We all have to answer to the taxman in one way or another and for some, this is overwhelming, the fear factor is real! Those who are afraid of getting their taxes done oftentimes miss the April 15 filing deadline. As a matter of fact, the IRS received a whopping 14.6 million extensions last year. Given some of the uncertainty with tax reform and how it affects taxpayers individually, there might be some greater desire to procrastinate, to put off what you don’t want to hear. Well, putting off what you know you have to do and feeling overwhelmed by it all is not a healthy move for you physically or mentally!
Check out these tips on how to have a stress-free tax season:
File early. Any time you face an unpleasant task, it’s best to get it out of the way as soon as possible. Just think, over 70% of taxpayers receive an income tax refund each year of nearly $2,800 on average, and you might just be one of them! IRS data shows that taxpayers who file by late February get significantly larger refunds than those who file later—around $400 on average. The sooner you start on your taxes, the more opportunity you have to make sure you’re claiming all the tax deductions and credits you’re eligible for, which takes more time and documentation than claiming the standard deduction.
Gather all of your documents in advance. Make sure you have all the records you need, including W-2s and 1099s. Don’t forget to save a copy for your files. In addition to your income documentation, you’ll also want to collect receipts for any deductible business expenses, charitable receipts, investment income statements, childcare invoices, freelance income, etc. Then, prepare one document with any other important information you’ll need to complete the form, such as social security numbers, mortgage interest amounts, etc. Always keep all of your documents together in a designated place and as organized as you can.
How about hiring a tax pro? Sometimes it’s best to turn over your tax filing concerns to a pro. They are going to know all the applicable laws, regulations, and proper deductions. That will save you money on deductions and, if applicable, tax refunds, but is also going to prevent you from making incorrect deductions and costly mistakes. A tax pro will be able to give your taxes the second look they need before filing that will keep them accurate and error-free. Finally, a tax pro will help keep you and your tax filing on the straight and narrow. It’s tempting to want to maximize your tax breaks and even tax refunds, but it’s not worth it in the long run! Do keep in mind is that accountants are going to be working hard starting in March, so if you can make an appointment at the beginning of the year (i.e., mid-January), you can get a jump start and not have to fight for your time.
Reduce your tax burden. If you wind up owing tax monies, talk with your financial pro about any of the many ways that you can reduce your taxes. Whether it’s putting money into a tax-beneficial account, getting subsidies for home improvements (i.e., green energy), or something else, it’s worth it to cut down on the financial load each year.
Consider tax prep software. Tax prep programs have come a long way, and if you choose the best tax software, you’ll be able to knock out your return quickly and confidently – and hopefully get a sizable tax refund to boot. Here are three tax software companies to check out: TurboTax (this is the easiest), H&R Block, and TaxAct.
Life changes can affect taxes. Certain life changes can impact your tax situation. Events such as a marriage, divorce, separation, a move, death, buying or selling a home, or someone going to college are some of the things you should be aware of. The IRS offers some guidance on how life events can affect your tax picture. You can access this guidance by going to the life changes section of the IRS website.
Get help from the IRS. You can access the IRS website to gain access to tax forms, answers to tax topics, and read recent publications. Just be sure you’re viewing the latest version of tax publications, as they do change regularly. You can find what you need by searching the IRS website.
You can also call the IRS through its toll-free number at 1-800-829-1040 between the hours of 7am and 7pm. Make sure that you call early during the tax season, as the closer you get to April 15, the longer the wait to get through to an advisor. You can also visit a local IRS office and get the help you need face to face.