MOUNTAINSIDE—While the tax filing deadline is about three months away, it always seems to be here before you know it. Here are the Internal Revenue Service’s top 5 tips that will help your tax filing process run smoother than ever this year.
1. Gather your records…now! It’s never too early to start getting together any documents or forms you’ll need when filing your taxes: receipts, canceled checks, and other documents that support an item of income or a tax deduction or tax credit you’re taking on your tax return.
Also, be on the lookout for W-2s and 1099s, coming soon from your employer and financial institutions. Check out IRS Publication 552, Recordkeeping for Individuals, as it contains information on what records you will need in preparing your return.
2. Visit IRS.gov often. The official IRS Web site is a great place to find everything you’ll need to file your tax return: tax forms, tax tips, electronic filing information and updates on the latest tax law changes.
The IRS encourages taxpayers to check out the Tax Benefits of the American Recovery and Reinvestment Act of 2009 section on IRS.gov. Get information about the numerous tax breaks made available in this Act. Energy, education, homebuyer credits and the new vehicle sales tax deduction may help to save you money.
You can access and get tax forms and publications from the IRS.gov Web site. You can view and download tax forms and publications from the convenience of your computer at any hour of the day or night.
Remember that for the genuine IRS Web site be sure to use .gov. Don’t be confused by internet sites that end in .com, .net, .org or other designations instead of .gov. The address of the official IRS governmental Web site is www.irs.gov.
3. Do a little research. Check out IRS Publication 17, Your Federal Income Tax Guide. It’s a comprehensive collection of information for taxpayers highlighting everything you’ll need to know when filing your return.
“IRS Publication 17, Your Federal Income Tax Guide, is your ‘tax encyclopedia’ for all your tax planning and tax return filing needs, said New Jersey’s IRS spokesperson Gregg Semanick. “Publication 17 summarizes the tax changes for 2009 to ensure you do not miss out on entitled tax credits, deductions and benefits.”
IRS publication 17 features details on taking advantage of new tax-saving opportunities, such as the making work pay credit for most workers, American Opportunity credit for parents and college students, energy credits for homeowners going green, first-time homebuyer credit, sales tax deduction for new car buyers, and the expanded child tax credit and earned income tax credit for low- and moderate-income workers.
IRS Publication 17 is available online at IRS.gov or can be requested by calling 1-800-TAX-FORM (1-800-829-3676).
4. Think ahead to how you’ll file. Will you prepare your return yourself or go to a preparer? Do you plan to file your tax return electronically with the IRS E-file Program? Do you qualify to file at no cost using the Free File Program on IRS.gov? There are many things to consider. So, give yourself time to weigh them all and find the option that best suits your needs.
Choose a tax preparer wisely. In New Jersey, about two-thirds of all filers use a paid tax professional. Choose a tax preparer wisely and in the same way you would choose a doctor or lawyer.
Even though you will be paying someone to do your tax return you are responsible for what’s on your return. It’s important to find a qualified tax professional.
The most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions, and other items. By doing so, they have your best interest in mind and are trying to help you avoid penalties, interest, or additional taxes that could result from later IRS contacts.
Some tips in choosing a preparer include:
Find out what the service fees are before the return is prepared. Avoid preparers who base their fee on a percentage of the amount of your refund or who claim they can obtain larger refunds than other preparers.
1. Only use a tax professional that signs your tax return and provides you with a copy for your records.
2. Choose a tax preparer that will be around to answer questions after the return has been filed.
3. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?
4. Before you sign your tax return, review it and ask questions.
Consider electronic filing. Electronic filing is fast, easy, accurate and secure. When you file electronically, the computer will handle the math calculations for you, and you will get your refund in about half the time it takes when you file a paper return.
“More and more New Jerseyans continue to hit the ‘send button’ on their computers when it comes to filing their federal tax returns,” said New Jersey’s IRS spokesperson Gregg Semanick. “Taxpayers and tax professionals alike are discovering and taking advantage of the benefits of e-filing.”
New Jerseyans e-filed a record 2.78 million federal income tax returns during 2009 for tax year 2008, up nearly 8 percent from previous year’s total of 2.58 million e-filers. About two out of three New Jersey taxpayers, 65 percent, e-filed last year; out of the 4.2 million returns filed.
Taxpayers can file for free and online at IRS.gov. The Free File program can be used by taxpayers with an Adjusted Gross Income (AGI) of $57,000 or less; about 65% of New Jerseyans qualify for the Free File program. Even if you do not qualify for the Free File program taxpayers can still e-file through the IRS.gov Web site at nominal or low cost.
The benefits of the IRS E-file and Free File programs include:
• Faster refunds: Direct Deposit into a bank account can speed refunds to e-filers in as little as ten days.
• More accurate returns: IRS computers quickly and automatically check for errors or other missing information, making e-filed returns more accurate and reducing the chance of getting an error letter from the IRS. It eliminates most common errors, such as math errors. The error rate with paper returns is about 20 percent compared to about 1 percent with e-filed returns. An error on a tax return can delay the issuance of a tax refund.
• Quick receipt acknowledgement: Computer e-filers receive an acknowledgment that the IRS has received their returns.
• Safe & Secure: Since 1986 over 790 million individual tax returns have been e-filed nationwide without a breach of security or integrity of these e-filed returns, according to the IRS. Tax return information is protected through encryption
“Whether you are a novice or experienced in taxes, the IRS encourages all taxpayers to check out IRS e-file and Free File at the IRS.gov Web site. The IRS also encourages taxpayers and tax professionals alike to get on line with the e-file program,” said Semanick.
5. Relax. There’s no need to panic. If you run into a problem, remember the IRS is here to help. Try the IRS.gov Web site or call the customer service number at 1- 800-TAX-1040 (1-800-829-1040).