We have a brand new year here so let’s start talking about what to do to prepare for the upcoming tax season to make life a little bit easier. The first thing to do is get out last year’s tax return and take a look at it. Usually, taxpayers don’t change much from year to year and the same kinds of expenses that you incurred last year are probably similar.
Next, start organizing your expense receipts by placing different receipts in an envelope by category of expense, i.e. mortgage interest, real estate taxes, charitable contributions, W-2s, interest income, dividend income, and so on. Putting your receipts in envelopes by category will make your life a lot easier come tax time.
You may need copies of your filed tax returns for many reasons. For example, they can help you prepare future tax returns. You’ll need them if you have to amend a prior year tax return. You often need them when you apply for a loan to buy a home or to start a business. You may need them if you apply for student aid. If you can’t find your copies, you can request a copy of previous tax returns from the IRS. There is a fee the IRS charges for this service, check the IRS website www.irs.gov or contact your tax professional.
Here’s how to get your federal tax return information from the IRS:
– To request copies of your transcripts, go to www.IRS.gov and use the Get Transcript tool.
– To order by phone, call 800-908-9946 and follow the prompts. You can also request your transcript using your smartphone with the IRS2Go mobile phone app.
– To request an individual tax return transcript by mail or fax, complete Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses and individuals who need a tax account transcript should use Form 4506-T, Request for Transcript of Tax Return.
After you have copies of last year’s return or transcript, contact your accountant or tax preparer as soon as possible and schedule an appointment. Most accountants pre-schedule their appointments and send letters out the first or second week of January. If you wait until the last minute (late March or early April), you will usually pay more to have your tax return prepared because the tax preparers put a premium on the stress taxpayers place on them, waiting until the last minute.
Finally, make sure that if you have changed your name or marital status, let the Social Security Administration know about the change. Because, if the name does not agree with the Social Security number both at the IRS and at the SSA, the deduction for your personal exemption will be delayed, if not disallowed. This can cost a great deal of tax. The average taxpayer will lose about $1,000 in tax savings for each person that does not have a matching name and social security number. This also includes your children.
Here are some points to remember:
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