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Are You Ready for Tax Season?
Are You Ready for Tax Season?
Tax season is here, so you might want to get started now, rather than wait till the last minute. The tax process can be frustrating and time-consuming, but it doesn't have to be if you know what you're doing. Even if you're an old pro at doing your taxes, there were changes made during 2013 that may require you to do a few things differently. Here are some tips that you should keep in mind whether you're planning on doing your taxes yourself or hiring a professional.
Should you do it yourself?
The first question you need to ask yourself when you're preparing to pay your taxes is should you do it yourself, or hire a professional? There are pros and cons to both of these options. For example, Daily Finance points out that while hiring a tax professional will save you the hassle and confusion that comes with attempting to figure it out yourself, it will cost more money upfront to obtain the services of these individuals. However, if you choose to do your taxes yourself you should be prepared to put in a lot of time and effort. MSN Money states that in 2012, the Internal Revenue Service estimated that the average taxpayer needed 22 hours to do his or her 2011 tax return. Also, a professional may help you maximize credits and deductions you didn't know about.
When looking for a professional, MSN states that you don't want someone who will simply take your numbers and input them into your return. Instead, you want an individual who asks a lot of questions to make sure that they are getting you the most money back.
MSN recommends that you use these three questions to help you decide what to do: Are you prepared to give your taxes the time they need? Do you have the money upfront to pay a professional? Are you prepared to deal with the complexity of the federal code?
If you're looking for a happy medium between these two choices, you may want to look into purchasing a software program for your computer that can help you do your taxes. However, even with this software, some people still find that they need assistance.
Organize your files
Regardless of whether you choose to do your taxes yourself or hire a professional, you need to get organized. You'll need to get your checkbook, receipts, credit card statements and bank statements and start looking for purchases that could be deducted. These include charitable contributions, home improvements that save energy and even job-hunting expenses. You also want to make sure that you have all of the necessary forms to file your taxes, such as your W-2 and 1099 forms.
You want to get organized now, since you want to make sure to send your forms to the IRS by April 15, or you may face a penalty. Remember, if you file online, your taxes are not officially considered filed until the IRS acknowledges it, which could take up to a day so you should file online early.
Look for Affordable Care Act changes
The Affordable Care Act (ACA) means changes when it comes to your taxes. For example, Yahoo! Finance points out that several new taxes were implemented as a part of the ACA, such as the 3.8 percentage point Medicare surtax on investment income. This tax will add a 3.8 percent increase to the investment earnings of single taxpayers making at least $200,000 and households making $250,000 or more.
The changes that the ACA will bring about are another reason why you may want to consider consulting a tax professional this year, particularly if you're filing for the first time.