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Getting Started on your Tax Return

Joe O'Connor, CPA

Tax season officially started this week. That means the IRS will now process and accept tax returns. For you, that means you can get started on gathering your documents and preparing your tax return. Here are a few tips to help you get ready, and get your tax return done without any problems. Please note, the new tax law will not impact the tax return you are doing this year.

1. Gather your documents

In order to have a smooth tax return filing, it is important to gather and organize all of the documents required to prepare your return. There are documents you need to receive from an outside source such as your employer or bank, and there are other records you maintain yourself such as mileage driven for work. The most common forms required for your income are listed below:

  • W-2 - Reports salary from your employer
  • 1099 - Form to report interest income from your bank, brokerage accounts, self-employment income, or other miscellaneous sources
  • Schedule K-1 - Income and deductions from partnerships
  • Any other form you received related to income, such as unemployment income, social security, or lottery winnings (yes, that happens)

In addition to your income documents, it is just as important to gather supporting documentation for your deductions. Some forms to support deductions are mortgage statements from your bank, property tax bills, confirmation from non-profits for any charitable donations, and tuition or student loan interest statements. In addition to documents you receive, there also are instances where you will need to maintain your own records to take deductions. This is especially important if you are self-employed or have a side gig, such as driving for Uber or renting property through Airbnb. Necessary expenses related to side business income are typically deductible on your tax return, such as mileage driven or supplies. Keeping good records will ensure you receive all the deductions you are entitled to.

2. Prepare your tax return/Hire a professional

Once you have gathered and organized all the necessary documentation, it is time to move forward with preparing your tax return. If you would prefer to do it yourself, there are many on-line and software options that are low cost and user friendly. The IRS has free preparation software as well, but you need to be very familiar with how to prepare a tax return. If you are really ambitious, you can download and print the tax form off of the IRS website, and do it by hand. This is not the most preferred method.

If you have a more complex tax situation, or you just do not want to deal with the work that goes into preparing a tax return yourself, it might be a good idea to hire a tax professional. The benefits of hiring a tax pro include accuracy, gaining tax advice including identifying deductions you are entitled to, and having support in the event the IRS audits your tax return or issues a notice. It also is nice to send over all of your documents, and having your tax return done for you without any worry.

3. File your return

The most efficient way to file your tax return is electronically. It is fast and secure, and if you are expecting a refund you will receive it faster if you e-file. A tax professional should be able to electronically file on your behalf. In addition, most tax preparation software will offer electronic filing as well. The IRS does still allow for paper filing. If you choose this method, you will need to print, sign, and mail your tax return to the applicable IRS address. As you can imagine, paper tax returns are processed slower.

4. Make a payment/Check your refund status

If you have a payment due, you can make the payment on-line via the IRS website at https://www.irs.gov/payments. The IRS accepts major credit and debit cards, and direct withdrawal. You can also mail a check. If you are expecting a refund, the quickest way to get your money is to choose the direct deposit option. Your other option is to receive a check. You can check the status of your refund and when you can expect to receive it at https://www.irs.gov/refunds. Then sit back, relax, and wait for your money!

 

Joe O'Connor