Tax day this year is April 18, 2017 — are you ready? Preparing for tax day is not something you should push off until the last second. Gathering all the necessary paperwork and deciding if you’ll hire an accountant to do your taxes or tackle them yourself takes time!
In 2016 alone more than 150 million tax returns were filed. We spent more than 6.1 billion hours prepping tax forms last year, which translates roughly to 16 hours per person. That may or may not include waiting on the phone with the IRS, which, due to recent budget cuts, meant average wait times of half an hour.
We’ve put together a basic tax filing guide to help you get started on your 2016 taxes, including a step-by-step guide to filing your taxes, information about tax filing programs and new tax filing tech to help you do taxes by yourself.
- Gather All Necessary Paperwork
You’ll need to ensure you have all of the necessary documents, including W-2s, 1099 forms, mortgage forms, loan interest documents (including any student debt) and any tax-deductible donation receipts. Be sure to gather receipts for other tax-deductible expenditures like childcare and health insurance premiums. For a full list of tax-deductible expenses, visit the IRS’s list of itemized deductions.
- Set Aside Time the First Week of February
Your taxes may not be due until April 18, but that is no excuse to procrastinate! You should receive all of your income and investment forms no later than January 31. Getting started on things the first week of February will not only allow you to get a head start, but also serve as a time to double-check that you received all the necessary forms. In case you didn’t, it gives you enough time to contact the involved parties and ensure you get the information you need.
- Who’s Doing Your Taxes?
After you’ve organized all your papers and are going through them, it’s time to decide whether you’ll do your taxes with the help of an at-home tax filing software, such as TurboTax, or use an accountant. If you’re thinking of using an accountant, it’s a good time to reach out to friends and family to see if they can recommend a trusted accountant. You’ll need to set up an appointment with the accountant to go over your files.
- File Your Taxes
After you’ve done your taxes yourself or met with your accountant, it’s time to submit. The IRS allows tax filing as early as January 23, but it’s likely you won’t have all your information together yet. However, the earlier you can get your taxes in, the earlier you can get your tax refund. If you wait to file closer to the deadline, it may take longer to get your refund since the IRS will be dealing with a large influx of last-minute filers.
Take a look at some of the most popular and well-rated tax-filing software available if you’re planning on doing your own taxes:
Often cheaper than visiting an accountant, these software programs allow you to “plug and chug” — all you have to do is follow the guided software and input your financial answers as you go.
All tax software is designed to help you understand difficult or confusing terms, but should you need extra help or need a question answered, you’ll want the ability to talk with a customer representative. Not all tax software has this kind of support, so make sure to research which offerings have additional help should you need it.
Tip: If you’re self-employed, you must file a Schedule C. Only a small percentage of available tax software programs include Schedule C’s, so check to see if it’s included before you purchase.
Whether you’re looking to use new technology to help you prep your taxes or even fill out the entirety of your taxes on your phone, there’s an app for that!
ItsDeductible Donation Tracker: Make sure you’re not losing out on potential savings with help from this app. You can track all of your charitable tax-deductible donations, including any driving mileage the trip required.
IRS2Go: This is the IRS’s very own app, which provides helpful tax information, like finding free local tax prep services, general tax tips, your tax refund status and more.
Bloomberg BNA Quick Tax Reference: You can check on your federal and state tax rates with one tap of the finger on Bloomberg’s app. There’s also a built-in calculator and separate sections that break down individual and corporate tax calculations.
MileIQ: This app is a must for frequent business travelers — you can set it to automatically track your mileage when driving to and from the office and more so you don’t miss out on any business travel tax deductions.
Expensify: This is another must-have app for business travelers. In addition to mileage, Expensify lets you track meals and any other expenses you incur while on the road. Simply snap a picture of a receipt and the app will log your purchases into the correct categories.
n.d. 2016 tax season opens Jan. 19 for nation’s taxpayers. Retrieved February 9, 2017 from https://www.irs.gov/uac/newsroom/2016-tax-season-opens-jan-19-for-nations-taxpayers
(April 13, 2016). As tax day looms, some IRS facts and figures. Retrieved February 9, 2017 from http://herald-review.com/news/opinion/editorial/as-tax-day-looms-some-irs-facts-and-figures/article_f7bb66f3-68d1-5899-bdd4-77d1c30badc4.html
Corpuz, J. (January 27, 2016). 10 best tax apps for preparing and filing taxes. Retrieved February 9, 2017 from http://www.tomsguide.com/us/pictures-story/655-best-tax-apps.html#s10
Risen, T. (April 15, 2014). Tax day: some facts about the IRS filing deadline. Retrieved February 9, 2017 from http://www.usnews.com/news/articles/2014/04/15/tax-day-some-facts-about-the-irs-filing-deadline