Tax season can be stressful for many, but it doesn’t have to be. The earlier you start working and preparing your taxes the better, and here are some tips to help you do so.
1. Make sure you have all your records. You should have, by mid-February, all your W-2s and 1099s. It’s important to have had kept copies of these for your own records.
2. Avoid procrastination. Procrastinating is tempting when Tax Day is April 17 this year, but you have to fight this temptation. Filing your taxes on time may allow you to take advantage of tax savings you might have overlooked had you been rushing to meet deadline. Waiting also increases your potential for mistakes. Starting early will not only keep the process headache free, but will also mean you get your return faster.
3. Double-check your math and verify all Social Security numbers you will claim. Among other errors, wrong Socials and erroneous math are the most common mistakes. Taking care of this before you submit your forms will reduce the probability of a hearing with the IRS and also speed up your refund.
4. E-Filing is faster than traditional paper filing. If you are a taxpayer that cares about efficiency and timeliness, you should consider E-filing. You could have your refund in as few as 10 days, if you sign up for direct deposit, about six weeks faster than taxpayers who file paper taxes and get a traditional check.
5. Request an extension for filing, but pay your taxes on time. You didn’t pay attention to our second tip, and procrastinated and now you won’t have your taxes on time? You can request an extension for the period of an extra six months, extending the deadline until October 15. This new deadline does not mean you have an extension on your tax payments. You will owe an interest amount on payments not made by the April 18 deadline, on top of a late payment penalty if you haven’t made at least 90% of the total tax payment you owe.
6. Don’t panic. If you can’t immediately pay the total amount of taxes you owe, consider some alternatives. The IRS allows taxpayers to apply for payment installment agreement, suggesting your payment amount and due date, and reduces the late payment penalty rate. You could also consider making a credit card payment and then paying it off over time, but the IRS does charge a small fee for credit card payments. Another instance when E-Filing is advantageous, when you file online the agent can set up the payment to be made on the April due date from either your checking or savings account, with no additional fee.
Our goal is to make tax filing as pain-free as possible and we hope our tips help make this tax season go by smoothly!