As April 15th quickly approaches, many individuals begin to stress over filing their taxes. There are a few ways to help prepare yourself for the upcoming tax season. The tips below are a great start and give helpful reminders to ensure you are ready to go when you are meeting with your accountant.
Obtain Income Statements and Documents
Many employers begin sending out W-2 statements at the end of December and beginning of January. If you have not received yours yet, inquire about it. Furthermore if you are self-employed, you will need to obtain a 1099. For specific circumstances such as student loans, there are other forms that you will receive in the mail. Also, you will want to gather any paid invoices and evidence of income you received in the past year.
Gather Deductions
If you did not have a system set in place where you stored all of your documents related to mortgage interest payments, property taxes, charitable donations, medical expense reports, or various items that may be counted as deductions, it is time to start backtracking and going through the previous year’s paperwork. For this year, it may be wise to designate an area where you want to keep information pertaining to deductions.
Determine Your Filing Status
This has a big impact on the refund amount you will receive so choose wisely. Many individuals can fall into different tax statuses but you can only select one. Let’s take a look at one scenario: if you are married, you have the option of filing jointly or separately. Your accountant will be able to offer advice on which route would be the most beneficial. Additionally, if you experienced a death of a spouse, divorce, or any other circumstance that would change your filing status, explore all possible routes.
Decide on Your Filing Method
There are numerous ways to file taxes. Many individuals go the traditional route and meet with a tax accountant who will go through your documents and prepare everything for you. Alternatively, you can fill out the paperwork yourself and mail it in. With a variety of tax filing software programs now available, it has become easier than ever to complete your taxes yourself and e-file, resulting in a quicker refund. Currently, the IRS sends refunds in as little as 21 days for nine out of ten filers.
Research Tax Laws
If you have an accountant who completes your taxes for you, this may not be as important. If you own a business or are filing yourself, it would be wise to research current tax laws to stay informed on how they might impact you. There are added tax provisions each year as well as changes that are important to know. The last thing you want is for the IRS to audit your tax return based on a simple error that could have been avoided.
Now that you have the basics on what to gather to file your taxes, try to implement a filing system for the current year to make getting your refund as easy as 1, 2, 3 next year.
Image credit: FreeImages.com/Magda S
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