7 Tips to Help You Prepare for Tax Season
Tax season will be here before we know it and
it’s time to start prepping. While you’re probably excited about receiving your
tax refund, it’s also common to feel anxious about the actual filing process.
Because most of us do not work in the financial realm on a day-to-day basis,
dealing with taxes can sometimes feel like a stressful experience.
To help you prepare ahead of time, we’ve
compiled the following tips to help you enter tax season with confidence.
Decide
who will prepare and file your taxes
First things first: figure out how you will be
filing your taxes this year. Will you be using a service or financial
professional, or will you be filing your own taxes? If you experienced a major
life change over the past year such as a marriage, divorce or the start-up
of your own business,
then your taxes may be more complicated than in years past. If this is the
case, you may want to consult with a professional for help filing.
Learn
from previous years
Think back – what have you learned from
previous years? Were there things you had difficulties or setbacks with? Were
there things that went well? Make note of what you would like to do differently
this year and what practices you would like to keep.
One of the best ways to prepare for tax season
is taking the time to gather up all the documents you – or your CPA – will need
when it comes time to file. Some of the documents you will need include a W-2
if you are employed, your social security card or tax ID number, childcare
records and deduction records. For a comprehensive document checklist, click here.
Tax deductions lower a person’s tax liability by lowering their taxable income.
Some examples of deductions include healthcare costs, property taxes, mortgage interest, and some
job-related expenses.
Protect
yourself from scams and fraud
You’re looking forward to that tax refund –
make sure you receive it by protecting yourself from criminals. Because most
taxes are filed online, the best way to protect yourself from cyber criminals
is by practicing safe computing:
●
Never share private financial
information over public Wi-Fi networks.
●
Be wary of phishing attempts. If
an email from your tax professional prompts you for sensitive information, give
them a call to make sure the email is legitimate and not a hacker.
●
Ask your tax professional about
their security practices before beginning your tax filing.
Take
advantage of resources
The great thing about the world wide web is
that there are countless resources at our fingertips for all different topics,
including your tax return. Here are some of our favorite resources:
Who better to seek
advice from than the Internal Revenue Service (IRS) itself? Check out their Interactive Tax Assistant before
filing your taxes to help answer some of your questions.
If you earn less than
$56,000 annually, speak limited English or have disabilities, then you may be
eligible to use the Volunteer Income Tax Assistance
program which offers free assistance from IRS-certified volunteers.
People who are 50
years of age or older who cannot afford a professional tax preparer are able to
take advantage of the AARP Foundation’s Tax-Aide.
Last but not least, don’t forget to plan for your
refund! An extra surplus of money is a great opportunity to pay off debt, put a
lump sum towards a down payment on a home or vehicle or
save for the future. If you’re planning to receive a refund, then making plans
ahead of time will help you commit to using the money in the most beneficial
way possible. Having a plan in place will make it less tempting to carelessly
spend the tax refund once you have it in hand.
