Doing your taxes is never something anyone looks forward to. There is always the worry that you haven’t included key deductions that can gyp you out of precious tax refund dollars.
Before you start to prepare your tax return, you should first make a list of the documents you might need, and be sure that you have them in front of you when you begin.
By gathering all of the information you will need in advance, you will surprise yourself at how much time you can save by not scrambling down these necessary but sometimes elusive documents.
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You can also get in front of financial ruin by hiring a tax lawyer to help you settle any outstanding IRS debt you may have.
#1. Your Personal Information
This is probably the most basic and necessary information you will need to supply to the IRS. Ensure that you have the complete names, dates of birth, and social security numbers for everyone covered by your tax return.
Tracking down a social security number at the last minute can unnecessarily hold up the entire process for hours, days, or even longer. Also, make sure you have a copy of your tax return from last year handy, as well as your bank account number and routing number if you want to set up a direct deposit to receive your refund.
#2. Income Information
Each January, you will receive documents from everywhere you worked the year before, as well as from any other sources of income from which you received income.
Some primary examples include W-2 forms, 1099s, any income earned from investments, K-1s, stock option information, unemployment income, or any distributions you received from an IRA, pension, or social security distribution.
Use your return from the prior year as a guide, as you will probably have received income from similar sources. Make sure you have all income documents for your spouse as well.
#3. Adjustments To Your Income
Make sure you keep records of any expenses that can help you reduce the amount of your taxable income.
These can include IRA contributions, moving expenses, any student loan interest you’ve paid, post-high school tuition costs, and receipts for certain energy-efficient home improvements.
#4. Itemized Deductions
If you itemize deductions on your return, make sure you have proof of any costs for child care, education expenses, charitable contributions, mortgage interest payments, and medical and dental expenses.
Other documents you should have on hand include proof of any taxes you have already paid, such as state and local income taxes and real estate taxes. Providing this information can keep you from overpaying taxes to the IRS.
#5. Outstanding IRS Debt
Having outstanding IRS debt can be stressful and sometimes overwhelming. Getting constant threatening phone calls from credit agents and harassing IRS representatives can make you afraid to answer your telephone.
The IRS can garnish your wages, place liens on your property, tap your bank account and cripple you financially. But having tax debt does not have to mean the end of all your hopes and dreams.
Hiring a tax lawyer may be what you need to do. If you qualify, a tax lawyer can help you work out a streamlined IRS installment payment plan, by which you can pay back your debt to the IRS at a rate you can afford.
This can help you regain financial control over your life and stop your escalating debt, as well as the harassing phone calls.
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