How to Make Tax Preparation Easier
Filing taxes can be daunting; a taxpayer with multiple facets to his return has more of a challenge at tax time than someone filing Form 1040-EZ. Owning a home, raising children and/or running a business adds complexity to your tax return. To ease tax-time tension, prepare for the task months in advance. Taxpayers who are proactive in preparation for tax season are better able to manage their tax information throughout the year.
Other People Are Reading
Instructions
-
-
1
Organize a record-keeping system. For example, if you own a home or a business, create separate files for records related to each. Keep receipts in another file and organize them by date and category. Organize pay stubs by date. Recent tax returns -- those from the last two years -- should be filed for easy access and review.
-
2
Update employer tax information. Check your withholdings, exemptions and deductions each year, especially for major events such as the addition or removal of a dependent. This habit ensures that you do not miss tax-savings opportunities because of information that was not up-to-date.
-
-
3
Research the current year’s tax credits to determine if you qualify for them. Use any applicable credits to reduce your taxable income. The Internal Revenue Service lists current tax credits on its website.
-
4
Track major life changes that will have an effect on your tax status or deductions. Having a baby, changing jobs or purchasing a home can have a significant impact on your tax return. Use a tax questionnaire to assess the degree to which major life events will affect your taxes.
-
5
Use a professional tax-preparation service if it suits your situation. Many tax preparers offer a maximum-return guarantee, which can give you peace of mind about how large a refund you will receive or how much you will pay in taxes. These services can review your recent tax returns to ensure that they were prepared correctly. A tax preparer might be the best option for taxpayers with small businesses or complex personal returns.
-
6
Prepare your returns in a consistent manner from year to year. Use the same e-filing method or the same preparation company; if possible, use the same preparer as well. Barring any major changes in the tax code or the forms that you complete, consistency in preparation gives you an idea of what to expect the next time you fill out your tax forms.
-
7
File your taxes early -- do not wait until April, especially if your return is complex. Early filing alleviates some of the rushed anxiety brought on by waiting, which in turn may prevent mistakes from being made. If you use a tax-preparation service, filing early gives you a greater choice of appointment times during the preparer’s busy season.
-
1
References
- Photo Credit Comstock/Comstock/Getty Images
