The Internal Revenue Service (IRS) begins accepting and processing new tax returns as early as January of each year. Despite having months to prepare, some taxpayers find themselves rushing to gather forms and calculate receipts just days before the April deadline. Juggling work and family responsibilities can make it difficult to set aside time for proper preparation.
Unfortunately, procrastination often leads to unnecessary stress, with paperwork hastily put together at the last minute resulting in late filing fees or missed deductions and tax credits. To reduce anxiety levels and maximize your refund, consider these five tax season preparation tips:
1. Confirm tax filing deadlines.
The IRS requires most taxpayers to file their taxes by April 15th, but you should check the federal tax calendar for other dates that may apply to your situation. Failing to file or pay taxes on time can lead to financial penalties. If you need more time to submit your return, request a filing extension before the deadline using Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
2. Learn two basic tax terms.
For many taxpayers, tax deductions and tax credits can directly affect the size of their refund. Tax deductions reduce your taxable income and generally result in you owing fewer taxes. You can choose to either claim a standard deduction or elect to itemize deductions.
Common itemized tax deductions include charitable contributions, deposits into retirement accounts, and mortgage loan interest. You may benefit from choosing itemized deductions if the total exceeds the standard deduction established by the IRS for the tax year.
IRS tax credits directly reduce the tax you owe, dollar for dollar. The amount and type of credits may also vary with each tax year. For a complete list of deductions and credits, visit irs.gov.
3. Examine last year’s tax return.
Prior year tax returns could serve as a guide as you prepare to file. If little has changed with respect to marital status or household size, you may be able to use updated versions of the same forms. However, if you exchanged wedding vows or had a child during the tax year, you’ll likely need to complete different IRS forms which could result in a larger refund. Start gathering your documents as soon as possible. Give yourself enough time to collect your paperwork to ensure you don’t overlook potential tax savings.
4. Watch out for tax scams.
Fraudsters may pretend to be IRS officials so they can steal Social Security numbers and other confidential data. These bad actors may use stolen information to file a return under your name and pocket the refund. Unlike scammers, the IRS never initiates contact by phone, email, text messages, or social media channels regarding urgent tax matters. Get more tips for avoiding fraud and keeping your money secure.
5. Get free tax help.
Confusing changes to tax laws might explain why relatively few people file taxes early in the season. The assumption that tax help is expensive could be another. Either way, you might qualify for free tax preparation assistance.
IRS Free File assists eligible taxpayers with guided tax software and fillable forms so they can file returns online at no cost. Contact the AARP Foundation Tax-Aide Program or IRS Volunteer Income Tax Assistance (VITA) if you prefer face-to-face assistance.
Make your refund go further by choosing to have it direct deposited into a Savings Account where it can earn dividends on the balance.* HawaiiUSA offers a variety of accounts with competitive interest rates based on your timeline and money goals.
Getting a paper check? Easily and securely deposit it to your HawaiiUSA account using mobile deposit.
Click here for more tax resources from HawaiiUSA.
Visit irs.gov for additional guidance or consult with a tax professional.
