The time of year has come again that either people thoroughly enjoy or despise – tax time. Whether you file your own taxes or leverage the expertise of a professional, it’s still important to educate yourself on any changes to make sure you’re taking advantage of every benefit possible. These tips can apply to part-time, full-time employees or entrepreneurs – so take a look before hitting the submit button this tax season.
Gather all of your W2s
The end of January was the deadline for employers, banks and other business firms to send out all tax documents. Did you pick up a seasonal job? Did you take advantage of offering any freelancing services? If so, make sure all of your documents are in your possession and accessible. Create a folder with all of this information so in the coming years, everything is centrally located. Here’s a quick list of potential forms:
W2 – This is a mandatory form issued to employees’ reporting the amount you’ve made in a given year, while also providing taxes withheld from paychecks.
1099 MISC – Applicable to contractors or freelancers, this form is used to calculate lax liability for the self-employed.
1098 – If you are a homeowner, this form shows the amount of interest and other expenses paid on a mortgage during the tax year.
1098-E – For those that have student loans, this form provides the amount of student loan interest paid within the calendar year.
1098-T – This form is generated for college students or parents that have paid for qualified tuition and college expenses.
Double check to make sure you have receipts and any important paperwork
This step is crucial if you are self-employed. Take the time to gather all business expense records so that it will be a smoother process for you or the tax preparer. Home office expenses, internet bill, phone usage, health insurance premiums and business-related travel fees are all examples of deductions. Be sure you have all of the information submitted for your own records as well as for the IRS.
Check the official IRS website for any updates
The new tax law almost doubles the standard deduction amount. Single taxpayers now will see their standard deductions increase to $12,200 compared to $6,350 in 2017. Married couples filing jointly will now see an increase from $12,700 to a whopping $24,400. For those with children, the child tax credit has also increased to $2,000. Take a look at the official IRS website for a complete list of information and make yourself aware of any changes.
File for an extension if necessary
The deadline for federal tax returns are April 15th – but The IRS does grant a six-month extension as long as Form 4868 is completed. If important tax information is missing and needs to be re-ordered, unexpected life events take your attention or if you simply need more time to ensure you submit an accurate tax filing, use this benefit. However, this is not something you use to escape filing taxes. It’s always best to prioritize this exercise once a year to prevent future headache.
Seek the assistance of a tax preparer or accountant if needed
If rallying all of the paperwork is enough for you to reach exhaustion, consider seeking the help of a tax preparer or an accountant. Most times tax information can get complicated based on your individual situation, so to avoid any IRS audits or mishaps – think about letting a professional do the heavy lifting for you.