- Learn what to do if you’ve changed your address or need an extension.
- Take action if you think you may have been the victim of identity theft.
- Find out how long it will take to get your refund.
Tax season has a reputation for being a high-stress, confusing time of year. IRS rules and regulations are complicated, especially for those who aren’t tax or finance professionals. Yet, navigating the rules correctly is critical if you want to maximize your refund.
Some people choose to hire a professional to do their taxes for them. However, the average cost of such a service can reach $300 or more, depending on your situation. (Check out this article for some cheaper help, though.) If you’d rather hang onto that money, it’s time to brush up on tax filing standards. To that end, here are answers to 12 frequently asked tax questions.
“Are there any new changes this year?”
It is common for the IRS to make changes to tax laws, filing procedures, and processing standards. The agency publishes information regarding annual tax changes online. To find it, refer to the “What’s New” section that applies to the type of return you are filing.
For individuals, check the instructions for Form 1040 or Form 1040-SR to see what’s changed since last year. Business owners can refer to the Employer’s Tax Guide or Publication 15 (Circular E) to see if any changes apply. You can also check the IRS Newsroom for any relevant updates that may affect your tax return.
“How do I notify the IRS of an address change?”
Individual taxpayers have multiple options for notifying the IRS of an address change. The easiest approach is to do it on your tax return. Simply list your new address on the return you file and the IRS will update it automatically.
Apart from that, you have multiple options. You may call the IRS and notify a representative after the agency verifies your identity. Alternatively, you can submit a written statement and mail it to the IRS office where you sent your last tax return. Finally, you can also submit a change of address form for individuals (Form 8822) or businesses (Form 8822-B).
“Can I extend the deadline for filing my tax return?”
You may apply for an extension by printing and mailing Form 4868 to the IRS. Unfortunately, the IRS stopped accepting online extension requests in May 2021. To determine the correct IRS mailing address to use, consult this resource.
For 2022, the deadline to request an extension is April 18. Those who receive an extension will have until October 17, 2022 to file their returns. However, remember that you are receiving an extension to file your return, not an extension on the payment deadline. The IRS also recommends that you estimate your tax burden for the year and prepay anything you owe.
“What should I do if I suspect someone else has illegally used my Social Security Number?”
The IRS maintains a comprehensive set of internal procedures and policies for verifying SSNs on tax returns. In many cases, the agency can automatically detect potential identity theft. If this occurs, the IRS will notify you in writing. The letter you receive will contain instructions on next steps.
You can also call the IRS to report potential identity theft at 1-(800)-908-4490. If you want the IRS to review your account for suspicious activity, submit Form 14039 (Identity Theft Affidavit). Publication 5207 (Identity Theft Information for Taxpayers) also contains relevant information. The IRS publishes it in English and Spanish.
“What is the age limit on dependent children?”
In most cases, the IRS’s standard age limit of 19 will apply to dependent children. However, an exception applies to children who are “permanently and totally disabled.” This means that the child has a mental or physical disability that prevents them from earning income. The condition must be chronic and verified by a doctor. In such cases, there is no age limit.
A different set of rules applies to students. Taxpayers can claim students as dependent children if they are enrolled full-time in a qualified educational program. The child must be no older than age 24 on December 31 of the relevant tax year.
“Can divorced or separated parents both claim the same dependent child on their individual tax returns?”
No. A dependent child can only appear as such on one individually filed tax return per year. In most cases, the parent who has primary custody of the child will qualify to claim them as a dependent. The IRS considers the parent with whom the child spent the majority of the calendar year as the custodial parent.
However, exceptions apply. For example, the custodial parent may allow the other parent to claim the child as a dependent by filing Form 8332. It is incumbent on the custodial parent to initiate this process. The noncustodial parent cannot unilaterally claim the child as a dependent.
“How much money can an unmarried dependent student earn before they need to file their own tax return?”
Many students work while enrolled in school to generate extra funding for their education. Some also earn money by starting businesses or making investments. Students who would otherwise qualify as dependents may have to file their own tax returns if their incomes exceed certain limits.
The details can get a little tricky. Thankfully, the IRS has prepared two documents to help you determine whether your income-earning student needs to file a return. The first is Publication 501 (Dependents, Standard Deductions, and Filing Information). You can also refer to the IRS guide Do I Need to File a Tax Return? for more information.
“How do married couples split and itemize tax deductions when filing separate tax returns?”
First, the following rule applies: If one spouse decides to itemize their deductions, the other must do the same. Otherwise, the standard deduction limit for the non-itemizing spousal partner will be 0.
There are two other rules of thumb to keep in mind:
- If a spouse covers tax-deductible expenses from their own personal funds, the other partner cannot claim any portion of those deductions.
- If a spouse covers tax-deductible expenses from jointly controlled funds, both partners may split the deduction.
State-specific common property laws may apply in the latter case. Check with your state’s tax service center for more information.
“Does the interest I pay on a home equity line of credit qualify as a second mortgage for tax deduction purposes?”
The answer depends on how you used the money you drew from your home equity line of credit. You can generally deduct the interest you paid on your HELOC if you used the money to:
- Buy a home or property.
- Build a home.
- Carry out substantial improvements or renovations on a property you own.
On the other hand, if you used your HELOC funds to cover personal expenses, the interest is not deductible. This includes money you drew from your line of credit to pay non-mortgage debt you hold, such as credit card debt. For more, refer to this IRS guide on mortgage expenses.
“How do I claim deductions on the mortgage discount points I pay over the life of my home loan?”
If your mortgage has discount points, the points payments are deductible. However, they must be properly prorated over the lifetime of the mortgage.
For example, let’s say you have a 25-year home loan that includes discount points. You may be tempted to simply divide the total points by 25 to generate an annual average. However, this isn’t necessarily correct. Instead, divide by the total number of payments over the mortgage’s lifetime. Then, track how many payments you made during the current tax year. Add up the total, and use that as your basis for claiming the points payments as a deduction.
This one gets particularly complicated, so check out the IRS site for even more details, or contact a local tax professional to guide you through it.
“When will I get my refund?”
In most cases, the IRS will send out tax refunds within 21 calendar days of processing your tax return. That said, it can take longer in certain situations. For example, this could happen if your return gets routed through the agency’s secondary review process.
You may be tempted to call the IRS to find out where your refund is if it takes longer. However, this will not lead the IRS to process your refund any faster. Instead, use the agency’s Where’s My Refund? tool. You should only contact the IRS to inquire about the status of your refund if the tool directs you to.
“Why does my refund differ from the amount indicated on my tax return?”
This can happen for various reasons. You may have calculated the projected refund incorrectly when you filled in your tax return. The IRS corrects inaccuracies when reviewing returns. If the agency makes such a change, you will be notified in writing.
In other cases, some or all of your refund may be applied to outstanding debts you owe to the government. These potentially include debts related to past-due federal or state taxes, child support, alimony, and federal student loans, among others. If the IRS calculates a different refund balance than your return indicated, the Where’s My Refund? tool will explain why.