Tips for Preparing your Taxes
When it comes time to prepare annual income taxes, many people have to sort through piles of disorganized receipts and try to make sense of them. Regardless of whether you will be doing your taxes yourself or you hire someone else to do them, getting things in order ahead of time will make the entire process easier. Consider the following tax preparation tips.
1. Collect your tax documents. By the 15th of January, most people have received their W-2 forms from their employers. By the end of January, you should have all the paperwork you need from sources like banks, employers, investment firms, and mortgage companies. The documents they send to you are all important in the tax preparation process.
If you do not have all applicable tax documents, you might miss out on a tax deduction that you are really entitled to. For that reason, you should file and organize all the documents you need as soon as your receive them.
2. Know your tax ID number. The IRS gives each taxpayer a specific tax ID number which traditionally corresponds to your social security number. You also need to know the social security numbers of any dependents who appear on your tax returns, including the social security numbers of any of your children's care providers.
3. Know your filing status. Some people qualify for more than one of the five different tax filing statuses. When it comes time to decide which one you want to file under, it is important to choose the status that will enable you to be awarded the most deductions and refunds.
4. Decide if you are going to itemize. Itemized deductions are not necessary on the tax form unless you will draw a great benefit from doing so. The term scares people but there is no need to worry. Most people can use the standard 1040 tax form and not have to bother with forms for itemization.
5. Know what's new for the year. Tax laws, deductions, and credits are changed or added to each year. The sheer volume of tax laws on record would curl your hair. You could never know them all, but familiarity with the latest changes can make a difference to the amount of refund that you receive.
6. Buy good tax preparation software. Even though employees at tax preparation centers have experience calculating taxes and deductions, they are often using tax preparation software that you could purchase and use yourself. The majority of such programs come with great help systems that guide you through the process line by line.
1. Collect your tax documents. By the 15th of January, most people have received their W-2 forms from their employers. By the end of January, you should have all the paperwork you need from sources like banks, employers, investment firms, and mortgage companies. The documents they send to you are all important in the tax preparation process.
If you do not have all applicable tax documents, you might miss out on a tax deduction that you are really entitled to. For that reason, you should file and organize all the documents you need as soon as your receive them.
2. Know your tax ID number. The IRS gives each taxpayer a specific tax ID number which traditionally corresponds to your social security number. You also need to know the social security numbers of any dependents who appear on your tax returns, including the social security numbers of any of your children's care providers.
3. Know your filing status. Some people qualify for more than one of the five different tax filing statuses. When it comes time to decide which one you want to file under, it is important to choose the status that will enable you to be awarded the most deductions and refunds.
4. Decide if you are going to itemize. Itemized deductions are not necessary on the tax form unless you will draw a great benefit from doing so. The term scares people but there is no need to worry. Most people can use the standard 1040 tax form and not have to bother with forms for itemization.
5. Know what's new for the year. Tax laws, deductions, and credits are changed or added to each year. The sheer volume of tax laws on record would curl your hair. You could never know them all, but familiarity with the latest changes can make a difference to the amount of refund that you receive.
6. Buy good tax preparation software. Even though employees at tax preparation centers have experience calculating taxes and deductions, they are often using tax preparation software that you could purchase and use yourself. The majority of such programs come with great help systems that guide you through the process line by line.
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