Gearing and getting prepped for tax season? Tax season begins January 23 and will end April 17, 2017. Expect this year to bring about a whole bunch of noteworthy changes and challenges that will very likely affect your 2016 tax year filings. Here are just a few tips to help.
Get yourself truly organized. It's important to have one place such as a large envelope, a file folder, or a handy dandy filing tote to pile up tax information as it arrives. When it is finally time to fill out tax returns, much information is required-- every single line and detail counts in order to allow for smooth processing.
Organize bank statements, pay stubs, and all W2 documents, including any 1099 forms. To make things easier when April comes around, why not keep track of transactions, deposits, and expenses throughout the year so that you’re not in a frenzy around D-Day? With online banking statements trailing back for months and months beyond end now available, it’s simple to just print off monthly statements to keep track of. Also, remember to store away all receipts by category.
2. Open your heart to professional help.
First things first. If and when planning for assistance with a professional, make sure always to check for credible references and never ever wait until the last minute to schedule an appointment.
It’s especially helpful for first-time filers to consider meeting with a tax professional, as doing it alone the first time around can be a huge head scratching pain. Use companies like H&R Block to assist you with your taxes this year. If you do decide to go the DIY route, turbotax is a great resource to make the process affordable and super easy as it literally does the work for you.
3. Identity check.
With all the fraud and hacking drama that’s been occurring, it’s always important to keep yourself safe and secure. Most previous filers have probably gotten an Identity Protection PIN, or IP PIN, in past years that needs to be provided on this year’s tax return and on all future tax returns. IP PINs are your ultimate BFF in getting the IRS to accept your tax returns so if you do not receive one, go straight to the IRS website to retrieve it.
4. Get what you deserve and what it yours to keep.
Here’s a surprising tidbit: according to the IRS, 1 out of every 5 workers fails to claim their earned income tax credit. If you’re one of those busy bees who has worked incredibly hard throughout the year but earned less than $53,505 in 2016 (the limit for 2017 is $53,930), hop onto the EITC Assistant tool to see if you qualify for some much-needed credit. However, you have to actually file a tax return in order to receive the credit, so mosey on over and hurry on up!
5. Think retirement plan contributions.
For those whose employers provide a 401(k) or other sorts of the deferred pension plan, be sure to always contribute the maximum amount allowable instead of leaving out money that could actually benefit you in retirement. If and when your employer does not offer a retirement plan, try making a contribution to a Roth IRA or perhaps even simply a traditional individual retirement account.
Remember, it’s always just easy to reduce the amount of your tax-deductible income by feeding your IRA retirement or by doing some good by donating to charities. Give back in the name of Uncle Sam and aid that retirement fund. It’s a win-win!
6. Adjust those withholdings.
Because the IRS is now required by law to hold all refunds on returns until Feb. 15, be sure to double check any or all year-to-date withholdings, or, if expecting a substantial refund, consider changing the taxes withheld especially if claiming the earned income tax credit (EITC) or any additional child tax credit. This newest law was actually just recently put into place in order to give the agency extra time to scour for and to prevent tax fraud.
7. File for an extension
Need more time to get your finances and documents in order? Don't forget the option to file for an extension so you can give yourself some breathing room when finalizing your taxes. This can give you the time you need to get the most from your refund this tax season and take some of the added stress and pressure off.