Tax Preparation Tips
Well, it's that time again - tax time. It's time to gather all of those rumpled receipts from the shoe box and straighten them out. Whether you are doing your own taxes or having the service performed by someone else, getting all of your papers in order beforehand will help. Here are some tips for tax preparation:
1. Collect your tax documents. By the 15th of January, most people have received their W-2 forms from their employers. By the end of January, you should have all the paperwork you need from sources like banks, employers, investment firms, and mortgage companies. The documents they send to you are all important in the tax preparation process.
If you do not have all applicable tax documents, you might miss out on a tax deduction that you are really entitled to. For that reason, you should file and organize all the documents you need as soon as your receive them.
2. Know your tax ID number. The IRS gives each taxpayer a specific tax ID number which traditionally corresponds to your social security number. You also need to know the social security numbers of any dependents who appear on your tax returns, including the social security numbers of any of your children's care providers.
3. Know your filing status. Some people qualify for more than one of the five different tax filing statuses. When it comes time to decide which one you want to file under, it is important to choose the status that will enable you to be awarded the most deductions and refunds.
4. Decide if you are going to itemize. Itemized deductions are not necessary on the tax form unless you will draw a great benefit from doing so. The term scares people but there is no need to worry. Most people can use the standard 1040 tax form and not have to bother with forms for itemization.
5. Be aware of this year's new regulations. Each year, tax rules and regulations change. That means that, in order to maximize your deductions and minimize problems, you need to be up to date on the most recent tax law changes. Even though learning all the tax laws would be a gigantic undertaking, just knowing about recent changes will help you out.
6. Buy good tax preparation software. Even though employees at tax preparation centers have experience calculating taxes and deductions, they are often using tax preparation software that you could purchase and use yourself. The majority of such programs come with great help systems that guide you through the process line by line.
1. Collect your tax documents. By the 15th of January, most people have received their W-2 forms from their employers. By the end of January, you should have all the paperwork you need from sources like banks, employers, investment firms, and mortgage companies. The documents they send to you are all important in the tax preparation process.
If you do not have all applicable tax documents, you might miss out on a tax deduction that you are really entitled to. For that reason, you should file and organize all the documents you need as soon as your receive them.
2. Know your tax ID number. The IRS gives each taxpayer a specific tax ID number which traditionally corresponds to your social security number. You also need to know the social security numbers of any dependents who appear on your tax returns, including the social security numbers of any of your children's care providers.
3. Know your filing status. Some people qualify for more than one of the five different tax filing statuses. When it comes time to decide which one you want to file under, it is important to choose the status that will enable you to be awarded the most deductions and refunds.
4. Decide if you are going to itemize. Itemized deductions are not necessary on the tax form unless you will draw a great benefit from doing so. The term scares people but there is no need to worry. Most people can use the standard 1040 tax form and not have to bother with forms for itemization.
5. Be aware of this year's new regulations. Each year, tax rules and regulations change. That means that, in order to maximize your deductions and minimize problems, you need to be up to date on the most recent tax law changes. Even though learning all the tax laws would be a gigantic undertaking, just knowing about recent changes will help you out.
6. Buy good tax preparation software. Even though employees at tax preparation centers have experience calculating taxes and deductions, they are often using tax preparation software that you could purchase and use yourself. The majority of such programs come with great help systems that guide you through the process line by line.
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posted by Credit Counseling at
10:03 AM
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