3 Tips for Doing Your Taxes Quickly and Accurately
Filing taxes can be a harrowing process, but it doesn't need to be. Here are a few tips that will help you file your return efficiently -- without risking a major mistake as you go along.
1. Keep good records year-round
One way to ensure that the tax filing process goes smoothly is to keep impeccable records throughout the year. Much of the information you'll enter on your return won't come from a form you'll get in the mail -- rather, it will come from your own personal documentation.
For example, if you're claiming a deduction for charitable contributions, you'll need to have a record of each donation you made to know what to claim. The same applies if you're taking a deduction for medical expenses, job-search costs, or self-employment expenses like mileage on your vehicle.
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Of course, the more receipts and paperwork you're dealing with, the more likely you are to lose something along the way. That's why it's a good idea to keep an electronic record of your tax-related spending year-round. To do so, just scan or take a picture of each receipt you get, organize and store those files on your computer, and back them up regularly to a flash drive. This way, you'll have everything in order once tax season kicks off, and you won't find yourself scrambling to piece together your records.
Just as importantly, having accurate records will help you avoid a tax audit. Guessing at deductions, or using round numbers in the absence of actual figures, is a good way to get your return flagged. Stick to the facts, and you're less likely to run into trouble.
2. Use software and file electronically
There's nothing like poor math to cause you unnecessary headaches when filing a tax return. In 2014, the IRS picked up on almost 2.3 million math errors from the previous year's returns. If you're willing to spring for some tax software, you'll largely take human error out of the equation -- though keep in mind that if you enter the wrong amounts, there's only so much your software can do to compensate.
Programs like TurboTax and TaxAct make it easy for you to file your taxes yourself, and they're even equipped to identify credits and deductions that could save you money -- and more than make up for their cost. Furthermore, if your adjusted gross income is $64,000 or less, the IRS offers a Free File service that lets you prepare and submit your return electronically at no cost.
Filing your taxes electronically can help you avoid mistakes that could otherwise land you on the IRS audit list. While the error rate for paper tax returns is as high as 21%, it's less than 1% for electronically filed returns.
3. Give yourself plenty of time
When you're forced to rush through the tax filing process, you're more likely to make a mistake. On the other hand, if you leave yourself plenty of time to get your return done, you'll have more opportunities to follow up on missing paperwork, correct erroneous forms, and explore the many lucrative tax credits the IRS offers.
This year, the tax filing deadline is April 18, so if you've yet to get started on your taxes, now's the time to begin. Go through your records and make sure you have all of your 1099 forms -- though companies and institutions are supposed to issue them by January 31, this doesn't always happen. Furthermore, make sure the information contained on your tax forms is correct. If it isn't, you'll need time to get things sorted out prior to the deadline.
Remember, every time you get a tax form like a 1099 in the mail, the IRS receives its own copy. If you get a 1099 saying you were paid $4,000, when in reality you only earned $2,000, you can't just report the amount that matches your records to the IRS and call it a day. Even if you're perfectly correct, that discrepancy could trigger an audit, if and when the IRS picks up on it.
Here's another good reason to give yourself ample time to complete your return. If you finish it early and are due a refund, you might get that money sooner rather than later. On the other hand, if it turns out you owe money, you'll have more time to come up with that cash in time for the deadline. As a reminder, filing a tax extension won't get you out of paying what you owe on time -- it'll merely give you additional time to submit your actual return, so don't bank on that as a remedy for poor planning.
Nobody enjoys working on taxes. But if you keep good records throughout the year, enlist the help of some decent software, and give yourself enough time to get the job done right, you can make the process of filing your return smooth and hassle free.
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