andre Moreau
Can someone explain the Child and Dependent Care Credit for 2024 taxes? I spent about $8,400 on after-school care for my 9-year-old last year while I worked. I keep getting confused about how much I can actually claim and if there are income limits. The IRS website makes my head spin every time I try to figure it out.
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Zoe Christodoulou
ā¢For 2024 taxes (filed in 2025), the Child and Dependent Care Credit allows you to claim up to $3,000 in expenses for one child or $6,000 for two or more dependents. The credit percentage ranges from 20-35% of those expenses depending on your income. The percentage decreases as your income increases, with the 35% rate applying to those with AGI below $15,000. For most middle-income families, you'll get 20% of your qualifying expenses. Since you spent $8,400, you'd be limited to claiming the $3,000 maximum for one child. At the 20% rate, that would be a $600 credit. This is a non-refundable credit, so it can only reduce taxes you owe to zero, not generate a refund beyond that.
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Andre Moreau
ā¢Thank you so much for explaining! That makes way more sense now. So basically even though I spent $8,400, I can only claim $3,000 of it, and then I get 20% of that amount as an actual credit on my taxes. That's much less than I was hoping for, but at least it's something.
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Jamal Thompson
Does anyone know which tax software is actually free? I make about $45k a year, have one W-2, rent an apartment, and take the standard deduction. Nothing complicated. But every year I start with a "free" version and somehow end up paying $75+ by the time I finish. It's so frustrating!
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Mei Chen
ā¢Check out the IRS Free File program. If your AGI is under $73,000, you can file federal taxes for free. The Free File Alliance has different providers, and some even offer free state filing too. TaxAct, TaxSlayer, and 1040Now are usually good options. Make sure you go through the IRS website (irs.gov/freefile) to access the truly free versions. If you go directly to the company websites, they often push you toward paid versions.
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