Preparing for tax season often is a common cause of procrastination. However, waiting until the last minute to file your taxes can lead to even more stress.
Instead of waiting, take proactive steps to get ready to tackle your taxes. Here are six tips experts say can help us be better prepared for a smooth and dare we say, easy path to filing your tax return.
1. Organize Your Tax Documents and Financial Records
Use last year’s tax return as a road map. Referencing your previous return helps ensure you’ll have the documentation you need to properly prepare your tax return this year.
2. Be Sure Your Name and Address are Up to Date
If you’ve moved or changed your name since the last time you filed, you’ll need to bring the IRS up to speed. Notify the Social Security Administration as soon as possible to avoid potential delays in processing your return. Apply for a new Social Security card by completing Form SS-5, the forms are available online. The new card will reflect your new name. If you’ve moved, the IRS offers several ways to report an address change.
3. Create an IRS Online Tax Account
Setting up an online tax account with the IRS is a great way to obtain your tax documents without having to contact the agency by phone or mail. This feature allows you to log into an account and check payment balances, set up payment arrangements and view prior-year tax returns and reported tax forms. It also allows you to authorize a tax professional to work on your behalf.
4. Pay What You Owe by the Deadline
If you expect to owe money when you file your return, pay as much as you can by the due date. The IRS failure-to-pay penalty is generally charged at 0.5% of the unpaid tax per month.
5. Consider DIY Using Online Tax Software
Depending on the complexity of your return, you may want to consider using online tax software to file the return yourself. If you are a freelancer, operate a small business or are an investor, it’s probably a good idea to seek the assistance of a tax professional like a CPA.
6. When in Doubt, File an Extension
You can request an extension by submitting Form 4868, “Extension to File,” to the IRS on or before the due date. While an extension gives you six additional months to submit your tax return, it doesn’t extend the time to pay your taxes. You’ll still need to pay by the due date to avoid penalties.