If you're like most Americans, you put off your personal tax returns as long as possible. But filing your taxes doesn't have to be a chore if you plan ahead and follow these simple tips.
Before starting your tax return, carefully compile required information such as your personal data, employment and income records, homeowner or renter information, financial assets and liabilities documents, and expense records.
Your tax refund will be in the mail much sooner if you avoid common errors like incorrect or missing social security numbers, mathematical miscalculations, checking inappropriate exemption boxes, and not having W–2 forms from all of your employers. See a checklist of common tax return errors.
If you owe money to Uncle Sam, be sure to include a check or money order with your return. Write your social security number, tax form number, and tax year on either form of payment.
Taxes can be very confusing; if you don't understand a certain tax code or term clarify the definition. Be sure to check out H&R Block's tax definitions, or talk to your tax advisor.
Remember that events like marriage, divorce, retirement, and buying a home are likely to affect your tax return. Account for these and other events when preparing your taxes. Also try to stay up with the tax laws, which may have changed since the last time you filed a return.
If you feel you're paying more taxes than you should, consider consulting a tax professional who can tell you whether or not you're taking advantage of all of the deductions available to you. Maybe you can deduct the interest you're paying on the loan you took out for your new RV camper, or perhaps your childcare expenses are deductible to a certain annual limit.
Under current laws, contributing to a 401(k) lowers your taxable income, thereby reducing what you owe to the government. Better still, all–earnings on your 401(k) investments are tax–deferred until you begin making withdrawals.
If you have an unresolved tax issue, the IRS has a Taxpayer Advocate Service specifically established to settle tax problems fairly, protect taxpayers' rights, and reduce the tax burden. Each state has advocates that report directly to the national program.
Sounds too simple, but it's one of the most common mistakes people make.