January brings us a refreshing start in New Year’s, lactose-intolerance-awareness in National Cheese Lover’s Day, ailing resolutions in Chocolate Cake Day, and a reminder of responsibility with the arrival of W-2s and other tax statements. Tax season has befallen us once again, and gathering all those receipts, statements, and pay stubs from the past year can be a nuisance in itself. Throw in the laborious search for a trustworthy tax preparer or the more-demanding task of doing it yourself in addition to the hefty penalties for mistakes– intentional or not– and the whole process can be downright scary. Luckily for you (once again, we might add), we’ve compiled a preparation list to guide you towards completing your taxes before the rush towards mid-April.
First thing’s first: time to collect everything to do your tax return. What exactly, though, is included in “everything”? A variety of checklists are available online, but the most common items include:
Because of the variety of tax situations, what you will need will vary. If you paid student loans, you will need that tax statement. If you donated to charity, check for receipts or estimated value of property. If you moved, you can even deduct moving expenses, so be sure to check for those receipts as well. For more detailed information, check out checklists from TurboTax, H&R Block, and the E-file website.
Itemizing deductions is a good thing because they can increase the tax refund you might receive. Basically, itemized deductions are extra expenses from the year, such as the previously mentioned charitable donations and mortgage interest. But to itemize, the amount from these expenses must surpass a set amount (the standard deduction) from the IRS based on your filing status. If you qualify to itemize, you have to also calculate these amounts by filling out a Schedule A form. Don’t worry, it’s not as complicated as it may seem. Read more simplified info on itemizing deductions at MoneyUnder30.
Yay, you’re finally nearing the end of all this tax filing madness! But how do you plan to file?
So you’re a go-getter who’s gonna go get those taxes done sans a professional? We commend you! But we also want to provide you with some resources in the process.
Whether you file with tax software or online, an increasing amounts of perks are making the DIY option much more appealing. For one, you have the convenience of filing in your pajamas if you wanted to. Depending on what return you’re using, some websites will also allow you to e-file for free. And the absence of professional preparers often means that fees for longer forms are still smaller than seeing someone. Additionally, tax websites like TurboTax and H&R Block offer help from experienced accountants via web chat, e-mail, or phone as well as audit support should the worst happen.
Searching for a tax preparer when you’ve never had one before can be especially challenging considering the amount of responsibility and accuracy that must be injected into tax preparation. Not to worry, though: online databases like the American Institute of CPAs and the National Association of Enrolled Agents are available to start your search (and it doesn’t hurt to ask friends for names, either). Once you’ve narrowed down your choices, do your research: check out credentials, ask for referrals, ask if they are members of any organizations (many require additional certifications), and find out how many years they’ve been practicing. Plus, it pays to be organized: people who comes with a messy heap of uncategorized receipts and paper tend to get charged more for tax prep fees because there’s more work for them to do. Many tax preparers will send out checklists of their own before your appointment. Check out Consumer Reports and Bankrate for more info on using professional tax preparation services.
Hey, we all love receiving large amounts of money, especially when we’ve earned them rightfully. But even if you end up owing the gov’ment, be sure you fulfill that responsibility; ignoring it can have significant consequences on your future, like not receiving large amounts of money, even if you’ve earned it (i.e., your wages can be garnished to pay back taxes). However you choose to do it, here’s hoping that your tax return yields the most it can for you!