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Want your tax refund faster? File electronically

Filing electronically is the most accurate and fastest

Filing electronically is the most accurate and fastest way to get a refund. The error rate for electronically filed returns is less than 1 percent, compared with 20 percent for paper returns. Photo Credit: iStock

The 2014 tax filing season officially opened on Jan. 20, and you should have received all of the documents necessary to attack your taxes. For the technophobes out there, the IRS has a reminder.

Filing electronically is the most accurate and fastest way to get a refund. The error rate for electronically filed returns is less than 1 percent, compared with 20 percent for paper returns.

The IRS said the average tax refund for the past few years has been about $3,000, and, like last year, the IRS expects to issue more than nine out of 10 refunds within 21 days. Because of IRS budget cuts, it will likely take an additional week or more to process paper returns, which means that the IRS will probably issue those refunds in seven weeks or more after filing.

And another outcome of the smaller IRS staff: The agency is unlikely to answer even half the telephone calls it receives, and taxpayers who miraculously manage to get through are expected to wait to talk to a real person for 30 minutes on average, and considerably longer at peak times. In other words, try to use IRS.gov if you have computer skills.


AFFORDABLE CARE ACT

Now, on to the changes for this filing season! This year's return will include new questions to incorporate provisions of the Affordable Care Act, often referred to as the ACA. According to the IRS, there are four basic categories when it comes to the ACA:

Covered with qualifying insurance (employer-provided coverage, Medicare, Medicaid, CHIP, Cobra) The IRS has said that the majority of taxpayers -- more than three out of four -- will fall into this category. These people will simply check a box acknowledging coverage.

Qualifies for an exemption Those who cannot afford coverage, are not U.S. citizens, had a gap in coverage for less than three consecutive months, are a member of a recognized religious sect with objections to health insurance or are a member of a federally recognized Indian tribe are among those who qualify for exemptions. (Go to IRS.gov to review the full list of exemptions.) Eligible taxpayers need to complete the new IRS Form 8965.

Will make the individual shared responsibility payment If you don't have qualifying coverage and do not qualify for an exemption, you have to pay the greater of $95 per uninsured adult in each household, capped at $285 per household, or 1 percent of household income.

Will claim premium tax credit If you received health care through the marketplace and qualified for a tax credit, you should have received Form 1095-A by now, which contains details of your coverage and premium tax credit. If you don't receive the form or you misplace it, the federal and most state exchanges should have them available online. If you benefited from advance payments of the premium tax credit, you may see a different tax refund/liability than you were expecting. Use IRS Form 8962 to calculate the premium tax credit and reconcile the credit with any advance payments.


THE LARGER PICTURE

With ACA out of the way, the rest of your taxes should be a breeze, because most of the rest of the changes are inflation adjustments to various thresholds. That's because, at the end of 2014, Congress reauthorized more than 50 tax breaks (the so-called "extenders" or the Tax Increase Prevention Act), including:

The deduction for state and local sales taxes: The option to deduct state and local sales taxes instead of deducting state and local income taxes could be beneficial to those who live in no-income-tax states. If you didn't keep your sales-tax receipts, use the IRS' sales tax deduction estimator.

* Above-the-line deduction of up to $4,000 for higher education expenses.

* Above-the-line deduction of $250 for teacher supplies.

* The ability to exclude up to $2 million in discharge of residential mortgage indebtedness from gross income.

* The deduction for mortgage insurance premiums.

* Energy-efficient home improvements tax credit.

* Tax-free distributions from an Individual Retirement Account for charitable purposes for taxpayers older than 70½.

Next week: I will review deductions, credits and IRAs.

Jill Schlesinger, a certified financial planner, is a CBS News business analyst. She welcomes emailed comments and questions.

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