It's that time of year again... tax time.
At Members Cooperative Credit Union we want to help you achieve financial success during tax season, so we've put together ten general tax tips to help you prepare.
1. Get organized
If you don’t already have all your tax related information together in one place, start gathering that information now. Information that’s missing at the last minute can take up extra time and be costly. A great resource to make sure you have all items needed for taxes, is the Tax Form Checklist on the IRS website.
2. Decide how you will file
Will you file taxes on your own, utilize tax preparation software, or have a tax preparer submit your taxes? Once you decide how you will file your taxes, decide whether you’ll file electronically or submit by mail. Many experts recommend filing taxes electronically for accuracy and faster funds.
3. Research options
Whether you decide to utilize a tax preparation software or hire a tax preparer, do your research and choose your preparer wisely. Ultimately the taxpayer is responsible for all the information on their income tax return no matter who prepares the return.
4. File early
You can file taxes as soon as you have all your information and documents need to prepare it. The earlier you file, the sooner you’ll get your refund, or in some cases know how much you will need to save if you owe.
5. Don’t guess
If you are filing taxes yourself and are uncertain of an answer or how to proceed when filing taxes, don’t guess or make up numbers. These things will come back to haunt you if there are any errors. So when in doubt, look it up on the IRS website or contact a CPA. It’s okay to reach out for help.
6. Mind your deadlines
This year’s tax deadline is Wednesday, April 15th. This doesn’t mean you should procrastinate and then panic as you get closer to the deadline. Rather, mind your deadlines and give yourself plenty of time. If you are going to be late, file an extension to avoid any fines.
7. Check for errors
If you make a mistake on your tax return, it usually takes the IRS longer to process it. Therefore, check for spelling errors, math mistakes, missing information, etc.
8. Start Saving
Whether you owe or are expecting a refund it’s always best to be saving. Sometimes tax refund delays are expected and you don’t want to be shorthanded financially when you’d normally expect to receive a nice refund check. Therefore, try to set aside a small portion of your income now so you’ll be prepared to handle any bills or expenses while waiting for your tax refund or when payments are due. Auto transfer is a great way to save by automatically transferring designated funds to a savings account.
9. Create reminders
According to the IRS, generally an individual should make estimated tax payments for the current tax year if both of the following apply:
- You expect to owe at least $1,000 in tax for the current tax year after subtracting your withholding and refundable credits.
- You expect your withholding and refundable credits to be less than the smaller of:
- 90% of the tax to be shown on your current year’s tax return, or
- 100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
If this is you, create reminders to pay your quarterly tax payments on time. Failure to make estimated quarterly tax payments will likely result in penalties for both individuals and businesses.
10. Use your return wisely
If you’re expecting a tax refund this year, don’t let your refund burn a hole in your pocket. Instead, give your refund money purpose. Whether it’s putting a portion of your refund toward an emergency fund, paying off high-interest debt, or spending it on something you need, prioritize your financial needs over your desires.
“You may delay, but time will not.” – Benjamin Franklin
This is not tax advice and should not be construed as such. Please seek professional tax services for more information and advice that will apply to your specific tax situation.
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