Thursday, January 12, 2017

Top 5 tips for doing your own taxes

With the 2017 tax season a few short weeks away, now is the time to start thinking about your taxes, especially if you are doing your return by yourself. Whether you are a seasoned filer or a first timer, keeping a few tips in mind could help you increase the size of your refund (or minimize the amount you owe) and win the season like never before! Here are five tips to keep in mind while you prepare:


1. Find out if you need to file before starting to prepare a return.

Several factors affect whether you should file, including how much you earned, the source of your income, filing status and your age. You should file a federal income tax return if your gross income (generally, your income before deductions and exemptions) is above the threshold for your age and filing status. The Internal Revenue Service (IRS) online Interactive Tax Assistant is a tool that can help you figure this out. It asks basic questions about your filing status, dependent status, gross income and whether you had federal income tax withheld. At the end, you will know whether you are required to file.


2. So you found out you have to file. Make the process go more smoothly by reviewing your 2015 returns.

Since some of the information on your 2015 tax return may be relevant for 2016, having this information handy will help speed up the process. Reviewing your old return will also remind you of any major life changes this year that you need to account for like getting married, having a child or going to school. If this isn’t your first time filing online, tax preparation software’s including H&R Block’s online products allow you to easily import last year’s tax return from any other tax preparation service or provider.


3. If you have health insurance, gather your tax documents.

Filers who have coverage from the Affordable Care Act marketplace will receive the “Health Insurance Marketplace 1095-A” form. You will need this document to accurately complete your tax return. If you have coverage through your employer, the government or another source, you will receive either a Form 1095-B or 1095. If you’re not sure whether you were covered for the entire year, these forms will help you accurately complete your tax return.


4. Compare standard and itemized deductions to see which works best for your situation.

Nearly every tax filer can claim a standard deduction which reduces their taxable income and taxes owed. But depending on your situation, you might get an even bigger deduction if you choose to itemize your deductions instead, which means deducting specific qualifying expenses including charitable donations, mortgage interest payments and state and local income or sales tax.


5. Make sure your entries are correct before submitting to avoid mistakes.


It is important to verify your entries before submitting your taxes, but almost any kind of error is fixable. You may be able to file an amended return to correct errors and go back three years to claim an additional refund if you missed a credit or deduction. Most individual tax returns can be amended by completing a Form 1040X. This form amends a previously filed Form 1040, Form 1040A or 1040EZ Forms.