- Personal Finance
Get Going on Your Tax Return Now
Snow storms or not, April is fast approaching
The winter of 2013/2014 is no doubt the harshest ever in most people’s memory. While February is already half finished, this nation is still withering under the relentless attacks from record-breaking low temperatures, snowfall and ice storms, so it’s no surprise that filing for tax return is not on top of many’s to-do list. But this one of two sure things in a person’s life will show no mercy because of bad weather; and the dreaded deadline in mid-April is indeed fast approaching.
As if to show the government is at work, the IRS never stopping cooking up something new. And this year is no different. Fortunately these days there are plenty of tools and options for everyone, whether you are a do-it-yourselfer or don’t know how to spell “tax”. However you decide to prepare your return, these few pointers might help serve as reminders:
1. The forms are not in the mail. That’s right, you will not find that hefty instruction book, Publication 17, in your mailbox anymore. From 2011 on, the IRS has stopped sending out to tax payers their paper tax packages. The rapidly increasing use of electronic tax filing has all but eliminated the need for paper forms. And in this trying time when everyone is doing belt-tightening, this cost-cutting move makes sense. Besides, imagine how much natural resources will be saved by skipping the papers. So let’s go green! However if you still insist on doing your returns by hand, try your luck at your local IRS offices, post offices and libraries. Or you can download the forms at www.irs.gov .
2. Take advantage of free filing online. Who doesn't like a free lunch? And you can actually get something close to it with Uncle Sam this time around. If your taxes are relatively simple and adjusted gross income is no more than $58,000, there is a Free File program for you at www.irs.gov/freefile . It links you to certain for-profit outlets (e.g. TurboTax) that will let you use a stripped-down version of their software to prepare and electronically file your federal returns at no cost. You may also take advantage of the Free File Fillable Forms on the IRS website, regardless of income, by choosing the appropriate form and fill them out right there and file online. Obviously the free stuff can only do simple calculations and provide basic help for you. For folks with higher income and more complex tax implication, you may want to step up your game and see what ‘s on the market.
3. Use commercially available tax-prep software. Various venders have been selling tax software for many years. Among the ones with the long history are TurboTax and H&R Block At Home (formerly TaxCut). There is also a new kid on block – TaxAct. While TurboTax enjoys the highest profile perhaps due to its relentless advertising campaigns during tax time, all three works virtually the same way: Start with an interview, which collects relevant tax data from a potential filer; appropriate forms will then be chosen and filled out; upon previewed and approved by the filer, the return can be e-filed or printed out for the post office. Certain versions of these softwares allow you to import previous year’s data, even if you had used a competitor’s product. They have proven to be reasonably easy, reliable and cost-efficient. With decent accuracy guaranty and audit assistance, hence peace of mind, no wonder this form of tax filing is gaining popularity steadily over the years.
4. Choose a tax professional wisely. More than half of Americans still pay someone to do their taxes, with somewhat mixed results. One of reasons is the varying levels of training, from board-certified professionals, such as CPA’s to enrolled agents like the seasonal employees at H&R Block. Fees charged is another concern. You might have to pay a CPA upward of $300 for an itemized return while someone on the Craig’s List advertises a cut-rate $99. All factors being considered, look for an experienced professional with clients similar to you in terms of tax and economical situations. Also bear in mind that true professionals such as CPA's and reputable enrolled agents, once hired, usually represent you before the IRS in all matters, including audits, collections and appeals. Avoid tax preparers who base their fees on the amount of your refund, and run if someone asks you to sign a blank form.
5. Get moving now! Remember that whether you do it yourself or go to a professional, you are responsible for all the information on your return, which mean every single piece of document that is relevant. Some of them, such as the W-2 from your employer and 1099 from your savings bank or stockbroker, will be sent to you automatically, while some others, including the receipt for that brand new desk now sitting pretty in your home office or that gigantic tuition bill for your daughter’s med school, are entirely your responsibility to put together. Looking for and getting all the needed documents in order require more time and efforts than you might think, and the filing deadline always approaches faster than most people want. There is no reason to procrastinate, especially when you, like most of us, are expecting to have an added bonus for early filing – a tax refund!
For many, filing returns resembles going to the dentist: it’s not always pleasant and even painful sometimes, but a must-do. However, taking proper measures and giving yourself a head start can indeed make tax preparation a less taxing process.