Smart tips for filing your taxes
The tax deadline is fast approaching and many people who have never done their own taxes before are nervous when they file their first return. According to the IRS, 25% of all taxpayers wait until the last two weeks before the due date to prepare their tax returns. If you fit into this category, check out these helpful tips to help you get the job done right.
-Use a tax preparation checklist to make sure you have everything you need to file.
-Keep your forms, receipts, and other documents nearby for easy access
-Keep in mind your submission deadlines
-If you have filed before, have last year’s return ready for reference
Remember, knowledge is power.
The tax process can be intimidating for anyone, especially first-time tax preparers. Did you know that the average American gets only about 50% on personal finance questions related to tax returns? It will be important for you to research your tax options, learn for yourself, and understand which items are deductible and could give you a higher return. Don’t let yourself down by rushing through your due diligence. There are programs available that can help. For example, Volunteer Income Tax Assistance (VITA) offers free tax assistance to people who earn $54,000 or less and need help preparing their own returns.
Choose the correct IRS forms
The simplest form is 1040EZ. People whose income is less than $100,000 use this form.
Choose your software or tax preparer
Tax preparation software is popular with DIYers. You can find a multitude of cloud or computer-based preparation options. If you need the help of a professional tax preparer, it’s important to find a reliable option. Talk to friends, colleagues, or someone you know who has experience preparing taxes. Be sure to ask about their fees and, most importantly, get their preparer tax identification number.
Decide how you will file your return
There are two options available related to submitting your completed tax returns. The first is to file electronically through an authorized IRS E-file provider. The other is to download the required forms, fill them out, sign them, and mail them. If you’re expecting a refund, E-file will definitely ensure you get your money faster.
Take security measures
Be careful when filing your taxes. Make sure you are working on a secure network. Be sure to avoid using public Wi-Fi and remember to have a strong, unique password for any tax-related account.
Make a plan for your tax refund before you get it
If you’re one of the lucky taxpayers waiting for a refund, you need to have a plan for your money. Before you go out and spend your refund, remember that the IRS does not send you a tip check. It’s money that should have been yours all along. So be sure to give your pending refund a special purpose.
An excess of 50% of Americans have no savings to speak of. So the best time to start saving is on your tax refund. This could help you take a big financial step in the right direction. How about putting your refund toward bill consolidation or other savings goals? You might also consider investing your money in certificates of deposit, bonds, or real estate. Whatever you decide, make the most of the money you will receive.
Ready, Set, Archive!
Now that you have all your documents gathered and IRS forms filled out, it’s time to take a deep breath and file your taxes.