Before you know it, tax season will be here again. If you’ve made a couple of mistakes on your tax forms in previous years or you’ve had to file for an extension on more than one occasion, this is the perfect time to right those wrongs. A financial advisor can help you optimize a tax planning strategy for your investments and retirement goals. Let’s break down what you need to do (and avoid) before the April 15 tax filing deadline (extended to May 17 in 2021).
Check out our federal income tax calculator.
Do: Double Check Your Math
Before you file your taxes, it’s a good idea to review your forms and make sure all the numbers add up. The world won’t come to an end if you miscalculate or enter incorrect information. But you will have to make time to submit an amended tax return.
If you’re someone with a tight schedule and a lot of obligations on your plate, you’ll want to do your taxes right the first time around. If you’re unsure about something, you can always reach out to a tax professional or use our income tax calculator to get a sense of what your tax burden will be.
Don’t: Use Last Year’s Numbers
There’s a reason why you’re required to file taxes every year. Things change. Since the previous tax season, you could have gotten married, had a child or taken on a side gig. Bottom line: You don’t want to just use the numbers that you wrote in on your 2013 or 2014 tax return. Doing so could delay your tax refund.
Do: Stay Organized
Your home might be a mess right now, but tax season is a great reason to get organized. You’ll need to report certain details in order to fill out your forms and the process can be quite labor-intensive, particularly if you’re self-employed or you’re a business owner.
To keep your blood pressure from skyrocketing, it’s best to have a system in place to keep track of old tax returns, other tax documents, receipts and records of income. That way, they’re accessible when you need them.
Don’t: Wait Until the Last Minute
April 15th is the filing deadline, so you don’t want to start working on your tax return on, say, April 10th. You might be the kind of person who works well under pressure. By procrastinating, however, you’re more likely to make mistakes and forget something important, like your tax credits.
Related Article: How to File a Tax Extension
Do: Choose the Right Filing Status
According to the IRS, filing status errors are one of the most common mistakes that taxpayers make. It’s a minor detail, but it can have big consequences if your tax bill is higher or lower than it’s supposed to be. If you don’t know which category you fall into, you can consult a tax preparer or use the interactive tax assistant on the IRS website.
Don’t: Forget About Extra Sources of Income
Uncle Sam wants an accurate picture of how much money you have coming in. At this point, handing in your W-2 form is probably second nature. Aside from that, you’ll need to be ready to report all of the earnings that aren’t coming from your day job, such as your capital gains or other miscellaneous income.
Do: Consider Filing Online
There are several benefits that go along with filing your income tax return online. Filing online can save you both time and effort since tax preparation software (like TurboTax or Credit Karma) can run all of the numbers for you. E-filing is also cheaper, more convenient and much safer than sending your tax return through snail mail. You’ll also get your tax refund sooner if you file online.
Don’t: Forget About Deductions
Tax deductions lower the amount of your income that’s subject to taxation. So why wouldn’t you try to round up as many deductions as possible? Once you have a clear sense of what you can deduct at tax time, you can create a plan that reduces your overall tax liability.
Bottom Line
Unless you don’t mind paying penalties and interest on top of your unpaid tax bill, you’ll want to file your returns on time every year. By keeping these dos and don’ts in the back of your mind, you can help your tax season go more smoothly.
Tax Planning Tips
- A financial advisor can help you make smart tax decisions with your money. SmartAsset’s free tool matches you with financial advisors in your area in 5 minutes. If you’re ready to be matched with local advisors who can help you achieve your financial goals, get started now.
- Plan ahead for tax season by calculating how much you’ll owe. SmartAsset offers several tax calculators, including a federal income tax calculator and a property tax calculator.
- Our annual roundup of the best tax filing software can help you get through this tax season as painlessly as possible.
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