Tax season really is not all that far away. Some filers choose to save a bit of money by preparing their own taxes rather than hiring someone to do it for them. If you fall into that category, there are a few important things that you should know before you submit your tax return. Check out these five important rules for preparing your own taxes.
#1 – Determine the Complexity of Your Return
Before you prepare your taxes, take a moment to consider the level of complexity of your return. If your return is pretty basic – say, you only have one W2, and you are only taking the standard deduction – then it should be a fairly simple process to prepare the tax return on your own. However, if your tax return will be more complex – you are itemizing your deductions or have multiple W2s – you may want to consider hiring a professional to assist you. A tax professional can help you find deductions that you aren’t aware of, which can increase your refund. In addition, a tax professional will assist you in the event that your return is audited.
#2 – Familiarize Yourself with the Tax Code
Before you attempt to prepare your own tax return, you should make sure that you familiarize yourself with the basics of the tax code. The tax code changes each year, so even if you have filed your own taxes before, you should brush up on the current rules. The tax codes are quite complicated. If you are unsure about any aspect, you should definitely consult a tax professional for advice.
#3 – Keep Meticulous Tax Records
When it comes to filing your taxes, organization is key. You should keep receipts to justify any exemption that you claim. After your return has been completed, keep all documents, including tax forms, receipts, and any supporting paperwork for at least seven years. This will protect you in case your tax return is audited.
#4 – Take Advantage of All Available Resources
Preparing your taxes yourself doesn’t mean that you are completely on your own; there are many different resources available to assist you, and you should take advantage of them to guide you through this process. The IRS offers a tax hotline where you can ask questions. There are many online resources available, too. If you have any questions at all, you should use these resources or contact a tax professional for advice. You will save a great deal of time and money by making sure that your tax return is completed properly before you submit it rather than correcting errors after filing.
#5 – Find Out About Available Tax Credits
There are many different tax credits available for which you may be eligible. You can’t claim them unless you know about them, though. Some of the most common tax credits include credits for families with children, especially those who have a child enrolled in a child care program or college. The IRS compiles a yearly list of available tax credits that are frequently overlooked. Some common deductions and credits to make that list include job search expenses, out-of-pocket contributions to charities, and reinvested dividends. If you are unsure about what tax credits and deductions are available to you, consult a tax professional for advice.
Acceler8 provides tax services, business advice, and accounting services to entrepreneurs and small business owners. If you could use some assistance in filing your taxes or dealing with any small business matter, give us a call. Acceler8 offers free consultations with our business advisors.