With all of the events and festivities of the holiday season, we tend to forget that the tax-filing season is right around the corner. There is still a lot of time left until the April income tax filing deadline, but why wait until the last minute to get your affairs in order? In order for you to receive a speedier refund, it helps to file your return as soon as possible. In order to file earlier in the tax season, you can take the steps below to prepare yourself for the tax filing season.
1. Consider year-end tax decisions that will reduce your taxable income, such as giving to charity.
The IRS encourages both individuals and corporations to make donations to charities by offering deductions for your contributions. However, receipts detailing the items and amounts donated must be saved and included with your tax return. If you have already made charitable donations throughout the year, make sure you find the records.
2. Locate Last Year’s Tax Return
Looking at your last year’s return can provide you with some helpful information.
· Withholding information
· Information about how certain income may have been treated, such as capital gains
TaxSlayer.com’s Premium Edition allows you to compare your prior year return, filed with TaxSlayer, at the click of a button. By comparing your two returns, this feature helps to alert you to a potential mistake or problem with your return.
· TaxSlayer.com also allows you to transfer prior year tax information. By pulling your information forward, it helps to save you time and makes filing even easier because you do not have to find your prior year return.
3. Gather work related receipts
If you purchased an item, such as a uniform or supplies needed for your job, and you were not reimbursed by your employer for the expense, then the item is deductible. Also, if you are self-employed, many items you use to conduct or promote your business may be deductible as well.
4. Find Social Security information for new additions to your family
Be sure to have on hand any social security numbers of any children that you had or have adopted over the last year. You will need this information to receive the child tax credit and file with dependents.
5. Set aside IRA contribution proofs
The primary benefits of contributing to an IRA are the tax deductions and the tax-deferred or tax-free growth on earnings. Generally, any contributions that you or your spouse, if applicable, made to a Traditional IRA qualify as a deduction on your return. Sometimes this deduction may be limited. With that in mind, taxpayers should set aside proofs of this contribution. The preferred examples of proof are the form of a cancelled check or brokerage statements.
· In 2012, taxpayers under 50 years of age are allowed to contribute $5,000 per person to their IRAs.
· Those over 50 years of age may contribute $6,000.
6. Collect your W-2 and 1099s
Keep in mind, you will generally not start receiving your W-2 and 1099 forms until the end of January. It is important that when you do receive these documents that you review them closely.
What to look for on your W-2
· Make sure the withholding amounts are accurate
· Makes sure that the gross wages reported on the W-2 form match what you have actually earned.
If there is a discrepancy, be sure to contact your human resources or payroll department and have them reissue you a corrected W-2.
What to look for on your 1099 statements
· Be sure to find out the cost basis of the securities you have sold, so that when you file your tax return you have all the necessary information at hand.