Filing tax returns is the single most frustrating task for most Americans. Still, every citizen has an obligation to do it. Admittedly, it is not the simplest thing to do and the average person spends more hours than they can afford preparing their taxes. Add to that the many mistakes one is bound to make. With these tips, we hope that you will be able to less time preparing taxes and avoid some of the most common mistakes.
To help you along, here are the Income-related documents you need to have:
– Form W-2 for employers you and your spouse worked for during the year
– Forms 1099-MISC for miscellaneous income
– Forms RRB-1099 for Social Security/RR1 benefits
– Forms 1099-R for Retirement Plan Distributions such as pensions, IRAs and annuities
– Schedules K-1 for Partnership, Corporation and trust income
– Forms 1099-G for unemployment compensation
If you have investments, you will need to have these forms:
– Form 1099-B to declare the proceeds from sale of stock and other indices
– Form 1099-INT to declare interest income
– Form 1099-DIV to declare dividend income
Homeowners need Form 1098 for mortgage interest and Form 1099-S showing the sale of your home or other real estate property. If part of your mortgage debt was cancelled, you must indicate it in Form 1099-C. If the cancellation was on your main residential house, you are exempt from paying tax. You will need to fill Form 982 for this.
If you are not hiring a tax preparer, use tax software for your tax calculations. It is so much easier than doing the math on your own and will help you avoid many mistakes. Check every angle for deductions you could qualify for which can make a huge difference in the amount of taxes you end up paying, from medical and self employed health insurance to work-related, property, real estate, and state tax deductions.
To meet the deadline and avoid penalties, pay as early as possible. If you have no time to file by the due date, ask for an extension via Form 4868. Note that this is for filing only, not paying. Your payments must still be made by the IRS deadline.