Tax Day is just two months away! Many people find preparing their tax return to be stressful and frustrating, but it doesn't have to be. Here are seven tips to help you prepare your taxes without pulling out your hair.
1.) Gather your records in advance. Make sure you have all the records you need, including W-2s and 1099s. Don't forget to save a copy for your files. Some additional items you may need could include:
- 1098 mortgage interest statement
- Real estate tax paid if you don't escrow
- 1099-SA for those who have Health Savings Accounts
- Gain/loss records for any 1099-Bs you have
- Medical Expenses
- Ownership tax
- Daycare amounts paid along with the provider's address and Social Security Number
- Business expenses if you are a small business owner
2.) Get the right forms. They're available around the clock at IRS.gov.
3.) Take your time but don't procrastinate. Resist the temptation to put off your taxes until the very last minute. Your haste to meet the deadline (Wednesday, April 15, 2020) may cause you to overlook potential sources of tax savings and will likely increase your risk of making an error.
Getting a head start will not only keep the process calm but also mean you get your return faster by avoiding the last-minute rush. Don't forget to leave room for a coffee or meal break when filling out your tax return.
4.) Double-check your math and verify all Social Security numbers. These are among the most common errors found on tax returns. Taking care will reduce your chance of hearing from the IRS. Submitting an error-free return will also speed up your refund.
5.) E-file for a faster refund. Taxpayers who e-file and choose direct deposit for their refunds, for example, will get their refunds in as few as 10 days. That compares to approximately six weeks for people who file a paper return and get a traditional paper check.
6.) Don't panic if you can't pay. If you can't immediately pay the taxes you owe, you can apply for an IRS installment agreement, suggesting your own monthly payment amount and due date, and getting a reduced late payment penalty rate.
You also have various options for charging your balance on a credit card. There is no IRS fee for credit card payments, but the processing companies charge a convenience fee. Electronic filers with a balance due can file early and authorize the government's financial agent to take the money directly from their checking or savings account on the April due date, with no fee.
7.) Request an extension of time to file (but pay on time). If the clock runs out, you can get an automatic six-month extension. However, the extension itself does not give you more time to pay any taxes due. You will owe interest on any amount not paid by the April deadline, plus a late payment penalty if you have not paid at least 90 percent of your total tax by that date.
The tax programs made available to the general public can be a very useful guide, but knowledge of the tax laws are still up to the person filing the return. Things get very tricky when you have children of divorced parents, own several properties, or run a business from home.
If you run into any problems, have any questions, or need to file an extension, help is just a phone call away. Call Kimberly White at (505) 699-6973 or email info@kimberlywhiteaccounting.com.
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Kimberly White is an accountant and the owner of Kimberly White Accounting, LLC. Kimberly received a bachelor's degree in Accounting from Wichita State University, a Master's degree in Healthcare Administration from University of Kansas, and was an auditor at Price Waterhouse.
Kimberly provides outstanding service to her clients because of her dedication to the principles of professionalism, responsiveness, and quality. She has more than 20 years of experience in tax preparation and planning, accounting services, payroll, and bookkeeping. She is a certified QuickBooks Pro Adviser.
To schedule an appointment, please call (505) 699-6973 or email info@kimberlywhiteaccounting.com.
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