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 deadline 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 for filing.
-Have your forms, receipts and other documents close by for easy access
-Be aware of your filing deadlines
-If you’ve filed before, have last year’s return ready for reference
Remember, knowledge is power
The tax process can be intimidating for anyone, especially the first time preparer. Did you know that the average American scores only about 50% on personal finance questions relating to income tax returns? It will be important for you to research your tax options, school yourself and understand what items are deductible and could bring you a higher return. Don’t short-change yourself by rushing through your due diligence. There are programs available that can help. For example, The Volunteer Income Tax Assistance (VITA), offers free tax assistance to those individuals making $54,000 or less that need help preparing their own returns.
Choose the correct IRS forms
The simplest form is 1040EZ. Individuals whose income is below $100,000 use this form.
Choose your software or tax preparer
Tax preparation software is popular with the do-it-yourselfers. You can find a multitude of cloud or computer based preparation options. If you need the help of a professional tax preparer, it is important to find a reputable choice. Talk to friends, colleagues or someone you know who has experience with tax preparation. Make sure you 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 sending 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 and send them in by mail. If you are expecting a refund, the E-file will definitely assure you get your money faster.
Take security measures
Be cautious when filing your taxes. Make sure you are working on a secured network. Be sure to steer away from using public Wi-Fi and remember to have a unique, strong password for any tax related accounts.
Make a plan for your tax refund before you receive it
If you are one of the lucky taxpayers that will be expecting a refund, you need to have a plan for your money. Before you go out and spend your refund, remember that the IRS isn’t sending you a gratuity check. It’s money that should have been yours all along. So make sure you 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 your tax refund. This could help you make a big financial step in the right direction. How about putting your refund toward bill consolidation or other savings goals. You could also consider investing your money in CDs, bonds or in real estate. Whatever you decide, make the most of the money you will be receiving.
Ready, Set, File!
Now that you have all your documents gathered and the IRS forms completed, it’s time to take a deep breath and file your taxes.