The 2017 tax season is set to begin on January 23rd. This is the date that the IRS will start accepting tax returns filed by paper or electronically. While the tax season can be a challenging time of year, there are some things that you can do to help streamline the process.
First, know your filing due dates. For most individuals, you must file your federal tax returns to the IRS by April 18th. For businesses, the filing due date depends on your tax classification. Partnership and S-Corporation returns must be filed by March 15th. C-Corporation returns must be filed by April 18th. Check with your individual state’s tax department for the filing deadlines for your state/local tax returns. Keep in mind that even if you file for an extension, you are still required to pay any tax payments due by the original filing due date. Be sure to file on-time! Do not wait until the last minute!
Second, have all your tax paperwork ready to go. Whether you prepare your own tax returns or have a certified Accountant or tax professional prepare them, get all your paperwork together. This includes your Form W-2(s) (if you had multiple employers you should have a 2016 Form W-2 from each employer), 1099-MISC(s) (if you worked as a freelancer or independent contractor and were paid non-employee compensation of $600 or more, you should have one for each company you worked for), 1099-INT(s) (if you earned any interest income on your bank accounts, you will receive a 1099-INT from each financial institution for interest earned in the amount of $10 or more – Note: You are still required to report interest income amounts under $10), 1099-G (if you itemized your taxes and took a deduction for your state & local taxes, you should receive a 1099-G or it may be available for download via your state’s tax department website), receipts for charitable donations (if you plan on taking deductions for qualified charitable donations, be sure to have copies of the qualifying donation receipts which should have been provided to you by the charitable organization) and so forth. Having all your paperwork ready goes a long way towards getting your tax returns prepared and having accurate records & backup for your filing.
Third, use tax preparation software if you are filing your own returns. With all the changes to the tax codes and the probability of making manual errors, tax preparation software can help to minimize manual errors and help you maximize on qualifying deductions. The caveat here is that tax preparation software may not be perfect so make sure you use reputable software and install all the applicable software updates. Carefully review all information. Keep in mind – Garbage In, Garbage Out. If you do not carefully follow the instructions while using the tax preparation software AND do not enter the correct information, your returns will not be accurate resulting in an overstated or understated refund or tax payment. Check your work then double and triple check it!
If your returns are “simple” tax preparation software is a fairly good way to go but you do need to understand what you are doing. If you have more complex returns or don’t have a good understanding of preparing your tax returns, consider having your returns prepared by a certified Accountant or tax professional. While it will cost you some money, it may be better off than filing an incorrect return and paying penalties down the road.
Fourth, e-file your returns and opt for direct deposit. If you use tax preparation software or have your returns prepared by a certified Accountant or tax professional, e-filing will be a must. For anyone who still prepares returns manually and files by paper, e-filing is the recommended method of filing returns and has been for many years so it may be time to make the switch. Once again, check your returns for accuracy & completeness before finalizing and e-filing your returns.
If you are entitled to a refund, direct deposit has been the recommendation for many years as refunds tend to be issued quicker than via traditional paper checks. Direct deposit also reduces the odds of a lost paper check. You will be able to check the status of your tax refund via the IRS website. For state & local tax refunds, check with your individual state’s tax department.
Fifth, after filing your returns, keep copies of the filed returns along with all your paperwork in a safe place. You may need to pull those records out again some day. The IRS states that you should keep copies of your returns for at least three (3) years. If you e-file your returns, be sure to keep copies of the e-file confirmations / transmittal receipts to show the returns were electronically filed (most tax preparation software will include notifications confirming the returns were successfully transmitted/received by the respective tax agencies). Be proactive and monitor to make sure those returns are filed. If your returns are prepared by a certified Accountant or tax professional, they should provide you with similar documentation to confirm the returns were filed.
These are just a few steps that you can take to help the tax season go smoothly. You can visit http://www.irs.gov/getready for more information on how to prepare for the tax season and if you still need help, consult with a certified Accountant or tax professional.