Filing your federal income tax return can be a daunting task. However, there are things you can do to tackle tax filing one step at a time while avoiding rookie mistakes and taking advantage of money-saving opportunities. This guide will help. Read on.
Know Your Income
If you happen to be earning over a certain amount of money during the year, you must file a tax return. If you work, look at your pay stub for your “year to date” income—and if you have more than one job, total up the earnings that you received from all of your employers. Remember to add revenue from other sources as well, such as rental property, sales, investments, or interest.
Keep Your Paperwork Handy
Keep track of tax-related papers throughout the year; it will make tax season easier. You should keep receipts for charitable gifts, work-related costs, medical bills, and other items.
Wait for Your Income Documents to Arrive
In January or February, you should receive documents detailing how much money you earned from your employers and other sources.
Learn Which Deductions and Credits You Can Take Advantage Of
Knowing what credits, as well as deductions you may be eligible for, can help you get the right documentation ready. Here are a few to consider:
-Saver’s credit
– Student loan interest
– Freelance expenses
– Charitable deductions
Check the IRS’ website to know if you qualify for additional deductions and credits.
Keep Your Deadlines in Mind
Once your tax documents arrive, you have about two months to prepare your tax return. Plan to allocate enough time toward filing your return. In general, tax experts recommend filing returns earlier rather than later. The earlier you file, the lesser your chances of being a victim of tax-related identity theft. What’s more, if you are owed a tax refund, you will receive it a lot sooner.
Decide how To File Your Taxes
You can choose to file your taxes yourself or use tax preparation software if you need a little extra guidance. If you need one-on-one help, consider hiring an accountant or a tax preparation firm. But make sure you’re working with someone trustworthy.
