by Robyn McCarthy on Feb 16, 2018
Here in the US, it’s tax season! Unless you’re a CPA (and if you are, thank you for your hard work and sorry for not sorting that shoebox filled with receipts), this fact is unlikely to fill your heart with joy, especially if you’re one of the millions of Americans who does her own taxes.
It’s an annual headache. It’s awful. Did you know that in some other countries, citizens are simply mailed a form that has all their tax data pre-filled? Then they simply check it for errors, make any necessary corrections or additions, and mail it back in. Done and done. Of course, here in the US, we don’t do things that way, because that would be simple and easy, and simple and easy is in direct contradiction to our rough-and-tumble pioneer spirit. Or something like that. But hey, good news: April 15 falls on a Sunday this year, so you have a whole extra day to prepare.
So. We have a tax code the size of a refrigerator. A walk-in refrigerator. It’s written in impenetrable bureaucrat-ese, and it has so many loopholes that even the exceptions to the exceptions have exceptions. So buckle in as we take a look at some important things to know about getting your taxes done right.
Get (More) Organized
Every year you tell yourself you’re going to be better organized next year. It happens. But it’s hard to maintain the discipline in June that will pay off next April. Still, the better a job you’ve done of keeping your tax-related documents organized, the easier a time you’ll have when push comes to shove.
Do Your Homework
Modern tax software is pretty good at grilling you with questions you’ll need to answer to properly complete your tax forms. But the more answers you have at hand when you fire that software up the happier you’ll be. Has your employment situation changed since your last filing? How about income you earned from your side hustle? Did you have any employees, contract or otherwise? If you’re self-employed, did you make any purchases that were a business expense, like a printer or computer? Start big and drill down.
Don’t forget deductions
Are you eligible for deductions? Check this handy summary of 2017 Tax Rates, Standard Deductions, Exemption Amounts, and more. And as insurance agents, we’d be remiss not to point out one potential deduction that shouldn’t be overlooked – non-reimbursed losses from theft or casualty events (fires, floods, storms, etc.)
Watch out for the scammers
There are a lot of bad guys out there trying to separate you from your tax refund – and the scammers get craftier every year. The IRS keeps track of the latest tax fraud schemes – there’s a lot of them! There are a lot of tax agent impersonators, too – remember, the IRS will never contact you on social media or via email. Here’s a guide to know when it really is an IRS agent and when it’s not.
Even the best tax software can’t anticipate the minutiae of your individual work circumstances. Spend some time looking over the IRS help pages to check for details you might have missed. If you work from home, can you write off those comfy footy pajamas as a business expense? (Probably not, sadly.) The best solution is to hire a professional tax accountant – she may save you enough to pay for her services!
Don’t Freak Out
Remember: Form 4868 is your friend! This is the form you’ll use to file for an extension, so BEFORE THAT APRIL 16 DEADLINE, submit this little beauty and feel the stress ebb away. Be aware that this form requires you to make an estimated tax payment, so it isn’t a get-out-of-jail-free card, but it can come in handy if you’re overwhelmed.
If you’re doing taxes for your business (and why are you doing that?! Get an accountant, jeez!) the form you’ll need to file for an extension is either Form 7004 or Form 1138, depending on your circumstances.
Of course, there’s a whole list of caveats, ifs, and buts swirling around any tax question. Your best guide will be a reputable tax accountant. Start looking soon, they’re very, very busy here in the depths of tax season!