Tax season is upon us. My personal belief is that preparation is key to making it through tax season. Many people become overwhelmed by all of the forms and deadlines. Well, to help you get organized for this tax season, I offer these simple tips:
- Locate a copy of your prior year return: This is really important in the event that you or your tax preparer wants to compare how you filed last year. For example, did you claim a deduction last year that you are not claiming this year? Did your filing status change? If you aren’t able to locate a copy of last year’s return, the IRS keeps transcripts of prior year returns. Transcripts are free of charge. Obtaining them is as simple as picking up the phone and making the call or completing Form 4506-T, Request for Tax Return Transcript. This form can be downloaded from the IRS website, http://www.irs.gov/pub/irs-pdf/f4506t.pdf.
- Create checklist for expected tax forms: If you receive multiple forms such as W2s or 1099s etc. a checklist will be really helpful in helping you to stay organized. The checklist can be as simple as a list using pen and paper or as technical as using an Excel Spreadsheet. My personal favorite is the Microsoft Money Software. The software has a feature that allows you to organize all of your accounts so that you know which accounts to expect a form for. Additionally, many companies now offer you to option to receive your tax forms online. Check with your bank or brokerage to see if this is an option for you.
- Use IRS Free File Program: The IRS Free File Program is available for taxpayers whose adjusted gross income is $56,000 or less in 2008. For more information visit the IRS Free File Home Page, http://www.irs.gov/efile/article/0,,id=118986,00.html.
If you are not eligible for Free File, decide if you will file your taxes electronically, use a professional tax preparer, or use the paper form. Bankrate.com has a great site on current tax topics to help you prepare for this tax season. Visit the site at http://www.bankrate.com/brm/news/news_taxes_home.asp.
- Use Direct Deposit: If you are expecting a refund this year, direct deposit is the way to go. In many instances you will receive your refund faster than if it had elected to receive a check in the mail. To indicate that you want to receive direct deposit, simply fill in the direct deposit section on your tax form with your banking information.
- Research deductions and Credits: By researching these ahead of time, you are putting yourself ahead of the game. You will have a better idea of which ones you qualify for. For more information on this topic, visit the Bankrate.com website, http://www.bankrate.com/brm/news/news_taxes_home.asp.