It’s Tax Time, do you know where you 1099s are?
Not many people like doing their taxes, and our tax code
doesn’t always make it as easy as it should be, but the key to reducing your
stress during tax filling season is maintaining good records and knowing where
to find then when you sit down to do your taxes. You should have received your W2’s and 1099s by now. 1099 is the
form your bank and brokerage firms will use to report any income (over $5.00)
they paid to you. This income is reported to the IRS and you are sent a form. (If
you did some work as a subcontractor you may also receive one from someone that
paid you for work you did). They are supposed to be in the mail by January 31st
which means you should have received them by now. If you have not, check first
to see if you signed up for electronic delivery and if so they may be waiting
on line for you. While the payer is responsible
for getting them to you, you are responsible for reporting all income on them
and cannot use the excuse “they never sent me one” as a reason not to declare the
income. This is why it is important to keep good records even if you closed
an account. So if you’re expecting one and did not come, find out what happened
to it.
If you are itemizing deductions make sure you have all of
your receipts and records ready.
Once you gathered all the documentation you are ready to do
your taxes. Unless you have really complicated tax issues it is now pretty easy
to do your taxes using any number of available tax software. Just follow their step
by step instructions. You of course are responsible
for the end result so make sure the tax software you choose is reliable. If
you have not read my
post about Credit Karma, please read it if you are considering their software.
If your income is less than $66,000 you may qualify for free software and e-filing,
check out your options on the IRS website. If you
have to pay for software see if your financial institution offers a discount. I
did my taxes with TaxAct this year. If you click on the word in this post it will take you to the website and you will save 20% if you sign up thought that link. Full disclosure they also say they will pay me $20.00 for anyone I refer through that link.
If you
have a refund coming file as soon as you can. No reason to allow Uncle Sam to hold
your money interest free any longer than you have to. If you want to lend him
money buy a savings bond or a T-Bill. If you are getting a really big refund
that may not be a good as you think and it will be a subject discussed in the
near future.
Once you
have completed the taxes it’s time to start thinking about next year’s taxes. This is
always important but especially this year with the massive changes in the tax
code. Don’t assume your taxes are going down, some people will actually see their
taxes go up. You are at greatest risk if you have lots of dependents or high
itemized deductions. The risk are even greater if you fall into both those buckets.
You need to guesstimate next year’s
taxes and make sure you are having enough withheld. How to do this will be
the subject of another post.
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