Tips for Preparing Your Taxes

If you haven’t yet filed your taxes, here are several tips that can help ensure that your tax-preparation process goes smoothly--and reduce the chances that you make a mistake on your tax return.

Gather all your records. Get all your W-2s,1099s, and any other tax materials you have together in one place. Then review these documents to make sure you have received all of them and that they are accurate.

Use Free File or a tax preparer. As I posted earlier this year, everyone is eligible to use Free File but depending on your tax situation, you might want to hire a professional tax preparer. If you are using a tax preparer, the IRS offers 10 tips in choosing a tax preparer.

If you are self-employed, you will have to pay self-employment tax as well as income tax. You also might need to make estimated tax payments. Self-employment tax is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. You figure self-employment tax using a Form 1040 Schedule SE. Also, you can deduct half of your self-employment tax in figuring your adjusted gross income. The IRS website offers several publications to help you figure out your self-employment tax and determine if you need to make estimated tax payments.

If you have children at home, you likely qualify for several tax benefits. In addition to being able to claim a child as a dependent ,you may also be able to claim the Child Tax Credit and the Child and Dependent Care Credit. You may also be able to claim the Earned Income Tax Credit. If you need more information, the IRS details the common tax benefits for parents.

You need to file your return by April 17, 2012 this year. If you can file earlier, you will likely receive your refund faster. Also, choosing direct deposit rather than having your refund mailed to you also speeds up the refund process. After you have filed your return, you can check the status of your refund using the IRS where’s my refund tool.

Those are just a few of the things you should be aware of when filing your taxes. If you have any other questions, you can ask your tax professional or consult IRS.gov.

Andy Hough writes about frugality and living well on a small income at TightFistedMiser.com.

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