By Nayelis Delgado
1. Gather Your Documents
The first step in preparing for Tax Day is to gather all the necessary documents. This includes personal documentation, banking information, and income records.
Personal documentation includes a photo ID, Social Security Number, or Taxpayer Identification Number for yourself and any other person on the return, including your spouse and all dependents.
If you want your return directly deposited into your bank account, you will need the routing and account number.
It is also necessary to have a record of your income sources and know what forms to begin looking for at the end of each year, some of the most common are:
- Employment income (W-2 Form, 1099-NEC, or 1099-K)
- Retirement or disability benefits (Form SSA-1099 or 1099-R)
- Unemployment income (Form 1099-G)
- Dividend, interest, or brokerage income (1099-DIV, 1099-INT, or 1099-B)
Knowing what documents, you need and having everything together will make the filing process more efficient.
2. Review Your Deductions and Credits
Take the time to review all potential credits and deductions you may qualify for. Tax credits can include the Child Tax Credit and the Earned Income Tax Credit while deductions can include things like your student loan interest, mortgage interest, or medical expenses.
3. Organize and Track Your Expenses
Tracking your expenses is one of the most important steps to take when filing taxes. This information will give you a larger refund by allowing you to claim specific tax deductions, lowering your overall tax liability. Expenses include retirement contributions, college tuition, childcare expenses, medical bills, charitable donations, and business expenses. Other expenses can also include state and local income taxes, personal property taxes, and real estate taxes paid throughout the year. Contact your accountant if you are unsure what documents qualify as an expense for a potential deduction.
4. File Your Taxes
Once all your information has been gathered, it is time to file your taxes. You can choose to paper file your return through the mail or to file electronically using tax preparation software. However, you should consider hiring a professional tax advisor to ease any doubts. By seeking professional help, you may increase your chances of maximizing deductions and credits, while also minimizing the number of errors that may occur.
5. Meet The Deadlines
Taxes must be filed before the deadline to avoid any penalties or interest caused by lateness. Taxes for the federal government are usually due April 15th, but this can change depending on if the deadline falls on a holiday or weekend. If additional time is needed to gather documents or put together your return, file for a six-month extension on or before the initial deadline of April 15th and you will be granted until the extension deadline (October 15th) to file your return. Remember that even if you request an extension, you still need to pay taxes owed by the original deadline to ensure you don’t incur penalties.
This information has been prepared for informational purposes only, and is not intended to provide, and should not be relied upon for tax, legal, or accounting advice. If you have any questions about filing your personal taxes, please do not hesitate to contact us at Lear & Pannepacker.