If you haven't filed your taxes yet, have no fear. Approximately 20-25% of all Americans procrastinate when it comes to filing their taxes. People often associate the tax process as a complicated task, therefore postpone filing returns until the last minute.
To help you prepare and complete your taxes on time, consider these seven tax filing tips.
1) Organize Your Documents
Prior to starting, gather all the information you need to complete your return. Although this will vary person to person, common items include your social security number, W-2s, 1099s, donation receipts, student loan expenses and retirement contributions. You might also want to look at last year's tax returns to give yourself a refresher as to what documents you used. Additionally, Nerd Wallet put together a helpful tax prep checklist of everything you may need before filing your taxes. Getting organized with the right documentation is a sure bet to save you time and speed up the filing process.
2) Choose A Tax Preparer
Since it is so late in the game you should probably skip the accountant and turn to an online tax preparation software. H&R Block, TurboTax and TaxAct are suitable options if you're looking for free options. They also offer paid plans to help maximize your tax deductions and credits. Each platform is user friendly and makes it easy to file your taxes yourself. If you don't feel comfortable filing online yourself, the IRS offers a program called VITA for those who make $55,000 or less. Those who qualify can receive free tax help with electronic filing from an IRS-certified volunteer. Additionally, taxpayers who are 60 years of age and older can receive the same support via the TCE program. To find a VITA or TCE site near you, search here.
3) File Electronically
Filing your taxes online is a great way for last minute filers. Not only is it eco-friendly, but it is the fastest way to get your money if you're expecting a tax refund. To put it in perspective, those who file taxes online receive their refunds within three weeks as opposed to the six to eight weeks it takes if processed by mail. Although the IRS will continue to accept paper tax returns, they are encouraging people to file electronically to minimize errors. E-filing provides a more accurate tax return because it takes out the human error element. The software being used for e-filing is built to check for mistakes in real time.
4) Take Your Time
Whether you plan on filing the return yourself or taking them to a tax professional, the worst thing you can do is rush through your taxes. This often leads to more mistakes such as math errors, typos or forgetting to sign the return. Not only do these careless mistakes cause a delay in issuing refunds, but the IRS can issue you fines and penalties to make the corrections. Finally, be sure to review your return and double check everything is correct before submitting it. Taking your time to thoroughly look over things will save you the headache later on if errors were made.
5) Lower Your Expectations
Expect the worst, but hope for the best should be your motto here. Don't plan on receiving a large refund this year. Among the early filers, many have noticed smaller refunds than years past due to the Tax Cuts and Job Act that was passed in 2017. This has resulted in angry taxpayers searching for answers. Nicole Kaeding, Vice President of Federal and Special Projects at the Tax Foundation says most of the people who are upset simply misunderstand how the IRS collects taxes. She added that taxpayers have been receiving tax cuts in their paychecks every two weeks for the past year. Essentially you are receiving more money in each paycheck instead of a large refund during tax season.
6) Request An Extension If Necessary
If you're unable to meet the April 15th deadline, the IRS gives you the ability to file for an extension. Individuals and small businesses needing an extension should fill out Form 4868 and corporations should use Form 7004. Typically the automatic extension will give you an extra six months. However, it is important to know that this will only give you an extension for filing your return. If you owe the IRS money, you still need to pay it by April 15th. Payment plan options are available if you fall under this group.
7) Save Old Tax Returns
Once you complete your tax returns make sure you save all your documents. You can always obtain your old tax returns at the IRS website or through the tax preparer you used. Keeping copies of your filed tax returns has many benefits. They help in preparing future tax returns, proving a claim and making computations if you file an amended return. Other reasons to hang on to your tax returns are for insurance companies or creditors to verify income. It is recommended that you keep old tax returns for at least 3 years in case of an audit from the IRS. If you filed electronically, print out a hard copy as well and store them into a folder. Some great options for long term storage of tax information include hanging folders, file pockets and colored top tab file folders for easy identification.