Online tax filing has gotten easier and cheaper. Unless you have complicated items to deal with in your tax return or you are new to your own business and need a tax accountant to help you with your accounting, you probably can file your own taxes with the right software. If you are ready to give it a try, avoid these 3 time wasting mistakes:
Mistake #1 – Starting unprepared. Good tax software steps you through the return in a question and answer format. If on every question you have to rummage through your files or stacks of paper, you will lose your train of thought and the process will take much longer.
Instead – Gather the basic information before you start which may include:
- Last years tax return
- Social security numbers of you, your spouse and your children
- Your bank account # and routing # (if you want the IRS to directly deposit your refund or collect any tax owed)
- W-2 forms from your employers
- 1099 forms from your bank and brokerage firm
- Deduction information (mortgage interest, state tax payments, real estate tax receipts, charitable gifts, etc.)
- Business income and expenses if you are self employed
- Cost basis information on any investments that you sold during the year
- Decide if you want to make an IRA or Roth IRA contribution
Mistake #2 – Feeling like you have to finish the process in one sitting.
Instead – Print the return and put it aside for a few hours or until the next day. Then review the forms to see if the amounts look reasonable. Review your tax file to make sure you haven’t forgotten to include something. When you are satisfied that everything checks out, you can sign and mail the return or log back into your account to e-file the return. If you found errors or omissions, it is easy enough to make the corrections.
Mistake #3 – And this is the biggie. Waiting until the last minute! The looming deadline can be a big motivator, but it can also cost you money because you are more likely to make a mistake.
Instead – Start now finding all those forms and your records. Use last year’s return as a guide and begin the paper treasure hunt. If the task is too overwhelming, work for an hour and come back to it the next day. And while you are at it, create a “This Year’s Taxes” file and any time during the year you get mail or have receipts that will apply to that year’s return, toss it in the file. You will be so glad you did next year when it’s time to file.