As discussed in Part One, the majority of US citizens use the services of paid tax professionals to help them submit their tax returns each year, and with these simple tips, your tax preparation experience can be as pain-free as possible:
Locate records of all charitable contributions:
Claiming a write-off for charitable donations when itemizing your deductions, requires clear and specific records of any transactions and gifts. For a contribution of $250 dollars and above, you will need to show a written acknowledgement from the given charity that clearly states the amount that you gifted, and that you didn’t receive any significant gifts in return. You will need this information at the time of filing.
Changes to tax laws:
With President Trumps tax reform bill now in full swing, you may want to consult with your chosen tax professional as to how the changes might affect you or your business. Some changes have been made to home equity loans, tax prep expenses, home mortgage interest deductions and job-related expenses, to name but a few. However, all reputable tax professionals will have a sound and accurate understanding of the reforms, and they will be able to use them to your best advantage provided you can furnish them with the relevant information.
Write down personal information:
It can be extremely helpful to jot down personal information that might be needed for your tax return, to save you having to hunt around for it when you need it. While you probably you’re your Social Security number, you may not be quite so aux fait with addresses of vacation homes, rental properties, the dates you moved and other such details.
Decide whether to file for an extension:
You can request a filing extension to the 15th October 2019, but this should only be necessary if you are struggling to complete all the required tasks by the current deadline. While doing so will help you to avoid having to pay any late-filing penalties, you must ensure that you pay what you think you owe by the deadline, otherwise you could be landed with a late-payment penalty. All taxes due must be paid by the 15th April.
Make up your mind about a refund:
There are several options open to you if you are expecting a tax refund:
- Some, or all the refund can be applied to your next tax bill when you next file
- You can be sent a check or simply have the amount deposited directly into your checking or savings account
- Or, you can contribute some or all your refund directly to certain other types of accounts
Locate a copy of your tax return for the previous year:
Things become a lot easier in this respect if you’re going to be using the same tax preparer that you used last year, as your previous return is likely to be at hand. However, if you’re using a tax preparer for the first time, or using the services of a new one, your previous tax return can be a handy reminder to both of you about some items you might not want to miss out.
The importance of being prepared cannot be stressed enough when filing your tax returns; it’ll make the whole experience far smoother and more efficient, whether you use a tax preparer or not, and in an ideal world, you should try to gather and organize your receipts and other relevant data throughout the year.