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6 Tips to Prep for Tax Season

By January 25, 2017 blog, Finance One Comment

 

When the ball drops for the new year there is one thing that we all have in the back of our heads. It’s tax season! Around the time we start struggling with our new year resolutions we are also preparing to file taxes. Tax season begins January 23rd and will end April 17, 2017. For new tax filers, it can seem overwhelming picking the right options to file your taxes so here are a few tips to help you prepare.

 

First, begin with organizing. Organize your pay stubs, bank statements and W2 documents. This includes your 1099 forms. Put them all in a safe place in your office or where you keep important documentations, such as safe or filing tote.

 

Organizing leads into tip two. Keep track of all your expenses, deposits, and transactions throughout the year. If you have not done so last year, lucky for you online banking statements trail back a few months. In the future, either print off your statements monthly to keep track, log them by hand, or store your receipts by category.

 

Tip three, if you are new to filing your taxes, consider meeting with a tax professional. You have a few options when filing your taxes; doing it alone (DIY), 1040.com is a grand resource for this and makes the process super easy, and affordable. What I adore most about 1040.com is their stance behind turning necessary parts of our life into opportunities to help others. How many of you wish you would have had a chance to give back more over the last year? 1040.com does the work for you.

There are also other options such as using guided software application, or preparing with a tax professional in a face to face setting. Seeing a professional will cost; however, there are quite a few benefits like the time you will save and the accuracy of your forms –because we all know it can get confusing. Using tax software is geared more towards individuals with simple tax situations. If you are looking at filing multiple forms or different types, some tax software may lack the ability of having some of the confusing questions answered.

One key thing to remember if you are planning to file online is that the IRS is preparing to get rid of e-file pins for this year to increase privacy and as a security measurement. The user would need to have their AGI (adjusted gross income) from the prior year or order it from IRS.gov. Another great thing about the process at 1040.com is if you are a previous user they save important data to make the process less stressful and headache free. Avoid the drama where you can. 🙂

 When planning for assistance with a professional, make sure you check for creditable references and do not wait until the last minute to schedule an appointment.

 

Tip four, if you foresee that you may have to pay the IRS, begin saving in advance. If this may be the case for you, when you do your monthly budget plan create a line item that reads: TAXES/20__.

 

Tip five, you can lower your tax-deductible income (meaning you owe less in taxes) by contributing to your IRA retirement or by making charitable donations (don’t forget 1040.com that makes it easy to complete your taxes and give back at the same time).  The amount of these two options plays into what your deduction will be; however, these are things to consider. Why not help out your retirement fund and give back in the name of Uncle Sam.

 

Lastly, update your financial information with your healthcare marketplace. If you do not have healthcare understand that you will be paying a penalty when filing your taxes. If you recently got healthcare or have even had it for a while, update your information so you may not have to pay any additional tax credits.

 

Preparation for your taxes makes your experience smoother and easier to understand. Consider these tips for this current tax season and the ones in the future.

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