Money Tips: Tax Time Prep 101
The New Year is here and with it comes the start of income tax filing season. Although the deadline for filing your return is not until April, be pro-active to make for a smoother and less stressful process. You can begin preparing now by following these 5 simple and smart tax time tips.
5 Tips for Income Tax Prep
- Round up your records. There are various documents you should begin gathering which will help to support income or deductions you plan to claim on you’re your tax return. These include receipts, canceled checks, and a copy of your Social Security card. It is also helpful to have your 2010 return handy as well as any information on investments or education related costs including tuition bills and student loan statements.
- Keep an eye out for tax-related mail. Important tax documents are sure to be making their way to your mailbox so take care to be looking for them. These include W2s and 1099s which are essential to filing your return.
- Consider your filing options. You have a variety of options for filing your return. You can go it alone or enlist the services of a tax preparer. For those who are eligible, there are free volunteer sites that exist to offer face-to-face tax help. Credit unions often offer free tax prep resources to all members – you can give your CU a call or check out the website for further info.
There are also software tools available, like Free File. According to the IRS, if you made $57,000 or less, you qualify for this free software which will take care of the challenging work involved with filing your return and can be accessed at www.irs.gov. If you surpassed this income bracket or would prefer to do your own return, you can access online fillable forms, which are simply the IRS paper forms in electronic format, at irs.gov as well. Take some time to research and determine the best option for you, based on your individual financial situation.
- Ask questions. If you need answers to your tax questions, don’t be afraid to ask. For valuable information on everything tax-related from general filing to credits & deductions use the IRS as a resource. Their Interactive Tax Assistant can be found at www.irs.gov and will provide the tax answers you need.
- Set up a system. Start now for next year. If you didn’t already have one for this year, set up a good organizational system for next year where you can keep records, receipts, and other documents safe, orderly, and easily accessible.
Good luck with your 2011 income tax return!By Cyndi Cohen
Published January 13, 2012