Procrastinate on your taxes and you could end up with a higher bill. The IRS has a fearsome reputation for going after every last debtor. The most common errors on tax returns are bad math. Mistakes in arithmetic or transferring figures from one form to the next will set you on the sure path to being audited or fined. That’s why getting a head start on your taxes now will help you avoid any last minute rush, when most filing mistakes are made.
Even if you’re not quite ready to file yet, do yourself a favor and follow my February guide to preparing your taxes. This checklist will help get you ready for when you are ready to fill out the forms and figure out how much you owe or are getting back from Uncle Sam. Each item on the checklist should only take you only a few minutes to complete, but save you future headaches when the time comes to file.
You can get a head start on your taxes by putting all your forms in one place. By now you should have gotten most if not all of your 1099s and W-2s, they are required to be mailed by January 31st. Gather them up and put them in a safe place until you are ready to work on them. If you have moved or haven’t received one from an employer by now you need to track them down. Send an email to any former employers inquiring about the status of your W-2 or 1099. The IRS won’t accept the excuse that you didn’t receive a tax form if you under report your income. It’s up to you to get everything together.
While we’re on the subject of W2s and 1099s it’s probably a good idea to hunt down last year’s forms as well. If you plan to do your taxes yourself they can act as a guide when you finally fill out this year’s forms. For added convenience I’d keep them with this year’s W2s and 1099s. To be sure you don’t mix up last year’s and this year’s form place a rubber band around last year’s filing with a sticky note that denotes the year.
When you do sit down to file your taxes you’ll need the social security numbers of everyone who’s listed on your return. On a sheet of paper you can put with the W2s and 1099 forms you’ve collected already write down your social security number, as well as your spouse’s, if you file jointly, and those of any dependents you claim. The IRS double checks the identification numbers against any tax breaks you apply for, such as the Child Tax, credits for educational expenses and the dependent care tax credit. You’ll save yourself time by doing this small gesture today. And if you store it with the rest of your 2012 tax information it will be one less thing you have to track down when you get set to file your returns.
Most of us filed our returns electronically last year, during which the necessary forms were provided for us. If you are one of the ones who filed the old-fashioned way last year then the IRS should mail you the forms to do this year’s taxes the same way. In case though you need a form they do not send or your situation has changed in the last year you should head over to your local library or post office and pick up any forms you might need. You can also download and print out any IRS forms from the IRS website. This time saving activity should take you no more than a few minutes to complete, but will save you headache and worry if you wait till the last minute to file your returns.
No matter if you file electronically or mail your tax forms into the IRS you’ll want to get your refund as quickly as possible. The fastest way to get your refund is to have the IRS directly deposit the funds into your bank account. Call your bank or look at the bottom of any spare checks you have lying around and write down your bank’s routing number and all account numbers you plan to have refunds deposited into. Keep this information with your W2s and 1099 forms for convenient locating when you finally sit down to figure out your returns.
For those of us that use a pro to do our taxes it’s time to give them a call and schedule an appointment. Tax professionals schedules fill up quick this time of year so it’s wise to call as early as possible to set up an appointment with him or her.
If you don’t have a tax preparer but know you plan to use one this year now is the time to find one. Look for someone who has the CPA credentials or is an enrolled agent. You can also take your forms to a tax preparation center like H&R Block or Jackson-Hewitt.
The IRS also opens taxpayer assistance centers this time of year in every state. These Centers offer you a personal one-on-one opportunity to ask a professional your tax questions free of charge. In some cases you can also receive assistance in preparing your federal taxes. For example, IRS Taxpayer Assistance Center employees will help prepare basic individual income tax returns if you earn $57,000 or less.
Did you give to any charitable groups last year? If so now is the time to pull out those receipts and put them with your other 2012 tax paperwork. All types of donations, from cash to clothing could be considered a tax deduction so make sure you count them all when you file. You’ll need some kind of proof that you made a donation, like a receipt or a list you made of any clothing or household items you gave away. Dig it out now so you won’t be scrambling to find it on April 14th!
Being nervous about filing your taxes is normal. Everyone gets a little scared they’ve made a mistake or have forgotten to report something. But when you start early, you give yourself time to make the best decisions for your status and take full advantage of every tax break that could ultimately lower your tax bill. Check back with me every Wednesday for more money saving advice. I’ve got plenty more tax related advice coming up in the next several weeks!
Keeping Money in Your Pocket,