Preparing to File Your Taxes: A Guide for the Upcoming Tax Season

As the tax season approaches, it's essential to prepare yourself to ensure a smooth and stress-free filing experience. Whether you're a repeat tax filer or filing for the first time, this guide will walk you through the necessary steps to take, tips to keep in mind, and important information to gather.

For First-Time Tax Filers: a step-by-step guide

If you're filing taxes for the first time, don't worry – it's a straightforward process. Here's what you need to know:

Gather Necessary Documents

• W-2 Forms: Collect your W-2 forms from your employer(s), which show your income and taxes withheld.
• Identification: Gather your identification documents, including your Social Security number, driver's license, and birth certificate.
• Bank Account Information: Have your bank account information ready to receive your refund via direct deposit.
• Previous Year's Tax Return: If you have it, your previous year's tax return can be helpful for reference.

Choose a Filing Status

• Single: If you're not married and don't have dependents, you'll likely file as single.
• Married Filing Jointly: If you're married, you can file jointly with your spouse.
• Married Filing Separately: If you're married but prefer to file separately, this is an option.
• Head of Household: If you're single with dependents, you may qualify for head of household status.
• Qualifying Widow(er) with Dependent Child: If your spouse passed away and you have a dependent child, you may qualify for this status.

Consider Filing for Free

• IRS Free File: If your income is below $73,000, you may be eligible for free tax filing through the IRS Free File program.
• Tax Preparation Software: Many tax preparation software providers offer free filing options for simple returns.
• Volunteer Income Tax Assistance (VITA): If you qualify, you can get free tax help through the VITA program, which assists low-to-moderate income individuals, people with disabilities, and limited English-speaking taxpayers.

For Repeat Tax Filers: Refresh and refine your strategy

If you've filed taxes before, you're likely familiar with the process. However, it's still crucial to review and update your information to avoid any mistakes or missed opportunities.

Gather Necessary Documents

• W-2 Forms: Collect your W-2 forms from your employer(s), which show your income and taxes withheld.
• 1099 Forms: If you're self-employed or have investments, gather your 1099 forms, which report income from freelance work, interest, dividends, and capital gains.
• Receipts and Records: Collect receipts for charitable donations, medical expenses, mortgage interest, and any other deductions you plan to claim.
• Form 1098: If you paid mortgage interest, your lender will provide this form.
• Form 1095-A: If you received health insurance through the Marketplace, you'll need this form to report your health coverage.

Review and Update Your Information

• Check Your Filing Status: Ensure your filing status is accurate, as it may have changed since last year (e.g., single, married, head of household).
• Update Your Dependents: If you have children or other dependents, ensure their information is up to date, including their Social Security numbers and birthdays.
• Verify Your Identity: Make sure your name, address, and Social Security number are accurate to avoid any delays or issues.
• Review Your Income: Double-check all sources of income, including wages, freelance work, investments, and any other earnings.

Take Advantage of Tax Credits and Deductions

• Earned Income Tax Credit (EITC): If you're eligible, claim the EITC, which can provide a significant refund.
• Child Tax Credit: If you have children under 17, claim the Child Tax Credit, which can provide up to $2,000 per child.
• Home Office Deduction: If you work from home, consider claiming the home office deduction, which can help reduce your taxable income. Check out this article to learn more tax deductions and tax breaks you may qualify for: 22 Popular Tax Deductions and Tax Breaks - NerdWallet.
• Education Credits: If you or your dependents are pursuing higher education, you may qualify for the American Opportunity Credit or the Lifetime Learning Credit.
• Retirement Contributions: Contributions to retirement accounts like IRAs and 401(k)s may be deductible, reducing your taxable income.

Additional Tips for a Stress-Free Tax Season

• Create a Tax Folder: Designate a folder or digital space to store all your tax-related documents and receipts.
• Set Reminders: Mark your calendar with important tax deadlines, such as January 31st for W-2 forms and April 15th for filing.
• Stay Organized: Keep track of your deductions and credits throughout the year to avoid last-minute scrambles. Keep copies of filed returns and all supporting documents just in case the IRS requires any further actions.
• Don't Wait Until the Last Minute: File as early as possible to avoid delays and ensure prompt processing of your refund.
• Consult a Tax Professional: If your tax situation is complex, consider consulting a tax professional to ensure you're taking advantage of all available deductions and credits.

Common Tax Filing Mistakes to Avoid

• Incorrect Social Security Numbers: Double-check that all Social Security numbers are correct.
• Misspelled Names: Ensure that names match exactly as they appear on Social Security cards.
• Filing Status Errors: Choose the correct filing status to avoid issues.
• Math Errors: Use tax software or a professional to avoid calculation mistakes.
• Missing Signatures: Don't forget to sign your return if filing by paper.

Don't Let This Year’s Taxes be Taxing

By following these tips and guidelines, you'll be well-prepared to tackle tax season with confidence, whether you're a seasoned pro or filing for the first time. Happy filing!