Tax Season Tips 2016

Tax season is here and it’s time to get organized. For many people, tax is synonymous to stress and confusion, but this doesn’t have to be the case. There are certain things you can do to make doing your tax much easier.

 

1) Find your 2015 tax return

 

The best place to start is your previous tax return. A year is a long time and it’s easy to forget how you completed your return last year. Having a proper look through your 2015 tax return. It will remind you of the things you need and how to go about using them. You might also realize that it wasn’t as bad as you remember.

 

2) Get your documents in order

 

Go through your email inbox and find any and every document needed for your return. The companies involved would have sent them to you during the course of February. Look out for forms like 1099 and W-2. Banks, investment and mutual fund companies, and lenders will also send tax documents to you. Put them all in one folder.

 

3) Find deductions

 

Look back to 2015’s tax return and see what other deductions you filled out. These could be charitable donations or job search costs. Now go through your credit card summaries and online receipts and fill out this section with the correct amounts, making sure you can reference back to the proof of payment if necessary.

 

4) Get a tax preparer

 

If you’re completely overwhelmed it is definitely worth spending a little bit of money to hire a tax preparer. This person only needs all your receipts and forms and they do your return for you. Because of their knowledge, you may even get back more money that you bargained on, which makes up for the extra expense. Just remember that you have to find one as soon as possible, because their schedules become full.

 

5) Get the forms and software

 

Do you earn $62,000 or less? If yes, you have access to free tax preparation software, courtesy of the IRS (Internal Revenue Service). It is called “Free File” and you’ll find it on IRS.gov. Everyone else can also do their tax return electronically, they just aren’t provided with the free assistance software.

 

6) Track your return

 

After filing your return, you can visit the IRS website again to track your return. This provides a much clearer timeline in terms of receiving the money due. Have a look at the IRS2Go mobile app or click on Where’s My Refund? on the IRS website to track refunds

 

7) Remember your home office deductions

 

People who have no fixed location for their businesses can claim a home office deduction if they use the space for administrative or management activities, even if they don’t meet clients there. This deduction has previously been regarded as a red flag for being audited, but the rules have been slightly loosened this year. Just make sure that you are entirely eligible before making this deduction.

 

8) Fill out your dependent’s ID’s on your return

 

Remember to fill out the ID numbers of your children or other dependents on your return. There is a personal exemption for which you are eligible for each dependent and a $1,000 child tax credit for each child under age 17. If you’re divorced, only one parent can apply for this. Be sure you have your children’s social security cards ready when you do your return.

 

9) File your return on time

 

It is very important that you don’t miss the deadline of 18 April 2016. If you see that you won’t be able to make it, file a Form 4868 before this date in order to get a six-month extension. This form requires a reasonable estimate of your tax liability for 2015 and you have to pay any balance already due when you make the request. All in all, it’s better to file your tax on time – when it’s done, it’s done and you can forget about it again until next year.