Monday, April 15th, is just around the corner. That’s the due date for all 2012 individual federal income tax returns. Many put off doing their taxes out of fear, or because of a lack of time, lack of knowledge of tax law, disorganization, or a combination. “It is being disorganized, not knowing where you are financially, and procrastination that can lead to trouble with the IRS” said Ceda Putiyon of CAP Accounting. “They either overlook income or fail to take all their entitled deductions and wind up paying more taxes than required. Waiting until the last minute to file your tax return can cause costly errors.”
Mathematical and other errors usually can be easily avoided by double-checking your math and by double checking to be sure Social Security numbers and financial institution information is correct. And, said Putiyon, be sure to compare last year’s return to this year. Not doing so could mean that you miss income, deductions, exemptions, and/or credits.
“It is of the utmost importance to double-check your work, compare this year with last year,” said Putiyon. And, she added, “When you are unsure, ask questions to a knowledgeable professional or hire a professional.”
Here are a few tips to make next year’s tax season easier:
■ Be organized. Have one central location for all your documents. Invest in an accordion folder or a binder for storing checks, statements, receipts and forms. Mark the year on the outside and make a habit of filing on a regular basis. Once you have developed this habit, preparing your taxes will be much easier than the proverbial “shoe box” method.
■ Be early. Don’t put off filing or finding a tax professional. Remember the saying “the early bird gets the worm”— the early filer has a better experience and gets their refund (if one is due) faster. In addition, leaving yourself more time allows for double checking, comparing this year to last year, and catching possible deductions/credits you might have missed.
■ Be accurate. Double-check your work. Simple addition or subtraction mistakes can cause an incorrect tax return. We all make mistakes, but you don’t want to have to file an amendment if you don’t have to. That could lead to additional costs.
■ Be realistic. Know when to ask for help. With the current tax laws changing rapidly; taxes can be complicated. Be sure you are taking full advantage of all the deductions, credits and deferrals that are available to you. Being self-employed, a student, going through a divorce, or purchasing or selling a property can make filing your taxes more difficult. A professional can help you avoid pitfalls or find tax credits.
■ Be truthful. As tempting as it may be to fudge some numbers, don’t. The long-term pain is not worth the short-term gain.
Whether or not you use a tax professional, educate yourself on available deductions, tax credits and changes in tax law. More information can be found at www.irs.gov or by contacting a tax professional.