9 MUST READ Tax Preparation Tips
The tax filing deadline is right around the corner. Tax preparation mistakes may be costly. Whether you hire a professional tax service, use software, file online or via mail, these tips are designed to help you make the right decisions.
1. Procrastination Costs Money – Many individuals put off filing their taxes until the last minute. The cost of some tax preparation services may increase as filing deadlines approach. Disorganized late filers may pay late fees, miss out on key deductions or make mistakes.
2. Extensions – The IRS allows a six-month filing extension until October 15th. You must file Form 4868 before the April 15th deadline to request an extension. If you owe money, you will be subject to late fees if the full amount is not paid by April 15th. The Canadian Revenue Agency does not allow for late filing; however, if you cannot make your full payment you can avoid late-filing penalties if you file your return before the April 30th deadline.
3. Documents – If you do not have adequate documentation to prove your deductions are legitimate you could end up in hot water. Do not claim anything you cannot back up with documentation. Save copies of your return as well as all of the receipts and other documents you used to prepare your taxes. Make sure the documents are easily accessible should you need them in the event of an audit.
4. Select Professional Preparers Carefully – Professional tax preparation can be invaluable to businesses and individuals with complex personal finances. If you decide to utilize a professional tax preparer find someone you can trust and always make sure they sign the return. Click here to read Ten Tips to Help You Choose a Tax Preparer.
5. Online Filing – Online tax preparation and filing is quickly growing in popularity. You may be eligible for free online filing if you meet certain income requirements (learn more U.S. and Canada).
6. Direct Deposit – The IRS and Canadian Revenue Agency (CRA) offer direct deposit for refund payments. The earlier you file the faster you can get your refund via direct deposit.
7. Security – Whether you file online or use a professional you must keep your personal information safe. Tax returns are a goldmine for identity thieves. Never store sensitive information on public computers or transmit financial information through unsecured Wi-Fi. Also, keep paper copies of your return in a safe location.
8. Avoid Scams – Tax scams can come in all shapes and sizes. If you have any questions or feel you may be the victim of a scam call your LegalShield provider law firm. Visit www.irs.gov to read the Dirty Dozen Tax Scams for 2014.
9. Check Your Work – No matter how you prepare your tax filing you should always double-check the work. Compare your current return to last year’s. Unless you have experienced major financial changes your refund or the amount you owe should be similar to the prior year.