1. Organize, Organize, Organize
The first step to filing your taxes is to gather all the necessary forms. By early February you should receive several important documents:
- W-2 from each place you received a salary from at some point in 2015
- 1099 for any interest earned
- 1098 for mortgage interest paid
While there is not much you can do to get these forms ahead of time, you can start organizing your records from other deductible expenses you have made throughout the year. Create a file for all tax-related documents to have on hand once it's time to file your taxes.
2. Use The Free File Program
Did you know that the Internal Revenue Service (IRS) offers the Free File program every year? This program is available at www.IRS.gov. This program becomes available in mid-January and offers two different options:
- Brand-name software, provided by IRS commercial partners, that is available to individuals and families with incomes of less than $60,000.
- Online fillable forms available to all income levels.
The online fillable forms are electronic versions of the standard IRS paper forms and are great options for individuals who are comfortable filing their own taxes.
3. Deduct, Deduct, Deduct
Overlooking deductions is the equivalent of giving money away. Many people are familiar with certain deductions, such as the child and dependent care credit (a credit that can be claimed if you have paid a provider to care for a child while you either worked or looked for a job), but some people may not realize that there are many other opportunities available. Some examples include:
- Charitable contributions paid through payroll deductions when employees retain pay stubs as proof
- Job search expenses (cost of travel, resume printing, etc)
- Earned income tax credit for lower-income families
Your tax professional will be able to help you determine which tax credits may apply to your situation.
Some tax preparers may offer tax refund loans or other immediate refund programs, advertising that you will be able to get your money much quicker. However, the reality is that you will not actually receive your money much sooner, and you will have to pay for the privilege of having received your refund early. The IRS expects to issue more than 90% of refunds within 3 weeks when filed electronically. If you want to make your refund more efficient, file electronically and request that your refund be delivered via direct deposit. The IRS reports that more than 75% of refund recipients will use this option. (By comparison, paper refunds will take a minimum of 7 weeks for refunds to be issued).
5. Beware Of Scammers
Unfortunately, scam artists and unethical tax preparers come out in full force during tax season. Every individual should be aware that the IRS will never email you to ask for confidential financial information; if you receive such an email, it is a phishing scheme. Additionally, you would be wise to avoid tax preparers who earn commission based on the size of your refund. This commission structure gives preparers an incentive to inaccurately fill out your tax forms, which puts you at risk with the IRS. To protect yourself, always ensure that your tax preparer guarantees to pay any and all penalties that may result from inappropriately prepared forms.
Remember that under the Affordable Care Act, individuals and families will be subject to fines if they did not have health insurance coverage in 2015. These fines are already much higher than they were in 2014 and are increasing every year, so if you are not already insured, be sure to make health insurance a top priority.
If you are not prepared to submit your tax return by April 15th, you may be able to file for an extension. If you complete the necessary forms by April 15th, the IRS will give you six months (until October 15th) to file your tax return. If your extension request is not properly filled out or submitted, however, your request may be denied.
Your tax professional will be able to help you ensure that your taxes are handled properly and efficiently. For all your other financial needs, we hope you'll remember First Bank of the Lake as your financial resource at the Lake of the Ozarks. From checking accounts to savings accounts and personal and business loans at the Lake of the Ozarks, our bank in Osage Beach MO has everything you need.
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Osage Beach, MO 65065