Filing your tax returns is the annual chore that most people aren’t looking forward to. If you’ve been putting it off – know you’re not the only one.
Luckily, there’s still plenty of time! April 18th, Tax Day, is just under a month away. Follow these pointers to help get you started on the filing process:
- Decide how you want to file. Many people choose the DIY approach to taxes, filing using an online program like TurboTax or H&R Block. That’s a great option for those who anticipate a straightforward tax year. Some online companies offer “audit defense” or “audit insurance” at an additional cost. This option might be something you should consider to provide peace of mind for the future.
If you think your taxes might be more complex, hiring a tax preparer is the way to go. Reasons you may want to hire a pro might include:
- You’re self-employed or own your own business
- You’re a new homeowner
- You’ve had a major life change in the last year like marriage, divorce, or having a child
- Gather important financial documents. Before you can start your taxes, there is a slew of documents you’ll need to dig out of those dusty old folders you haven’t touched in months. Take an afternoon and hunt around for things like:
- Last year’s taxes
- Income documents: Including any W2s, 1099s, investment income, rental property income and expenses, alimony, or other miscellaneous income you may have received in the past year
- Social Security or tax ID numbers for you, your spouse, and your dependents
- Review potential credits and deductions you could claim. Tax credits and deductions can help lower the amount of tax you may owe – or increase your potential refund. It’s important to start thinking about credits and deductions before you file because some have specific requirements in order to claim them – like filling out forms or submitting documentation.
Examples of credits include, but are not limited to:
- Child Tax Credit
- Retirement Savings Contributions Credit (or the Savers Tax Credit)
- American Opportunity and Lifetime Earning Credits
Examples of deductions include:
- Retirement account contributions
- Educational expenses
- Medical bills
- Charitable donations
You can view all available credits and deductions on www.irs.gov/credits-and-deductions.
Everyone has a different tax situation. Please make sure to consult a tax expert if you have questions about your own personal situation. The contents of this article are to educate not provide specific tax preparation advice.