When tax season comes around, you don’t want to be scrambling to reach that April 17 deadline. It’s important to take care of tax returns early to ensure your tax refunds come in on time. Avoid all of the stress of tax season by starting now and following these tips.
- Collect all of your documents, make sure they are accurate and keep them in an organized file.
If you have recently changed your name, make sure the Social Security Administration is notified so their records can match the records of the IRS. Your name should match the name on your social security card. If you are married or have dependents, make sure their social security numbers matches the name on their social security card.
Accuracy is key in getting your tax refunds quickly and easily. Make sure you have a copy of your most recent tax returns in your file to help your accountant with any questions about your tax history. Fred Gordon, a mastery tax advisor at H&R Block said that one of the biggest issues he sees is people failing to bring in all the right documents for filling their tax returns.
“Anyone who sends you something that needs to be in your tax returns, will come in an envelope that reads ‘Important Tax Documentation Enclosed,’” Gordon said.
- Decide how to do your tax returns.
There are plenty of options to approach filing your tax returns. You can hire an accountant, tax preparer or use tax prep software online. Plenty of companies within the Free File Alliance such as Turbo Tax, H&R Block and Liberty Tax offer free tax filing assistance.
United Way of North Central Florida has a local program called VITA (Volunteer Income Tax Assistance) providing free tax help to taxpayers preparing their tax returns. IRS-certified volunteers provide taxpayers with free basic income tax return preparation with electronic filing. Some of the qualifications for the program include: those who make $54,000 or less, those with disabilities and those with limited English. Call 211 for an appointment or you can visit unitedwayncfl.org/vita for more information.
If you have been filling with an accountant or a representative from a tax filling agency, they will typically hold on to your previous tax return information to make filing the next year a little easier.
Some things to take into consideration when deciding who will file your taxes are how much are you willing to spend, how complex are your taxes and how much time do you have?
If you are single filer with one job, renting an apartment, tax software might be your best option. If you are claiming dependents, run your own business and own a home, it might be better to pay for tax advice.
- Find the proper document for your income information.
You will need documents including a W-2 form from all employers you have worked for in the past year. Form-1099 is necessary if you have completed contract work earning more than $600. The person or entity that pays you is responsible for filing this form.
Any investment income information, unemployment income, rental property income, refunds from local and state taxes from prior year, social security benefits and any other miscellaneous income information are needed to file a federal tax return. If you had a Marketplace Plan in 2017, you should receive a 1095-A form which is a Health Insurance Market Place statement. You will need to send this form in along with all of your other tax related documents.
If you have started a business or work as a freelancer, you will have to pay the Self-Employment Contributions Act tax or SECA tax. This is another version of the Federal Insurance Contributions Act. It covers the costs of Social Security and Medicare. Usually this tax is split between employees and employers, but when you are self-employed, you have to pay the full amount yourself. You can report the results of your business on Schedule C and file it with your Form 1040.
- Check all adjustments to your income.
These adjustments could come from anything such as:
- Homebuyer tax credit
- Green energy credits
- IRA contributions
- Mortgage interest
- Student loan interest
- Medical Savings Account (MSA) contributions
- Self-employed health insurance
- Moving expenses
Including these adjustments in your tax filing could increase your chances of getting a tax refund.
- Take note of all your credits and deductions.
There are tax credits and tax deductions for certain expenses. These can help lower the amount in taxes you have to pay.
According to the Tax Policy Center, tax deductions reduce taxable income and their value depends on the taxpayer’s marginal tax rate. Tax credits, however, reduce taxes directly and are not dependent on tax rates. These credits are not subtracted from taxable income, instead they are subtracted directly from a person’s tax liability.
Some of these credits include earned income tax credit, education costs, childcare costs, adoption costs and medical expenses. Deductible expenses include local taxes paid, mortgage interest and charitable contributions. Make a running list of these expenses throughout the year so this process is easier.
- Mailing in tax returns
If you are mailing in your own tax return documents, use certified mail so you will have a receipt and receive confirmation that you mailed your documents. If you use an online tax assistant, your information will be sent electronically.
Filing tax returns might seem overwhelming at first. Starting early and seeking help when you need it will help the process go smoother. Once you gather all your necessary documents and keep a continuous file, tax season will get easier and easier each year.
Writer Bio:
ELLEN ANDREU is a junior at the University of Florida studying journalism and Spanish. When she isn’t drinking coffee or writing, she is running Hawthorne Trail. She is known for her desire to travel, write stories and learn more about the world.