It is that time of year again when everyone starts dreaming about money and dreading the tax form filing they will have to do. It's the beginning of tax season, and whether you are a first-time taxpayer or a long-time taxpayer who just needs a reminder that it isn't the end of the world, we have a guide that will help you navigate through your taxes.
What you need
When doing your taxes, getting all of your necessary paperwork organized is the first step you should take. Bankrate noted that you should receive your W-2, a form which relays how much money you made annually with a specific employer. If you worked independently, a 1099-MISC form is necessary to document your earnings over the course of the year as well. Collect these materials and keep them stored in a safe place. The IRS noted that keeping your records neat and organized may make the process run more smoothly.
In addition, because of the health care reform, the IRS highly recommended keeping records of your health insurance coverage or premiums paid to prove that you possessed the required coverage. According to the Fiscal Times, while some may experience extra costs and paperwork associated with the Affordable Care Act, most individuals will simply indicate on the form that they were covered over the course of the year. Speak with your financial adviser to determine what steps you may have to take as a result of the health care reform.
Deciding how to file your taxes
The age of the Internet brought a convenient and financially resourceful solution to doing your taxes. Filing taxes online is an option many individuals may take advantage of. However, there are still advantages to hiring a tax preparer.
U.S. News and World Report noted that filing your taxes electronically can save you significant time and money. By sending your taxes to the IRS using e-filing technology, you can track when the IRS received your tax return as well as your refund after the acceptance of your return.
While e-filing seems incredibly beneficial, Forbes indicated some advantages hiring a preparer has over electronically submitting your tax refund. Nearly 5,000 different adjustments have been made to the now 4-million-word Tax Code since 2001. Hiring a professional can help you navigate through new changes that have occurred and help you get the most for your refund. In addition, if your taxes require additional features and forms, further charges and expenses may accumulate while you file your taxes with a software package.
New jobs, marriages, becoming a first-time homeowner, children and other shifts in your life may have a notable impact on your taxes. Speaking with a professional may be especially helpful when navigating through new tax territory.
What to expect from your tax refund
The average tax refund in 2014 was up 3 percent from 2013 at $3,054, according to a report from the IRS. Last year, the IRS directly deposited 88 percent of refunds into individual bank accounts. This option is a convenient way to collect your money. The IRS noted that a limit of three refunds can be put on a pre-paid debit card or deposited into one financial account. If an additional refund is necessary, the IRS will send both a notice and refund check.
Important dates to remember
The IRS announced that Jan. 20 is the first day of the tax season, and file your taxes by Apr. 15. You can check on the status of your tax return by using the "Where's My Refund" tool provided by the IRS.
For more information about smart ways to manage your finances, contact Landmark Bank
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