Filing your own tax return is easier than ever. Follow these five simple steps to avoid scams, overpayment, and potential audits.
The drastic increase in email schemes, in 2016, requires extra vigilance on your part. You may receive communications from tax software companies that are really phishing schemes designed to steal valuable information. Rather than clicking on email links, diligently research tax preparing software before entering any personal information.
Once you find a legitimate company, make sure you don’t pay more than is necessary. Many companies offer free software for both federal and state returns. The IRS offers a free software to help you choose the one that is right for you. Popular offers include the following:
These are sufficient for most simple 1040 returns. If your return needs more advanced software, carefully compare offers to find the best deal.
Make sure you have all the necessary documents before you start your return. This should include the following:
You may qualify for income adjustments and tax credits. Gather all receipts or proof of contributions that may relate to the following:
These deductions are subtracted from your income before tax is assessed, lowering your adjusted gross income. The most common income adjustments include the following:
These credits are applied to the amount of owed taxes, lowering your tax liability. The most common tax credits include the following:
For additional credits visit the . Once you have all your tax documents and applicable receipts you are ready to start your tax return.
The IRS has strict rules for . Dependents are typically either qualifying children or relatives. General rules include the following:
Dependents can only be claimed by one person. In cases of divorce or legal separation, a child can only be claimed by one parent, typically the . If you are filing taxes for the first time, you need to verify that your parent or guardian is not claiming you as a dependent if you seek a personal exemption.
You can use the IRS’ to help you determine whom you may claim as a dependent.
Often filing statuses are straightforward. The are as follows:
You may qualify for more than one status. For instance, if you are married, you have the option to file jointly with your spouse or separately. Note that choosing to file jointly makes both spouses equally accountable for any tax debt and legal liability. If you must choose between two options, pick the one that has the lowest tax liability and greatest savings.
As you prepare your tax return, you will need to choose between a . For the 2017 tax year deductions are as follows:
There are additional deductions if you are 65 or older or blind. They are either $1,250 (Joint or Widow(er)) or $1,550 (Single or Head of household).
Choosing to itemize deductions makes preparing your return more difficult but is worth it if will save you money. The single determining factor is whether or not the itemized deduction is higher than the standard deduction. You can :
Once you have gone through all the steps to complete your tax return, double check your numbers. Computers make errors so make sure everything adds up. Make sure you are maximizing your savings by applying all relevant credits and deductions. Don’t forget to sign your return!
If you are eligible for a refund, you can either have a check mailed to you or have a direct deposit into your bank account. If you owe money, try to right away. If you are unable to pay it in full, you can negotiate a payment plan with the IRS. However, if it beyond what you can pay or you have concerns, you can talk to a and discuss your other options.
Once it is submitted, save a copy of your return and relevant documents (W-2s and receipts). Though your chance of being , it is important to hold on to all relevant documents. Keep your records for at least .
Congratulations, you’re done!
This article by Amber Westover first appeared on and was distributed by the .