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Tax Tips for Tax Day
With the countdown to Tax Day really begun, many are scrambling to file their taxes. As you prepare your tax return form this year, it helps to consider how you can make the process a little easier – and make sure your tax return is accurate. Here are some helpful tips for preparing your taxes:
Tax Tips: Look for Tax Deductions You Might Have Missed
Before you file your taxes, look for deductions you might have missed. There are a number of deductions you can take, depending on your situation, and how much you have spent. In fact, there are even a number of miscellaneous deductions you itemize on Schedule A if they amount to at least 2% of your Adjusted Gross Income. Job hunt expenses, investing costs, unreimbursed work-related expenses, and other expenses can all be deducted if you have spent at least 2% of your AGI on each category. If you have spent at least 7.5% of your AGI on unreimbursed medial expenses, you can deduct some of your costs.
Tax preparation software, or a consultation with a knowledgeable tax professional, can help you figure out which tax deductions you are eligible for.
Tax Tips: Reconcile Your Income with Your Records
Double check to make sure your records of income match what is being sent to the IRS. If all you have is W-2 income, this isn’t difficult. But you want to make sure that all of your 1099 income is properly accounted for. Realize, too, that the IRS expects you to report income – even if you don’t get a 1099 or some other report. Make sure you are properly reporting your income to avoid penalties from the IRS.
Tax Tips: Gather Your Records
Nothing is as scary as an audit. However, if you have proper records, you don’t have much to worry about. Gather proper documentation, including receipts and account statements, to support your deductions and credits. It also helps to gather the forms you receive from outside sources, such as employers, clients, mortgage lenders, and others. Keep your tax records together, and when you are done with your return, store your records with your copy of your return.
To increase the ease of doing your taxes next year, set aside a folder. Throughout the year, add documentation to the folder as you receive it. Keep your receipts and other important information together throughout the year, and you won’t have to go looking for it next tax season.
Tax Tips: Use e-File and Direct Deposit to Get Your Refund Faster
If the government owes you money, you can receive your refund faster if you use e-File and direct deposit. E-File helps you get your information in the system faster, and speeds up the process. If you elect to receive your refund via direct deposit, it will arrive as quickly as seven to 10 business days after your filing.
Don’t be fooled by “rapid” refunds, either. Some tax preparers claim to provide you with a same day refund, but you should realize that such “refunds” are actually loans. These loans often come with high fees and interest. You get the money now, but when your refund comes in, you have to repay the loan. Wait a few days for best results; chances are that you can wait a little bit for a true refund, avoid fees.
Tax Tips: File for an Extension if Needed
If you are concerned that you won’t be able to finish your tax return in time, you can file for an extension. This is important, since the penalty for failing to file can be fairly steep. You can receive a six-month extension, simply by filing for one – and you can even do it online. However, be aware that you will still need to pay what you owe in taxes. So if you know you owe money, make sure you pay it. Catch up with the paperwork and documentation later.
With a little planning, it’s possible to help tax season go a little more smoothly this year – and in the years to come.
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