Today’s the day! Thanks to a federal holiday, today is the deadline to file your personal tax return unless you file for an extension. If you file an extension, you have until October 15 to file your return. Here are a few tips to make tax filing and preparation easier.
The first thing you should do is assess this filing season. Was it stress free? Did you owe? Maybe you owed a lot. Did you get a big refund? Assess your situation if any of these events occurred.
If you owed a lot and are not sure why, the first place to check is your Form W-4 withholding allowance. If, for example, you are married, filing jointly and have two incomes, you may wish to have both wage earners claiming married and zero if you are in a higher income tax bracket. If you have dependents, this may be different. The best thing to do is grab your last two to three paystubs and head over to the IRS Withholding Calculator and be as specific as possible and run the numbers.
Second, did you receive a large refund? Well, that too can be a red flag. After all, the point is to get as close as possible to paying just what you owe and no more. A large refund may mean that you are over withholding. It would be better to get that money on a weekly or monthly basis if it is from earned income (i.e., your paycheck). There is no need to give Uncle Sam an interest free loan during the year when you can use that money for yourself.
Third, you should have electronic copies of your tax returns. Consider scanning them and creating and saving electronic copies. You can create a password protected file and many professional tax preparers already provide password protected electronic copies. Review this year’s copy and compare it to last year’s copy. There should be some consistency in taxable income, deductions, credits, and tax owed. If not, it’s time to ask why and meet with a tax preparer. Look for a preparer with good training and if possible, a designation such as EA, Enrolled Agent.
Finally, keep your tax returns together in a secure place. Now is the time to create a 2018 folder for next year’s filing season. All things related to your tax return should go into this folder. All receipts from charitable contributions, copies of Forms W-2 and W-4, 1099 forms, student loan interest paid, real estate taxes paid, mortgage interest paid, etc., should be included. Any form you receive that is related to a tax credit, deduction, or income production should be kept in this file. You may not receive some of these forms until early next tax filing season, which would be in 2019.
As an independent Certified Financial Planner™, I can help you prepare for a better tax filing season. Contact me and let’s get started! #talktometuesday #refund #Hireaplanner #income #cash #CFPPro #taxfiling #tax #1040 #w4 #w2