Tax Form PreparationPublished:
There are many different ways to prepare your income tax return. Whether you hire a professional or do it yourself, tax preparation can be relatively easy and stress-free if you make an effort to understand the process and your options.
Gather the appropriate documents. Preparing a tax return is much less stressful when you are organized and have all the proper paperwork laid out in front of you. In general, this includes income statements (W-2 and 1099 tax forms) as well as receipts for tax deductions and contributions.
Decide which filing method is best for you. You typically have 3 tax filing options: paper filing, tax preparation software, or hiring a professional.
- Paper Filing ? Even in today’s day and age of digital technology, many people still feel more secure preparing taxes with good old pen and paper. With paper filing, you are in charge of every detail from start to finish ‘ but there is no immediate tax help available.
- Tax Preparation Software ? Tax preparation software is becoming more and more popular for many reasons. Most tax preparation programs will be able to answer any questions you may have. Additionally, much of the software is built to help you take advantage of as many tax deductions and tax credits as possible.
- Tax Professional ? When you hire a professional to prepare your federal income tax return, you are generally cutting out all of the ‘guesswork.’ You can be confident that your return is accurate and that you are saving as much money as possible. The downside to this is that you will pass the control to the tax professional, and of course, you have to pay for this tax preparation service.
No matter what option you choose to prepare your taxes, one thing remains the same: you need to be organized and have the proper documents on hand.
Traditional Mail or Online Filing? Those who are filing a paper tax return will need to mail it to the IRS upon completion. On the other hand, if you are using tax preparation software or filing through a tax professional, electronic filing may be a better option. Tax returns that are submitted electronically are often processed faster, which means a faster tax refund for the taxpayer.
Tax Preparation Checklist
Before you prepare your tax return you should have a tax preparation checklist to help you get organized. Along with this, your tax preparation checklist should also get you in the right frame of mind. Once you are organized and ready to move forward, you will find that everything begins to fall into place.
What is the overall goal of a tax preparation checklist? Simply put, it will help you get everything together before you begin to file your tax return or show up for your appointment with a tax professional. As you move down the checklist, you will find items you may have missed as well as things that were accounted for in the past.
Listed below are some of the details that should be included on your tax preparation checklist.
Tax Preparation for Personal Information
The IRS needs to know who is filing the tax return, as well as how many people are covered on it. To make this easy, they require:
- Your Social Security number
- Your spouse’s Social Security number (if married)
- Social Security numbers for any dependents
Tax Preparation for Income Information
The following documents will help you prepare all the income information that you need to file a federal tax return:
- W-2 Forms from all employers you (and your spouse, if filing a joint return) worked for during the past tax year.
- 1099 Forms if you (or your spouse) completed contract work and earned more than $600.
- Investment income information (including: interest income, dividend income, proceeds from the sale of bonds or stocks, and income from foreign investments).
- Income from local and state tax refunds from the prior year.
- Business income (accounting records for any business that you own)
- Unemployment income
- Rental property income
- Social Security benefits
- Miscellaneous income (including: jury duty, lottery and gambling winnings, Form 1099-MISC for prizes and awards, and Form 1099-MSA for distributions from medical savings accounts)
Tax Preparation for Income Adjustments
The following adjustments can help reduce how much you owe in taxes, and in turn, increase your chance of receiving a tax refund.
- Homebuyer tax credit
- Green energy credits
- IRA contributions
- Mortgage interest
- Student loan interest
- Medical Savings Account (MSA) contributions
- Self-employed health insurance
- Moving expenses
Tax Preparation for Credits and Deductions
There are many tax credits and tax deductions for various expenses, which are designed to help lower the amount of tax that an individual has to pay.
- Education costs
- Childcare costs
- Adoption costs
- Charitable contributions/donations
- Casualty and theft losses
- Qualified business expenses
- Medical expenses
- Job and moving expenses
Tax Preparation for Direct Deposit
Are you interested in having your tax refund directly deposited into your bank account? If so, you will need to provide two things:
- Your bank account number
- The bank’s routing number
This tax preparation checklist should help you get organized before filing your next income tax return.
Tax Preparation Options
If you have specific questions regarding your situation or the tax code in general, this is the place to turn. You can use this website to find answers at any time during the year. Of course, traffic increases in the first few months of the year when the majority of people are preparing their income tax returns. You can also download nearly any tax form from the IRS website.
Turn to a Professional
There are many tax franchises, as well as individual certified public accountants (CPAs), that can help you with everything from basic financial questions to tax preparation. This is one resource that you may want to rely on if you feel that you need outside assistance.
Over the past few years, more and more people have begun to consider software as a top notch tax preparation resource. In addition to the help that you can receive while filing your return, many software programs feature tax preparation handbooks and other resources that focus on every detail ? including how to file your tax return, corporate and business taxes, finding tax deductions, and much more.
Tax Assistance Programs
For those who are eligible, the IRS offers Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE). Through these programs, many tax preparation resources are made available, including tax professionals who can help with the tax filing process as well as trained volunteers who are qualified to answer a variety of questions.
Click HERE to file your tax return online.