Prepare to File Your Income Taxes
by Lisa Morris
The days when you had to go to the library or post office to retrieve tax forms are long gone. With a few clicks on your home computer, you can download and print everything you need to prepare and file your taxes. Even better, you can instantly file your taxes online. Either way, limit the stress of this annual chore by organizing your documents and making a plan.
Tax document organization doesn’t just last from January to April 15 — it’s a year-round process. File away tax-related documents throughout the year so you can locate them easily when it’s time to do your taxes. Group your documents in folders according to their tax implications to speed up the tax filing process. The most common documents for the average American taxpayer are:
- Income statements. W-2s, 1099s, unemployment income, alimony, miscellaneous income, and IRA and pension distributions.
- Adjustments to income. IRA contributions, educator expenses, medical savings account contributions, and student loan interest.
- Itemized deductions and credits. Home mortgage interest, childcare costs, medical expenses, education costs, investment interest expenses, home-based business expenses and charitable donations
Alone or pro?
Decide if you’re going to file your own taxes or hire a professional. If you go it alone, the easiest way is to use an online service that guides you through the process step by step. Service prices vary, depending on your tax situation. Service usually covers very simple returns (for example, no stock transactions, self-employment income or rental income); for more complicated returns, a second level usually includes audit support; premium versions are usually geared toward self-employment or rental property and usually includes live tax advice.
If you decide to call in the pros, get referrals from your friends and relatives. Tax preparers’ fees vary greatly, so get a few quotes before deciding who to hire.
If you’e preparing your own taxes, there’s plenty of free assistance available. The Internal Revenue Service has a plethora of information, including all the tax forms, instructions and frequently asked questions. IRS assistance is also available 24/7 at 800-829-4477. You can also receiving face-to-face assistance at your local IRS office.
Whether you prepare your own tax returns hire a pro, don’t wait until the last minute. Leave enough time to do research or locate information or documents you’ll need to file your return. If you’re using a tax preparer, you may need to wait for an open appointment or meet them a second time if you forget any documents or information. If you owe the IRS and you’re in a financial bind, the earlier you know the more time you’ll have to save.
You can file for an extension, but an extension only gives you extra time to file, not extra time to pay. If you’re getting a refund and file for an extension, you will not incur a penalty. If you owe the IRS, you can get an extension to file, but the tax is still due by April 15. You may qualify for a payment plan, but fees and interest will be added.
If you procrastinate and find you’re short on time, your best option is to e-file. Just put on your pajamas, turn on your computer and get it done in the comfort of your own home.
Freelance writer Lisa Morris has been preparing income tax returns professionally and for family and friends since 1991.