According to the Internal Revenue Service (IRS), more than 80 million taxpayers use paid professionals to complete and file tax returns. If you are one of them, it is important to clean up your receipts, forms, and other documents well before tax hours.
Your author may get information directly from you or ask you to fill out a questionnaire. In any case, a little preparation in advance will help you complete the process quickly and easily.
Even if you pay your own taxes, the following steps can help you organize.
- First, collect all annual tax documents you receive, recording your taxable income and deductible expenses. Most will arrive by the end of January.
- If you want to itemize your deductions, collect all receipts and organize them by category.
- Note: If you get a standard deduction, don’t worry about your receipt!
- For reference, I will dig up a copy of last year’s tax.
- Your tax expert or your tax software has all the tax forms you need. Alternatively, you can download it from IRS.gov.
Due to Hurricane Aida, some residents and businesses in Louisiana, Mississippi, New York, and New Jersey are allowed to extend the deadline for filing and paying to the IRS. Most are related to future due dates for quarterly submissions and payments. For more information, go to the IRS Tax Exemption Page and click 2021.
Please select a tax returner
If you don’t have a tax preparer yet, it’s a good idea to ask a friend or adviser (such as a lawyer you know) for a referral. Make sure that the person you choose has an Author Taxpayer Number (PTIN) that indicates that you are allowed to complete a federal income tax return.
Depending on the complexity of your return, you will also need to inquire about fees. Avoid using a company that receives a portion of the refund. The IRS website has tips for choosing an author and a link to the author’s IRS directory, which you can search by credentials and location.
Schedule an appointment
The sooner you meet with the creator, the sooner you should be able to complete your return (even if you decide to apply for an extension). If you anticipate a refund, you will receive it as soon as possible.
If it takes too long to schedule an appointment with a taxpayer, it may not happen by the deadline and you will miss the opportunity to lower your tax, such as making a deductible donation to your IRA or health savings account. There is a possibility.
By the end of January, you should have received all the various tax documents you need, not only from your employer, but also from banks, brokerage firms, and others with whom you do business. For each form, make sure the information matches your records.
These are some of the most common formats:
- If you have a job, form W-2.
- Various 1099 forms that report other income received, such as dividends (Form 1099-DIV), interest (Form 1099-INT), and non-employee compensation paid to independent contractors (Form 1099-MISC). Brokers do not have to mail Form 1099-B, which reports the profit and loss of securities transactions, until mid-February, so it may arrive a little later.
- Form 1098, report interest on the mortgage you paid.
- Form W-2G if you have a particular gambling prize.
Round up the receipt
Which receipt you need to provide depends on whether you want to itemize the deduction item or request a standard deduction. We recommend that you choose to generate a larger deduction, but the only way to know for sure is to sum up the itemized deductions and compare them to the standard deductions.
For the 2021 tax year, the standard deduction for a single taxpayer is $ 12,550 and for a jointly filed couple is $ 25,100.
In particular, look for receipts for medical, property taxes, and investment-related expenses that are not covered by insurance or reimbursed by other health plans (such as flexible spending accounts and health savings accounts).
All of these are subject to restrictions, but if they are good enough, they may be worth itemizing.
If you itemize your deductions, you should also collect the backups you have for charitable donations. For example, donations of $ 250 or more require a gift amount and written approval from a charity that indicates that you have not received anything (perhaps a token item) in return. If you do not have such approval, please contact the charity to request it. For more information on charitable deductions, see IRS Publication 1771.
If you have business income and expenses to report on Schedule C, you need to share your books and records (for example, QuickBooks or any other accounting system you use, expense receipts, related bank and credit card statements). ..
The better your records are organized, the less time it takes authors to process taxes and the lower your service charges.
List personal information
You probably know your Social Security number, but do you know the Social Security number of each dependent you claim? It’s a good idea to write them down, along with any other information that the tax authorities may need.
For example, if you own a villa or rental property, make a note of their address. If you have sold your property in the last year, make a note of the date of purchase and sale, the amount you originally paid, and the amount you received from the sale.
Decide if you want to apply for an extension
If you need more time to complete all these tasks, you can request an extension until October 15th to file your tax return. However, to avoid penalties, you must estimate the amount of tax to be paid and pay that amount by the normal April 15 deadline.
Plan a refund in advance
If you anticipate a tax refund, you have several options on how to handle it.
- Part or all of the refund can be applied to next year’s tax. Usually, if you pay an estimated tax throughout the year, it helps cover the first quarter installments.
- The government can send you a check or deposit a refund directly into your check or savings account.
- You can donate some or all of your refunds to a specific type of account (IRA, Health Savings Account, Education Savings Account) or buy US Savings Bonds through Treasury Direct.
You can also fill out Form 8888 to split your refund into direct deposit options.
You need to let the tax filer know what you want to do so that you can fill out your tax return.
Find a copy of last year’s return
If you use the same author that you used last year, they may have your previous information. If you use a new creator, last year’s returns will serve as a reminder to the creator and you about some items you don’t want to overlook. Here are two examples:
- Interest and dividends. Last year’s returns should indicate which bank, trustee, or other financial institution sent you the 1099 form. Use that list to verify that you have received 1099 from them again this year (unless you close those accounts or sell your investment in the meantime).
- Charity deduction. If you give a small gift, you may not have received approval from your organization, but you can deduct these donations as long as your check or other evidence has been cancelled. See the list of organizations that donated last year to see if you gave a similar gift this year.
Whether you’re paying taxes yourself or hiring someone to handle it, organizing your records in advance can save you time and money if you’re a paid creator. The sooner you start, the smoother it should be and you can delay the process for another year.