7 Tips to Make Tax Time Easier
Now that the holidays are behind us, tax season is the next financial hurdle faced by many.
Although the filing deadline for your 2017 income tax year is not until April 17, 2018, it always seems to catch some people by surprise.
Luckily, you don’t have to be one of them. You can take steps to prepare using these 7 tips to make tax time easier.
1. Maintain Good Records
Keeping accurate records is important to ensure you file your taxes correctly. It can also prevent you from being targeted for a tax audit.
Gather together your receipts, cancelled checks, and employer pay stubs. Don’t forget to include any other paperwork that supports your income or expenses for the year. Use these to prepare your taxes or give to the person you hired to complete them.
2. Maximize Your Deductions
Lots of people miss deductions that could lower their tax liability when they file their taxes. Take advantage of all of them that you can so that you are not giving away your money.
If you are unsure about which deductions you can and can’t take, consult a tax professional to make certain your return is correct before filing. Or, if you prefer, you can always go to the IRS website to help you make sense of any questions you may have.
3. Recheck Calculations
Did you know having an error on your tax return could cause you to get audited? Not only that, but it may cause you to have penalties or interest as well. To avoid errors, use a calculator and double check your figures before filing.
Should you discover an error it is best to get it corrected right away rather than putting it off. When errors occur and you need to file an amended return, you can use an IRS Form 1040-X to show them the corrections. Include a check for any additional money you owe to avoid penalties and interest.
4. Enlist the Help of a Professional
Filing taxes can be a complicated process. If you want yours to be complete, accurate, and finished timely it may pay off to hire a professional to do the calculations for you.
If you are able to keep a good relationship with the same tax preparer each time you file it can be to your benefit. They may be able to warn you well ahead of time about changes that could affect your return.
Something you should never do is hire someone you don’t know well or who is not a professional tax preparer. One reason is because the tax return you send in to the IRS will most likely be rejected. Another is because they may not be current on tax laws and could make errors.
5. File Electronically
Electronic tax returns have a better track record than paper ones as far as errors go. If you want to increase the odds that your return is correct, file an electronic return.
Tax returns filed electronically rather than on paper also get paid faster when refunds are due. You don’t have to pay for postage either.
6. Complete Your Taxes Early
Filing your taxes early has several advantages. One is that it allows you to get your refund quicker if you are due one. Another is that it can lower the chances of someone committing tax identity theft against you and stealing your refund.
If the end result requires you to pay instead of getting a refund you have until the tax deadline to make your payment. Having your taxes completed early allows you more time before you must have the payment sent in to the IRS.
When you file early you get the added benefit of completing it sooner and avoiding the stress of worrying about it for three months. But you also have time to make additional contributions to your retirement accounts if that could lower what you owe.
7. Avoid Filing an Extension
Filing your taxes sooner rather than later can prevent you from panicking and making calculation errors on your taxes. But it also helps you to avoid filing an extension as the deadline draws near.
If you can avoid filing an extension you will save yourself from penalties and interest. The IRS will charge you if you do not file by the original deadline. That means more money out of your pocket than is necessary.