It’s that time of year again, tax time! While doing your 2017 taxes may seem overwhelming, careful planning and organization can ensure that everything goes smoothly, while avoiding penalties and maximizing your savings. Whether you go the do-it-yourself route or hire a CPA firm, here are some tax tips that will help streamline the process, as well as prevent tax-return fraud.
Organize Your Records
For many filers, obtaining and organizing all the needed tax documents can be the biggest hassle. Make sure to keep any W2s or 1099s you receive in the mail in a safe place, and follow up with any employers if you do not receive them by February 2nd. Save all interest statements (mortgage, student loans, etc) even if you are not sure if you will need them. Organize all receipts, invoices, and any other financial statements into folders for quick access. Visit the IRS website if you need any additional tax forms. Having all your documents organized will make e-filing or your accountant’s job much easier.
Decide If You Need Help
There are many decisions that can determine how simple your tax return is, such as if you decide to take the standard deduction or itemize. Buying a home, having a baby, renting out property, contributing to retirement accounts, or freelancing can all complicate your returns. Typically your e-filing software or accountant will ask a series of questions in order to determine the right tax strategy for you. Decide for yourself if you are comfortable handling your taxes yourself or if you prefer the help of a local tax professional.
File On Time
It is recommended you file as soon as you have all your required tax documents. The deadline this year is April 17th, 2018. You can fill out Form 4868 for a six month extension if needed, and this will avoid the late-filing penalty, which can quickly add up. While paper filing might be more familiar, comprehensive, and easier to proofread, it is also more likely to sit on a shelf longer. With electronic filing, you can expect to get your refund three to six weeks earlier, and even faster if you setup a direct deposit. Also, the IRS will make sure your return is complete before accepting, and will provide you with a notification that your e-file has been received. When paper filing, you have no assurance.
Prevent Tax-Return Fraud
With all the headlines this year about mass data breaches, it is recommended that you file your return as soon as possible to prevent thieves from trying to snatch your refund before you get a chance to file. In 2015, the IRS gave out 1.2 million dollars in fraudulent refunds. Safeguarding your sensitive information is more important now than ever. Always use security software with firewalls and antivirus protection, and make sure to use strong unique passwords. Be on the lookout for phishing emails – messages designed to look like they are from an official organization asking for sensitive information. Keep your tax information in a secure location and consider a locking mailbox. Finally, shred any confidential documents, credit card solicitations, or bank statements that you no longer need in order to prevent your risk of tax-return fraud.