Tax season is here once again. Once you have the appropriate paperwork you can e-file your tax return for 2017 income. The deadline to file this year is Tuesday, April 17 and if you are young and employed for the first time, welcome to adulthood. Tax filing is something that you will do for the rest of your working career. If you have never filed taxes before, it can be confusing at first to make sense of all of the paperwork and forms that you need. Don’t get overwhelmed. Just take your time, and don’t rush. Any mistake could potentially cause the IRS to take longer to process your return. Mistakes also raise red flags with the IRS and could lead to an audit, costing you time, money and stress. To help you prepare, we’ve assembled this guide to tax time filing to help make things as simple as possible.
Get Your Documents in Order
Your first of our guide to tax time is to get all of your pay stubs, receipts for deductible purchases and any other applicable paperwork and important documentation together in one place and organized. The IRS needs to know who is filing the tax return, as well as how many people are covered by it. You will be asked to provide your Social Security number as well your spouse’s Social Security number and those of any dependents whom you may be financially responsible for.
The following documents will help you prepare all the income information that you need to file a federal tax return:
- W-2 Forms from all employers you worked for during the past tax year.
- 1099 Forms if you completed contract work and earned more than $600.
- Investment income information (interest income, dividend income, proceeds from the sale of bonds or stocks, and income from foreign investments).
- Income from local and state tax refunds from the prior year.
- Business income (accounting records for any business that you own)
- Unemployment income
- Rental property income
- Social Security benefits
- Miscellaneous income (including jury duty, lottery and gambling winnings, Form 1099-MISC for prizes and awards, and Form 1099-MSA for distributions from medical savings accounts)
Itemize Your Deductions
Last but not least in our guide to tax time is itemizing. Itemizing your deductions can greatly maximize your tax savings. The benefit of itemizing is that it allows you to claim a larger than the standard deduction, meaning the amount of income that you have to pay taxes on can be reduced, thereby reducing the amount of taxes you must pay, and in some cases even granting you a larger tax refund.
in order to determine if itemizing would be profitable for you, you need to determine whether the allowable expenses you paid for things like home mortgage interest and property taxes, state income or sales taxes, medical expenses, charitable donations, etc. exceed the standard deduction for your filing status.
Essentially, if your deductible amount is more than the standard deduction rate, it would be wise for you to itemize.
Things to Consider
If Your Tax Prep Needs are Basic and Straightforward, you could probably get away with filing your taxes yourself. If you are a small business owner, have children or other dependents, have 1099 income or any other more complex tax preparation needs, you’d definitely be better off hiring a tax preparation professional. The same holds true if you simply don’t have the time to learn the system.
Tax laws can be confusing and are often written in language that is not the easiest to understand. By contacting a professional at tax time, you can get custom advice for your situation, as well as rest assured that you will be protected from any errors that could potentially lead to an IRS audit that could cost you thousands of dollars in fines and fees.
Why throw caution to the wind? It’s your finances. Leave them to a qualified professional.
Was this guide to tax time helpful and informative? Let us know in the form on our contact page.