The average American taxpayer spends over 13 hours preparing their annual tax return, according to the IRS.
The US tax code has grown to over 2.4 million words, making it one of the most complex tax systems in the world.
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There are more than 200 potential tax deductions and credits available to individual filers, but the average person only claims a small fraction of them.
The IRS Free File program, which provides free online tax prep software for those with an AGI under $73,000, is used by less than 3% of eligible taxpayers.
Tax software companies like TurboTax have been accused of actively hiding the IRS Free File program from taxpayers to steer them towards paid products.
The average tax refund is around $2,800, which is more than many people's monthly rent or mortgage payment.
Itemizing deductions can be more complicated than claiming the standard deduction, but it may result in a lower tax bill for some filers.
The Earned Income Tax Credit (EITC) is one of the largest federal anti-poverty programs, yet 20% of eligible taxpayers fail to claim it.
Self-employed individuals must pay both the employee and employer portions of Social Security and Medicare taxes, which can significantly increase their tax burden.
The IRS uses advanced algorithms to automatically flag tax returns for potential audits, so even minor mistakes can increase your chances of being selected.
Contributing to a 401(k) or IRA can lower your taxable income and help you save for retirement, but many Americans fail to take full advantage of these accounts.
The deadline to file your tax return is typically April 15th, but the IRS grants automatic six-month extensions to anyone who requests one.
The IRS offers free tax preparation assistance through the Volunteer Income Tax Assistance (VITA) program, but only a small percentage of eligible taxpayers use this service.
Taxpayers who owe the IRS money can set up installment payment plans or apply for an Offer in Compromise to settle their debt for less than the full amount.
The IRS can impose penalties for late filing, late payment, or underpayment of taxes, which can add up quickly and significantly increase your tax bill.
The Tax Cuts and Jobs Act of 2017 made significant changes to the tax code, including doubling the standard deduction and limiting certain deductions, which impacts how many taxpayers file their returns.
The IRS uses a system called the Automated Underreporter (AUR) program to identify discrepancies between the information reported on tax returns and third-party information returns, which can trigger audits.
Taxpayers who receive income from gig work, investments, or side hustles may need to make quarterly estimated tax payments to avoid underpayment penalties.
The IRS can seize assets, such as bank accounts or wages, from taxpayers who owe back taxes and refuse to pay or enter into a payment plan.
The statute of limitations for the IRS to audit a tax return is generally three years, but this can be extended in certain circumstances, such as if the taxpayer underreported their income by more than 25%.