As the April 18th tax filing deadline quickly approaches, there are a several important factors to consider while filing your individual income tax return.
- Get organized. The biggest hassle for many taxpayers is gathering the appropriate documentation from the year. Collect any tax-related documents received at the beginning of the year, stockpile old receipts, and look through bank statements or your checkbook. Then group related items to make it easier to sort through documentation.
- Report all income. Be sure to collect and report all income items including any W-2s and Form 1099-MISC. It us up to the taxpayer to report other income such as freelance income, rental income, awards, prizes, and gambling proceeds. Failure to report certain income may result in a number of penalties imposed by the IRS.
- Consider itemizing your deductions. By itemizing your deductions, you can reduce your overall tax liability. Important deductions include medical expenses, state and local taxes, real estate taxes, home mortgage interest, and charitable contributions. It’s easy to remember to include the big donations and taxes paid, but the smaller out-of-pocket charitable costs can add up as well and ultimately reduce taxes owed.
- File Electronically. Take advantage of e-filing your tax return. It is fast, accurate and easy. The IRS can electronically acknowledge the return has been accepted for processing. Refunds are generally issued in half the time it would take to process a paper filed return. Taxpayers can also opt to have their federal tax refund directly deposited into their bank account. Direct deposit combined with e-filing your return is the fastest way to receive a refund.
- Plan ahead. For many taxpayers, once they file their tax return, it becomes out-of-sight, out-of-mind until the following April. There are several things to consider going into the following tax year, such as the number of dependents you plan to claim in the coming year – you may need to update your W-4 exemption information. Other considerations could include marriage and divorce considerations, or significant changes in income.
- Ask for help. It is never a bad idea to ask questions that could potentially reduce your tax liability. Even if the information does not seem pertinent to you, your tax professional may see it otherwise. Use them for their knowledge, and you may end up getting a bigger refund than you were expecting.
There are a seemingly endless number things to keep in mind when filing your taxes, and some tactics are not always immediately obvious. If you are filing your taxes soon, and want to make sure that you’ve considered all of your options, Barnes Dennig wants to help! Call us at 513.241.8313 or click here to contact us. We look forward to speaking with you soon!