With the IRS deadline for April 17, 2012 approaching here are some of the things I believe you should know when you venture into filing the taxes. More on the tips later however I must say that you can reduce your tax burden if you are careful at the start of the year about tax planning.
April is anyway stressful with all the tax filing deadline so I am not going to put into any more stress by saying you should have done stuff in advance. My tips for sure will help you prepare for the last minute helter-skelter and hopefully you would be able to file the taxes easily and safely.
Mistakes to Avoid while filing
- Make sure that your name is the same it appears in the Social Security Card.
- Make sure the SSN number as well as any other numbers are OK.
- Check out the new gain/loss reporting form Schedule D.
- Always e-file as then you can easily say goodbye to the numbers and SSN type errors.
Tips for filing the taxes
Six month extension
Well if you are not sure that you can file the taxes in time then it is better that you file the six month extension. That will help you organize your paperwork and avoid filing incorrect information. Now April 17 is still your date for taxes owed etc but it is the paperwork that you are parking aside for the moment.
Self e-file or a Tax preparer
This is very very important. In most cases you should be able to do that using your W-2 and fill in the information. However, if you have a lot of deductions to claim, incomes to report etc then I would suggest use a tax preparer as they as experts and you are at peace that you have filed correctly.
E-file is free and fast, reliable efficient service. Use it
You still have time to contribute for Retirement
April 17th is the date by which you easily contribute to a tradition or a Roth IRA. You can invest max of $5000 if you are single. That is a good amount to contribute and save a lot of your taxes. Remember it is never too late. Go for it and you will never regret.
Note: Remember if you have converted from traditional IRA to Roth IRA then you could have some taxes to pay for the year 2011.
Organize your tax records
When you sit in front of your computer then you should just be able to do the e-filing in a breeze. Make sure that you have your paper records ready and accessible.
Here are some the records that are needed.
- Pay Stubs
- Tax return from last year
- Charity donation receipts
- 1090 forms
- Car mileage log
Make sure that you have records for taxes filed for the last three years as tax Audit can happen any time. It is better to have a file kept for each year separately
Here are some of the best tax books that you should read to make sure that you have adequate knowledge of taxes and the way you claim tax deductions and credits.
- JK Lasser’s Your Income Tax – Best year
- Ernst & Young Tax Guide for year 2012
- Taxes for Dummies – Easy guide for beginners
John Border created The University of Money after he failed in effective financial planning and was way too deep into credit card debt. He now has paid all his debt using simple and easy ways of financial planning , investing and cash management.