The “on your own – by hand” method should be avoided. There are many options on the IRS website (www.irs.gov) for free online assistance and even some in-person sites for lower income taxpayers.
Commercial tax software has grown incredibly over the last few years. TurboTax, TaxAct, 1040.com are a few affordable options you can find by doing a Google search online.
Finally, you can hire a tax professional. When you first start your working career, your income and finances might be simple. But as you progress through life, they can become complicated. Children, home, work, investments, business and rental property all have special tax credits and deductions that change every year. Just when you begin to understand the tax law, Congress changes it again.
No matter what you decide, preparation is the key to accurate tax preparation. If you’re not sure of what documents you need, discuss it with a tax preparer. As you start receiving your documents in the mail (usually around the end of January), put them in a tax folder to stay organized.
If employed, you’ll need to include your W-2. If you received income from interest, dividends, pensions, self-employment, government payments, or the sale of property or stock, you’ll receive a Form 1099. Bring the actual statements to your appointment. Remember that not all forms will look alike; be sure to check the bottom of year-end statements that might be substitute 1099s. Also, include Schedule K-1s you receive from a partnership, an S corporation, or estate. If you had any income not reported on the forms listed above, make a note for your tax preparer to include it.
For many taxpayers, it helps to itemize deductions. Home mortgage interest, property taxes, vehicle license fees, medical expenses, charitable contributions, plus work and investment related expenses could all be deductible.
Many credits are also available to filers, including child tax credit, child care credit, earned income tax credit, saver’s credit, education credits – these are just a few.
This general information for taxpayers isn’t all-inclusive. Each tax situation may be different, so don’t rely on this information as your sole source of authority. Seek professional advice for all tax situations. Tax professionals – experts who keep current on tax law changes – can save you time and offer insight on how to use the tax breaks available to you.
Cherry Comstock is an enrolled agent at Jet Tax, which has been providing tax expertise in Antioch since 1979. For more information, e-mail firstname.lastname@example.org, call 925-778-0281 or visit www.jettax.org.