No one really looks forward to a tax season, even if a tax refund is expected. The tedious process of filing documents, itemizing deductions and making sure you won’t commit an ounce of mistake are all too overwhelming to bear.
Add to this the pressure that comes from the nearing deadline. Not only are you liable if you skip filing your tax return, but you will also incur penalties and interest. The Internal Revenue Services (IRS) is strict on implementing its rules and policies, especially with deadlines.
If the month of April still feels like a Halloween for you, what you need to do is to equip yourself with knowledge about tax preparation and about preparing for each tax season. Here are some tax updates you need to check.
Should You File Taxes?
This is the first thing you need to determine about your tax return. The IRS has given certain parameters for you to know if the filing of your tax return will be required or not.
These parameters take into consideration your filing status, your age, and the amount of your income.
In the case that due to any of these factors, you are not required to file, availing some benefits from the IRS will force you to process your tax return. These could be claiming a tax refund, your earned income tax credit, and many more.
If in doubt, the IRS has an Interactive Tax Assistant tool to help you decide if filing a return is needed in your tax situation. There might be other tax services the IRS can offer like assistance from a professional but you have to reach out to them.
What documents does IRS require for you to file taxes?
The best step to make sure you have a firm handle on your tax filing is to compile and prepare your tax forms. The IRS has four basic categories for tax returns. Tax returns can be classified as personal information, income, deductions, and adjustments.
Prepare the following information as early as you can to avoid cramming and making mistakes with your tax return:
Personal Information
Keep a file where all the information for your taxes are already compiled such as your Social Security Numbers, Birthdates (especially for dependents) or if you are filing jointly with your spouse.
Proof of Income
If you are employed, your employer will provide a copy of your W-2 form. For other forms of income like your investment income, dividends, real property sales or rental, you will need different forms to declare your income.
Reduce Your Gross Income and Your Taxes Owed
The IRS provides ways through which you can reduce your tax bill. Think of your 401(k) contributions, student loan interest payments, and IRA contributions.
You can also take advantage of deductions that you are eligible for. You can consider expenses like childcare, education, business expenses and other allowed deductions.
Just make sure that you have complete documents to support these deductions and that you have spent time understanding the policies to qualify for the said deductions.
How to File Your Tax Returns
While you can still submit your tax return via mail, the world has been constantly moving to the e-filing of returns. You can still consult brick and mortar tax preparation service companies scattered across the nation, but there is a great development in tax software and mobile applications to help you with your tax preparation.
The electronic filing of the returns also allows for faster processing of the refunds since the tax returns submitted enter the IRS system almost instantaneously. If you want to receive your refunds even faster, opt for the tax refund to be deposited directly into your bank account.
Get Help with Your Income Tax Return
There are now many options for you to choose from when it comes to getting help for the preparation of your return.
The IRS has been constantly developing ways to help taxpayers with their tax returns. You can connect with them to try their free online tool for tax preparation. The website is also full of resources to help you know the process of filing your taxes properly.
Another great option is to ask for help from tax professionals and tax service companies to process your tax return. These tax pros have spent countless hours learning the tax laws of the land and even more hours spent working with clients.
When is the best time to start preparing my tax return?
The best rule to follow when it comes to tax preparation is to start preparing on the first day after your submission. Organize your files. You can follow many ways to help you get organized with the storing of your tax documents.
You can file them by year, by type, or by location. The most important thing to do is to be consistent about it.