Preparing your tax return can be complicated and overwhelming. However, there are some simple steps you can take to make the process easier.
Double-check your basic personal information
Inaccuracies of the names and Social Security numbers (SSNs) for yourself, spouse and dependent(s) is a common mistake made by taxpayers on individual tax returns. Filing a tax return with incorrect personal details may result in delays in processing your returns and potentially require further identification procedures by the IRS and state tax authorities.
Did you change your name or move to a new address?
If you legally changed your name with the Social Security Administration, make sure it is reflected on your federal and state tax returns. A mismatch may delay the processing of your tax returns. Otherwise, any correspondence and even your tax refund may get mailed to the wrong address.
Is your bank account information correct?
Be sure to check that your bank information, such as your bank account number and routing number, are accurate when submitting your returns. At a minimum, the processing of your refund or payment may be delayed, but you may also be charged interest and late payment penalties if your taxes were not paid timely as a result.
Select the correct filing status
Still in the honeymoon phase? If you were legally married during the year, don’t forget your filing status may change from Single to Married Filing Jointly (or Married Filing Separately). There are other filing statuses that you may not have considered, such as Head of Household or Qualifying Widower, that may yield certain tax benefits.
Report all your income
This is the starting point of individual taxation. By law, gross income is generally defined as “all income from whatever source derived.” There are, of course, exceptions and unique treatments of certain types of income, but the general definition has stood the tests of time. Many times individuals don’t realize they generated income that is subject to tax. Other times a person may be unfamiliar when they receive a new tax form, such as a 1099 or K-1, that includes income to be reported on an individual income tax return. It’s crucial to report your activities from these forms, as the IRS generally receives a copy and can determine if any discrepancies exist from their records compared to filed tax returns. Omitting income from a tax return can result in unpaid taxes subject to interest and various penalties.
You may still benefit from itemizing your deductions
While many taxpayers now claim the increased standard deduction under current tax law, you may still benefit from “itemizing” your deductions. Current tax law imposes limitations on many itemized deductions (most notably state and local taxes). However, under the right circumstances, aggregating your itemized deductions, such as medical expenses, state and local taxes, mortgage interest and charitable contributions (even after the applicable limitations); may exceed the standard deduction and result in tax savings.
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