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TAX TIP No. 1
7 tax-filing moves you can make now
Earlier is better when it comes to
working on your taxes, for both you and the Internal Revenue
Service. By getting a head start on tax preparation,
you avoid the last-minute rush, when many filing mistakes are made. And the sooner the tax agency gets your return, the sooner it can process it and get your refund
on its way to you.
Here are seven ways to get a jump on your
taxes long before the April 15 deadline rolls around:
1.
Get ready for the arrival
of records. When your
W-2s, investment statements
and other tax-related documents
start coming in, create a
collection point and put them
there. It could be as simple
as a large envelope. You might
have received a few documents
in December, but most will
arrive throughout January.
Just make sure that whenever
the material shows up you
put it all together in an
accessible place, so when you
are ready to fill our your
return you have all the data
you need. Remember, the IRS
gets a copy of most of these,
too, so figures on those statements
are critical to ensure your
return sails through the system.
2.
Track down Social Security
numbers. Before the
IRS will process any return,
the agency must have your correct
Social Security number,
as well as your spouse's,
if you file jointly, and those
of any dependents you claim.
These numbers are crucial
because so many transactions
-- income statements, savings
account interest, retirement
plan contributions -- are
keyed to them. The IRS also
checks the identification
numbers against any tax breaks
you apply for, such as the
Child Tax and Additional Child
Tax credits, credits for educational
expenses and the dependent
care tax credit. So make sure
everyone in your tax family
has a valid Social Security
number and that you have them
written down correctly. It
wouldn't hurt to put this
information in that envelope
where you're stashing your
incoming tax statements.
3.
Find your forms. Slightly
more than half of all taxpayers
filed their returns electronically
last year, meaning all the
forms were provided in the
tax software. The other half
who filed the old-fashioned
way will get a tax packet
in January, but it never hurts
to have backup forms in case
you make a mistake. Plus,
your tax situation may have
changed, meaning you need
material other than what's
in the IRS package since it's
based on your past filing
history. A few of the most
common forms are available
at post offices and libraries.
Most of the rest can be downloaded
from the Internet. Check out Bankrate's
tax forms library or the IRS'
Forms and Publications Web page.
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