Smart Tips for Tax Preparation

If you’re reading this between Jan. 1 and mid-April, it’s income tax season! These simple tips can help you successfully navigate the ins and outs of tax preparation—either on your own or by partnering with a professional.

Here are some important tips to know about preparing your taxes for filing.

Organize the tax information you’ll need

Give yourself plenty of time to get organized before filing your federal tax return or reaching out to a professional for assistance. Start with these steps:

• Use a tax preparation checklist to make sure you have the necessary documents and information, including Social Security number(s), income statements, standard deduction information, retirement plan contributions and limits and investment gains/losses.
• Save forms, donation receipts and other documents in separate folders.
• Keep track of all relevant tax deadlines, and make sure you’re aware of everything that’s taxable.
• Have last year’s income tax return and tax documents handy for reference.
• Select tax preparation software, or a professional tax preparer if you want personalized assistance.

7 questions to ask yourself when choosing how to prepare taxes

When choosing tax software or a paid tax preparation provider, set yourself up for success by asking yourself the following questions:

1. How much money do I want to spend?
2. Am I filing only a tax Form 1040, or are there other forms I’ll need to file as well?
3. Am I filing in multiple states and needing to consider different state returns or state taxes?
4. Do I have a complex tax situation, such as owning a small business or trading on the stock market frequently?
5. Will I want help if I have questions while completing my tax return?
6. If I want assistance based on my situation (for example, I'm self-employed, own a small business or own certain investments), should I consider working with a certified public accountant (CPA) or other tax pro?
7. Will the tax preparer arrange for someone to accompany me to a meeting if I get audited?

Filing your own tax return forms

Even if you have assistance with tax preparation, you may need to file your taxes yourself. The Internal Revenue Service (IRS) recommends filing your return electronically. Remember to keep a copy of your filed tax return for future reference.

If you’re due a tax refund, you may get the money faster by using IRS Direct Deposit. It typically takes fewer than 21 days to receive your refund when you e-file and use direct deposit compared with 6 weeks when you send the tax return by mail. If you owe money, use Direct Pay to send funds from your checking or savings account. 

3 tax preparer red flags to watch out for

When the tax bill arrives, it’s common for people to hire tax preparers to help with the filing process. However, there are several things to look out for to ensure they’re a qualified professional.

Don’t hire a tax preparer if they:

• promise a tax refund before they have reviewed your tax information
• guarantee an exact refund amount after only looking at your Form W-2
• say their fee will be a fixed percentage of your projected tax refund