The way people sometimes talk about tax return preparation, you’d think filing your tax return is the root canal of personal finance. If this is your first time filing, you may be dreading the experience.
You may be in for a surprise.
Preparing a tax return doesn’t have to be difficult. In fact, as a first-time filer, you may be able to file your return with far less trouble than you think.
Follow these tips to make your first income tax filing experience a positive one.
1. Gather your information first
If you don’t already have a file or box for tax information, start one. It’s important to have it handy before the tax-related documents show up in your mailbox, so you can toss them in as they arrive.
If you don’t have a small business or other tax issues, you may not need anything to prepare your return other than your Forms W-2 and 1099, and other tax forms you may receive.
It’s much easier and faster to prepare your return if you have all your information in one place before you start.
2. Get organized
Sort your tax documents by type. For example, group your W-2 forms together, and group your interest and dividend income statements together.
Work from a checklist of tax information so you can check items off as you go. Save your notes so you can remember how you calculated the information on your return.
3. Start early
You’ll have far less stress preparing your return when you give yourself plenty of time.
If you need more information, you have time to get it. You’ll also have more time to review your return and make sure you’re not missing something.
Plus, if you have a tax refund coming, you might as well get it sooner than later.
Remember that you may receive tax-related information in the mail through the first week or two of February since employers have until Jan. 31 to mail Form W-2s to employees.
Be sure to file by April 15 in order to avoid late filing penalties and interest if you owe taxes.
If you can’t file your federal return by April 15, file for an automatic 6-month filing extension. You can prepare, print and e-file Form 4868 for free with TaxACT, then finish and file by October 15, the extension filing deadline.
4. Rely on experts
You don’t have to be an expert to prepare your return with confidence, even the first time you file.
By using TaxACT to prepare your taxes, you take advantage of our CPAs’ and Enrolled Agents’ expertise.
The Step-by-Step interview is designed to help make sure you meet your obligations to the IRS and get all the tax benefits for which you qualify.
The experts at TaxACT have also created tools on the Review main tab to make sure your return is accurate and you’ve maximized your refund.
5. Read your return
With TaxACT doing the heavy lifting on your tax return, it’s tempting to just sign on the line and send it in. That’s a mistake.
For one thing, understanding your tax return helps you plan better for the current tax year, and beyond.
You should know which deductions and credits helped lower your taxes, and how tax items such as stock sales affect your tax bill.
In addition, there’s no substitute for reading your return to see if there is anything that doesn’t look quite right. Make sure you have the exemptions for yourself, your spouse, and your kids.
Double-check spelling of names, social security numbers, and bank routing and account numbers.
How old were you when you got your first real paycheck?