File Your Taxes Like a Pro
Make Filing Your Taxes Easy
Another fiscal year has come and gone, which can only mean one thing – it’s tax season! More and more Americans and businesses are filing their own taxes, despite the fact that the tax code continues to grow and become more complex. Whether this is your first time self-filing or your tenth year in a row, it can be extremely helpful to implement certain tips and strategies to help you file your taxes like a pro.
Step 1: Gather Your Documents
There are several forms and documents needed when preparing your tax returns. Individuals will certainly need a copy of last year’s tax return, their W-2 forms, their banking account number, their bank routing number, mortgage payment stubs, home closing documents, receipts for itemized deductions, such as charitable donations and more, as well as their insurance forms, which could be a 1095-A if they obtained their insurance through the Affordable Care Act Marketplace or 1095-B or 1095-C if they are enrolled through Medicare, their employer, or another third party source.
Business owners will need some of the above information, as well. In addition, they will need to gather all business records and will need a good record of every transaction and expenditure throughout the year. Hopefully, your company has kept good records using a spreadsheet or accounting software, as this will save you quite a bit of time as you begin to file your returns.
Pro Tip – Use Bankers Box STOR/FILE storage boxes to collect and organize your important tax documents throughout the year.
Step 2: Determine Which Forms Need to Be Filed
It is important to know the appropriate IRS form to use when filing your taxes. Individuals will need to complete Form 1060, while the forms for business owners may vary depending on your company’s legal operation status. If your company is registered as a sole proprietorship, you will need to file a Schedule C along with your personal tax return. In addition, you are permitted to file a Schedule C if your business is an LLC, but it is treated like a sole proprietorship. However, if your company is registered as a corporation or your LLC operates as a corporation, you will need to file Form 1120, which is a separate corporate tax return.
Step 3: Know Your Credits and Deductions
There are many tax-saving benefits to learning which individual and business deductions to file. While individuals who meet certain criteria are able to enjoy the Earned Income Tax Credit, Child Tax Credit, Education Credits and more, businesses can also take deductions on new office equipment, insurance costs, travel expenses, home offices and more. To determine if you or your business are eligible for any of these credits or deductions, visit IRS.gov for more details, or if you’d rather take a simpler approach, there are many tax software options available that will walk you through the questions you need to answer to determine your eligibility.
Step 4: Don’t Forget the Extras
If you are an individual who does freelance work on the side or a company that has paid independent contractors throughout the year, this information will need to be included on your tax forms. It will be a lot easier on you and your company in the long run if you are able to file your taxes correctly from the start. If you do forget to include something, however, you have roughly a three year grace period from the date of your original filing to fill out IRS correction Form 1040X. You will simply need to list the year of the original return, as well as document your reasoning for amending your return in the “explanation of changes” section.
Step 5: File Your Taxes Like a Pro
Once you’ve completed your tax returns and double-checked them for accuracy, it is time to file them with the IRS. If you chose to utilize tax prep software, this process may be as simple as electronically signing your returns and clicking the submit button. For those who have completed their individual taxes without such aides, you can transfer your personal data over to the electronic forms that are available on Free File, a free service available from the IRS. Businesses that are required to file Form 1022, however, will need to either be approved as an e-file Provider or a Large Taxpayer or submit their returns through an approved vendor or tax professional in order to file their documents online. Regardless of which route you decide to take, be sure to have all of your forms in on time! The deadline to file your taxes is April 15th.
This article was originally posted on March 2, 2017 and has been updated to include new content and links.