4. Decide how you want to do your taxes. Gathering the appropriate tax forms goes hand in hand with how you plan to complete your return. Which preparation method fits your tax style? Are you a do-it-yourselfer or should you hire a pro? Do you prefer pen and paper or a computer? Now's the time to decide. By starting early, you have plenty of time to gather filing paperwork yourself, pick the perfect tax preparer or find the tax preparation software that fits your needs.
5. Consider electronic filing. If you decide to use your computer to calculate your taxes, consider taking the next step and file the forms electronically. E-filed returns are processed in about half the time of paper ones, according to the IRS. Plus, e-filing catches math problemsand provides confirmation your return has been received. You might even be able to e-file for free via the Free File Alliance, a joint venture of the tax software industry and the federal government. For 2007 returns, taxpayers with adjusted gross income of $54,000 or less can e-file at no cost. In mid-January, the IRS will start accepting electronically filed returns, as well as kick off its Free File program.
6. Use direct deposit. Regardless of whether you file electronically or the old-fashioned paper way, this year have your refund check directly deposited into your bank account.
Again this filing season, you can have your refund sent directly to up to three accounts. You'll just need to file Form 8888. Whether you have your tax cash deposited in one, two or three accounts, there's one big advantage: You won't have to worry about the check being lost in the mail or returned to the IRS because of a bad address. Even better, you'll have access to your refund sooner.
7. Don't panic. Tax filing makes everyone a little nervous, but when you start early, you've got time to get the answers and make sure you're taking full advantage of every tax break for which you're eligible. Check Bankrate's Tax pages throughout the filing season for more tips, stories and explanations of tax laws and how to make the most of them. If you have a specific question, ask our tax expert. You also can visit the IRS Web site or call its TeleTax service at (800) 829-4477 to get recorded information on more than 140 tax topics.