3 Ways To Make Sure Tax Season Doesn’t Catch You Unprepared
Tax season comes the same time every year but still manages to sneak up on people. Who wants to think about all that paperwork and jargon? Overcome the temptation to wait on filing with these helpful hints.
Keeping your documents in order can make filing taxes easy. Key items include: last year’s tax return, this year’s receipts and documents sent from financial agencies. Both the benefits you receive and major expenses you incur during the year affect your taxes – gather the relevant paperwork. Your receipts are especially important because they help prove what deductions you qualify for, such as those for charitable donations.
You also need non-financial documents, like your Social Security or tax ID card and a government-issued ID. If there are other people in your household – a spouse and/or dependents – you will need their personal details as well. Lastly, if you are a business owner or otherwise self-employed, estimate how much you owe in income tax, as that is not taken out of a regular paycheck. It is vital you have money set aside to cover that amount come April.
Now that you have all your paperwork together, read it. Has anything changed since last year? Whether you hit a milestone – such as marriage – or you saw a big salary increase, there is a chance your taxes will change. You should be aware of your current filing status and tax bracket. These things affect how you file taxes and what you owe.
If you had filing issues last year, make sure you know how to address them if they pop up again. You want a quick, painless and fair filing process. Take a look at your receipts. They should give you an idea of what deductions you deserve. Typically, things like loan payments, medical expenses not covered by insurance and major purchases (e.g. a house) are eligible for deductions.
Review any changes in tax law that might affect you this year. With the Tax Cuts and Jobs Act that went into effect December 2017, we should see major shakeups for a few years. Make sure you are not missing out on new deductions or anticipating old ones that no longer exist.
If you would like to use a tax preparer this year, get started perusing options. You should ask around and compare organizations, including their required fees. Whoever you go with should have a Preparer Tax Identification Number (PTIN), as required by law.
For filing taxes on your own, read up on some online resources. There are multiple affordable services you can use. FreeFile is a popular choice. It is a partnership between the IRS and private companies.