Filling out your tax forms
Filling out your tax forms isn't an ideal way to spend a Sunday afternoon. Whether you fill them out long-hand, use tax preparation software or enlist the help of a tax accountant, you're going to need to spend some time gathering documents and providing the IRS with the information it needs.
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Where to Get Tax Forms
If you're wondering where to get tax forms, look no further than the IRS website. They've got you covered, with downloadable (and free) PDFs of federal income tax forms and more. They also provide guidance as to how to fill out tax forms. IRS tax forms can be confusing – and the IRS knows it. That's why their website provides plenty of helpful instructions. If you're really in a pinch you can call the IRS, but be warned that their phone lines have been blowing up, with significant wait times for callers pretty much guaranteed.
The most notorious of the federal tax forms is probably IRS Form 1040, the longest of the federal income tax forms. Some people can get away with filing the shorter versions of the 1040, the 1040EZ and the 1040A. However, if you want to itemize your deductions you'll need to fill out the original 1040. You should also use the long 1040 if you have substantial income from investments or self-employment income.
What about non-federal taxes, you ask? Finding state tax forms is as easy as a quick web search. The tax collecting agency in your state will have forms and guidance on its website. Even if your state doesn't have an income tax (lucky you!) you should make sure you don't owe property taxes, capital gains taxes or other state taxes. The same goes for local taxes. If you live and work in two different states you'll need to take that into account at tax time. You may need to file a nonresident return in the state where you work.
Related Article: What Can Happen If You Don't File Your Taxes?
Avoiding Tax Season Frustration
If the idea of wrestling with a bunch of Internal Revenue Service forms makes you want to tear your hair out you can always seek help. A tax accountant can take over the job of filling out your taxes for you, but you'll still need to provide him or her with the necessary information and documentation. Or, if you've been doing your taxes by hand, consider splurging on some tax preparation software that can make the process easier for you.
The biggest change that can decrease the stress of doing your taxes is to start earlier. No, we don't mean filling out your name and address on your 1040 form in February and then waiting until the second week in April to do the rest. We mean actually starting (and finishing) early.
Planning for Your Refund
Many people consider the goal of tax season to be securing a big refund. And if you're eligible for refundable tax credits like the Earned Income Credit you will get a hefty refund. For folks who have enough money to live comfortably, however, getting a big refund is both a blessing and a curse. In fact, the personal finance world is divided when it comes to tax refunds.
Some people think that getting a sizable refund is a good thing. It provides you with a big chunk of money that you can use strategically, either paying down debt, building up your emergency fund or saving for retirement. For some people, the trigger of a large lump sum can be a big motivator.
Technically, though, if you're getting a big refund you're not optimizing your dollars (assuming your refund is coming from overpaying the IRS rather than from a refundable tax credit). You could adjust your payroll tax withholding and get more money with each check, rather than getting a big refund once a year. By overpaying the IRS you're giving the government an interest-free loan. If you were getting that money throughout the year you could invest it and watch it grow. If you decide you want to adjust your withholding to get a smaller refund you'll need to re-submit Form W-4 to your employer.
Related Article: 6 Smart Ways to Spend Your Tax Refund
If you're doing your taxes yourself, whether on paper or with tax preparation software, it's a few afternoons of your year that you have to spend looking at tax forms instead of social media. Not the end of the world, right? The alternative (not filing your taxes) isn't worth exploring. You'll face serious consequences from the IRS and you'll just be delaying the pain. Our advice? Gets your documents together, start early in tax season and break filling out tax forms into manageable chunks of time.
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