It’s that time you should spend the entire year planning for — tax time! If you take time throughout the year to complete certain tasks, it makes it much easier come tax season.
The IRS tax-filing deadline falls on Wednesday, April 15, this year, so now’s the time to get started on your income tax return if you haven’t already. We’ve put together some helpful tips to make filing your taxes easier this year and every year.
10 Savvy Tips to Simplify Income Tax Returns
- Make a list. One thing I like to do at the start of every year is to put together a list of potential forms I should expect to receive. You can include any employers, clients, banks, mortgage companies, student loan companies, etc. As you receive each tax-related document, you can check it off the list. Still missing a form? Contact the organization to find out the status.
- Don’t file until at least January 31. The deadline for tax-related forms like W-2s and 1099s to be sent out is January 31st of each year (though the deadline to mail them to the IRS is February 28; you have until March 31 if you’re submitting them electronically). That’s when they’re supposed to have them in the mail, but it can take weeks to actually receive them. Sometimes they fail to get the forms out by the deadline and it takes even longer (I’m still waiting on one). Avoid having to do an amended return by waiting until you receive all your forms.
- Gather all forms and documentation. In advance of doing your taxes or having them prepared, make sure to gather together all the necessary forms and documentation. Don’t wait until you’re in the midst of the process to obtain what you need. Having everything you need ahead of time will streamline the process.
- Do your own taxes. Want to save money on tax preparation and be more knowledgeable about your tax situation (and consequently, more informed on how to save money in taxes)? Complete your own taxes instead of paying someone else to do it. I’ve done my own taxes for much of my adult life, even now that I am self-employed and have a house. It saves me money, but it also allows me to be more informed about how the tax system works and what exemptions and deductions I can take advantage of, which improves my year-round tax planning.
- Don’t pay for tax preparation software. You may think it’s necessary to purchase tax preparation software annually, but it’s really not. There are plenty of free resources available, particularly for low-income filers. Check out Free File on the IRS website for a list of free programs. I use TaxACT to electronically file my federal tax return. Most states allow you to electronically file state tax returns on the state website for free.
- Keep track of business, household, and medical expenses. If you’re interested in slashing your tax liability, it’s to your benefit to keep track of certain expenses throughout the year. You may be able to write off expenses related to your business, whether you’re employed by a company or self-employed. You may also find savings through household improvements you have made (new energy-efficient appliances, for example) or medical bills you’ve paid. Keep receipts and proof of expenses whenever possible in case of an audit.
- Look for free tax help. Instead of paying an accountant or tax preparer to answer your tax-related questions, seek out free resources instead. If you use tax preparation software, often you will find in-depth explanations that may answer your questions. Look for printed tax publications at the library or online that feature more complete directions and explanations on how to fill out forms. Utilize the IRS’s Interactive Tax Assistant (ITA), which is designed to provide answers to common tax-law questions. Find out more about IRS programs for free tax-return preparation for qualifying taxpayers who are low-income or elderly. Ask around about state or local community programs designed to offer free assistance with tax preparation. Contact a tax expert by phone using IRS Live Telephone Assistance.
- Allow adequate time to complete your tax return. Never get started on doing your taxes when you’re in a rush. I actually recommend allowing 2 or 3 sittings to complete and review your return prior to submitting. Sometimes you may have to stop and get a question answered or find a piece of documentation. It’s always wise to check over your work once or twice to confirm accuracy and completeness.
- Ask for direct deposit of your refund. Expecting a tax refund this year? Streamline the process by asking for the refund to be sent via direct deposit to your bank account. You’ll get your refund sooner and avoid a potentially lost or delayed tax refund check.
- Avoid tax refund loans. It may seem like a smart idea to get your tax refund on the spot, but what you’re really doing is taking out a loan that will cost you. Resist offers to provide you with an immediate refund check or card that comes with a fee. If you want to get a faster refund, follow Tip #9 to avoid any fee.
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Do you think these tax tips are helpful? Be sure to help out your family and friends by sharing this blog post with them!
How do you save on taxes or make the tax return process easier? Share your favorite tax tip by commenting below.