Filing Your Income Tax Doesn't Have to Be Painful

Filing your federal income tax doesn't have to be painful. The IRS has downloadable free tax preparation software for tax filers who have an adjusted gross income of $57,000 or less. How to you know what your adjusted gross income will be? Hey, what is adjusted gross income?

Adjusted gross income (AGI) is the amount of income you have minus the credits available. The lower your adjusted gross income the less tax you pay. And if your adjusted gross income is less than $49,708, you may qualify for the earned income credit, even if you don't have a child. It is an opportunity to take advantage of credits offered by the IRS. Never think that an amount is too small. On average you save $15-$25 for every $100 of allowable deductions.

First, add up all your income documents, including self-employment, W2s and 1099s. Then review the available credits and subtract ballpark amounts you use to reduce your income. This will give you a rough estimate of your AGI. You can use the link at the end of this post to search for the IRS sponsored free tax software.

Adjusted Gross Income Credits:

• Educator expenses: Taxpayers can deduct $250 for each eligible educator ($500 if married filing jointly and both are educators). An eligible educator is a kindergarten through grade 12 teacher, instructor, principal, or aide who worked in a school for at least 900 hours during a school year. Qualified expenses include ordinary books, supplies, equipment (including computer equipment, software, and services), and other materials used in the classroom. An ordinary expense is one that is common and accepted in your educational field.
• Certain business expenses of reservists, performing artists, and fee-basis government officials.
• Health savings account deduction: amounts you contributed to an HSA in 2011.
• Moving expenses: If you relocated more than 50 miles from your home for your new job.  
• Deductible part of self-employment tax. 
• Self-employed SEP, SIMPLE, and qualified plans. 
• Self-employed health insurance deduction. 
• Penalty on early withdrawal of savings: If you received a form 1099-INT or 1099-OID the penalty should be listed. 
• Alimony paid.
• IRA deduction.
• Student loan interest deduction: any interest paid when making student loan payments.
• Tuition and fees for qualified education for yourself, your spouse or dependents.
• Domestic production activities deduction. 

If you don't have any of these credits, your AGI will be the sum of your income.

If you have any specific questions, please leave a comment and I will answer the question so others can benefit.

IRS free tax preparation software