What to know before filing your taxes this year

Tax season is in full swing, with about a month left to file.

After last year’s sweeping tax and spending law, there are several changes for filers to keep in mind this season, including a new deduction for older adults, policies like the so-called “no tax on tips” deduction, and similar changes to overtime taxes.

To help break it all down, “Marketplace Morning Report” host Sabri Ben-Achour spoke with Lori Evers, a retired CPA and volunteer with the AARP Foundation's Tax Aide program, which offers free tax preparation and filing services with a focus on filers over 50 — about how this tax season is shaping up.

The following is an edited transcript of their conversation.

Sabri Ben-Achour: So, yeah, what is the senior deduction? How big is it? How do people get it?

Lori Evers: So the senior deduction is up to $6,000 per every person 65 and over. It does phase out — once their income hits $75,000, it starts phasing out, and for a married couple, once their income hits $150,000. It's something that a lot of people were not really aware of and aware of the impact.

Ben-Achour: Are there any parts of this that are tripping people up this year that you want to help clarify?

Evers: Another part of the tax bill is no tax on tips or tax on overtime, and a lot of people are confused with the overtime. When we think of overtime, we generally think of time and a half. So just because the math is easier, somebody makes $10 an hour, [with] time and a half they're making $15 an hour. But it's not the full $15 an hour that is excluded from taxes. It's only that ‘and a half.’ So the $5 an hour is the part that is not going to be taxable.

Ben-Achour: I mean, do you see that a lot? Does that affect a lot of seniors?

Evers: You know, we have a lot of seniors that are in their 70s, that are still working and yeah, the overtime and the tips still affect a lot of people. Even though our focus is on taxpayers 50 and over, because of AARP Foundation, we will do returns for anybody. So we also do see taxpayers under 50 that we prepare returns for that have overtime and tips.

Ben-Achour: What's one thing older filers should keep in mind before they submit their return this year?

Evers: I think the most important thing, when we're talking about our elderly is talking about identity theft. So one of the things we always recommend when a taxpayer comes in, even if their income is lower than the amount that they are required to file, we still recommend they file a return, because that way their return has been filed with their social security number and that essentially prevents anybody else from electronically filing using that number. Identity theft in taxes is huge in the seniors and it's also large with college students — that just happens to be the two areas that their social security numbers get hijacked the most often. So it's really important that they file and it's important that they file electronically, because that way, if I send a return electronically, within 10 or 15 minutes, I have confirmation from the IRS that return has been accepted. So that means we're good to go for this year.