All you need to do your taxes is a little bit of time over one weekend to gather what you need, get organized and file your return.
Friday Evening: Collect the Documentation
On Friday evening, devote an hour or two to collect the necessary documents. If your documents are scattered, use a checklist to make sure you grab all the important stuff. Here's what most people will need:
Last year's tax return.
The Social Security number -- or tax ID number, if applicable -- and birthdate for you and everyone in your household.
Income information for employees: W2s.
Income information for self-employed individuals: W9s, 1099s and Schedule K-1s. Report all income, even if you did not receive a 1099 from a client.
Income information from investments: 1099s reflecting interest earned, dividends, retirement funds and son on.
Proof of income adjustments: 1098s.
Receipts: If you are itemizing, they should be added for health expenses, donations and other key categories.
Tip for next tax season: If you had to run around to find these forms and documents or you had to dig through a box of old receipts, now is a good time to create better habits to make tax time less stressful next year. For instance, you can upload your receipts and paper clutter to a cloud-based, accessible-from-anywhere storage system with Shoeboxed.
Saturday: Use Software or Take Everything to a Preparer
On Saturday, you are ready to fire up tax software or bring your information in to a tax preparer. Which you choose is a matter of personal preference and how complicated your tax situation is.
If you do your taxes with the help of a tax software, double- and triple-check all the information you entered. %VIRTUAL-article-sponsoredlinks%The software will do the math, but it can't tell you if you have typos.
The added cost of a tax professional may be worth it if you have your own small business, unique tax situation or simply don't feel comfortable handling this information on your own. It's OK to ask for help.
Sunday is time to think about your taxes. Take an hour to carefully review your return and check for errors. If a mistake was made, don't panic. Don't cross your fingers and hope the Internal Revenue Service won't notice, either. Erroneous reporting can trigger an audit, which is stressful for most taxpayers. Instead, take pre-emptive action and file a 1040X form to point out the mistake. This will help you avoid penalties, since you reported the error.
Tax season isn't fun, but this plan will make it go more smoothly. And if you invest extra time, you'll set yourself up for a less stressful and faster experience next year.
7 Most-Missed Tax Deductions and Credits
How to Organize and File Your Taxes Over a Weekend
Our lives are busy, and taxpayers may forget what donations they gave last year may get them a bigger refund. If you cleaned out your bulging closet and dropped off clothing or household goods at your favorite charity, don't forget this may be deductible on your tax return.
Taxpayers taking a full course load and working toward a degree can receive education benefits through the American Opportunity Tax Credit for college expenses, but those who took even just one class to further their career may be able to take the tuition and fees deduction. With this credit, you can deduct up to $4,000 for tuition and fees, books and educational supplies for you, your spouse or dependents. This tax deduction is especially important to remember if you qualify because the offer expires after tax year 2013.
Taxpayers can deduct state income taxes, but what about people who live in states that don't have a state income tax? The state and local sales tax deduction is useful for those who don't pay state income tax because they can deduct sales tax paid on purchases. Even people who live in states that pay state income tax can benefit if they paid more sales tax due to large purchases. This is another tax that is going away after the 2013 tax year, so don't miss out on this one.
The earned income tax credit is a refundable tax credit given to filers who earn low- to moderate- income from their jobs. The credit can be worth up to $6,044, depending on income and how many dependents you have, but one in five tax filers overlook this opportunity, according to the Internal Revenue Service. You have to file your taxes in order to get it, so even if you make less than $10,000 (the IRS' minimum income filing requirement) you should still file your taxes.
If you were looking for a job last year, you may be able to deduct costs related to your job search – even if you didn't secure a new one. Job search expenses such as preparing and sending resumes, fees to placement agencies and even travel related to searching for a new job can be included.
This credit is often overlooked and seldom talked about, but if you have an income up to $29,500 ($59,000 for married filing jointly) you can save for retirement and get an tax credit worth up to $1,000 for individuals and $2,000 for couples if you contributed to a qualifying retirement plan such as an individual retirement account or 401(k). The retirement savers tax credit is a win-win situation since contributions to your IRA may also be a deduction from income.
Taxpayers who weren't so lucky gambling last year should know that their losses can be deducted if they itemize their deductions. However, your amount of losses cannot surpass your winnings, which must be reported as taxable income. For example, if you have $2,000 in winnings and $4,000 in losses, your deduction is limited to $2,000. Make sure you have documentation such as receipts, tickets and other records to support your losses.
If you're going through a divorce, taxes may be the last thing on your mind, so we're here to help. We've got tips for you on which filing status to choose after the divorce, who can claim the exemptions for the kids, and how payments to an ex-spouse are treated for tax purposes.
Filing taxes as a single parent requires coordination between you and your ex-spouse or partner. Usually the custodial parent claims the child as a dependent, but there are exceptions. A single parent is allowed to claim applicable deductions and exemptions for each qualifying child. Even though you claim your child as a dependent, she may still have to file her own tax return if she has income, such as from an after-school job.
The Child Tax Credit can reduce your tax bill by as much as $1,000 per child, if you meet all seven requirements: 1. age, 2. relationship, 3. support, 4. dependent status, 5. citizenship, 6. length of residency and 7. family income. You and/or your child must pass all seven to claim this tax credit.