Tax Preparation For IndividualsPublished:
Things to Know When Preparing Your Taxes
Tax preparation can be daunting for anyone.
Fortunately, there are several ways to make the tax preparation process for an individual tax return go more smoothly.
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Online Tax Preparation
You could look into using an online tax preparation service, some of which provide free e-filing for certain federal tax returns (such as E-file.com). The IRS also has a tax preparation tool called “IRS Free File” that gives individuals access to the government’s tax preparation service, through which you can e-file your return directly to the IRS. However, note that Free File is not available to taxpayers with income over $66,000.
Taxpayers of all income levels are generally welcome to use basic tax preparation service, which presents the necessary tax forms that you can fill-in yourself without tax software. Depending on how complicated your financial situation is (and how well you understand the tax code), you could seek out a professional accountant for tax preparation. A tax accountant will be well-versed in looking for the tax breaks that you are eligible for, as well as making sure that all your tax forms are filled out correctly. Any mistakes or errors could result in a delay of your tax refund, or worse, a tax audit.
Preparing to File Tax Form 1040
Whether you e-file your taxes online, use a professional tax preparer, or simply fill-out the tax forms yourself and mail them in, there are several records you will need to have on-hand to begin the tax preparation process.
First of all, you must know your Social Security Number (SSN). Also have copies of your W-2 tax forms from all employers you worked for during that tax year. You will need documentation for any income you received from an annuity or pension, as well as any income from being part of a partnership or trust. Receipts of income from gambling or lottery winnings should be available from the casino or from whoever paid you the lottery money.
Ask your financial institution for a statement of the income you have received from interest and dividends, and remember that you will also need to report any distributions that were paid to you from a retirement account.
This is all information that will be required for successful tax preparation. Keep in mind that certain tax credits and tax deductions may require additional documentation.
If you want to claim the Child Tax Credit, you will need the Social Security Number of your qualifying child and the Tax ID Number of your child care provider. If you want to claim a tax deduction for business-related travel expenses, you will need to record your mileage and save the receipts from your transactions. Mortgage interest can be tax-deductible as well, and your mortgage lender should provide you with an annual statement of the mortgage interest you’ve paid.
As you can see, collecting the necessary paperwork before you begin the tax preparation process can save you time and money in the end. Click HERE to file your taxes online.
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