The April 15 tax deadline is just around the corner. Unfortunately, many Americans end up making some decisions that either result in a smaller tax refund than they should receive or they make some mistakes that lead to some headaches with the IRS. Here is a guide that will help you make the right tax filing decisions in 2019.
Are you required to file?
The first question when tax time comes around is whether or not you actually should file. If you’re not sure about this, there is a tool you can use online to determine this. It basically comes down to your annual income and your marital status. For example, if you’re single and under 65 years old, you must file a tax return if your income was over $12,000 for the year 2018.
Determine your tax filing status
Before you file your return, you need to decide what tax filing status you will declare. If you happen to be married, filing jointly usually provides the greatest tax breaks for personal income tax. There may be some cases where you would file separately, such as if one person is self-employed and earns much less income than the other partner. If you’re a single person with children, you could file as a head of household. This provides some tax breaks when claiming children as dependents.
Choose who will handle your taxes
For many people, their financial situation is simple, so they can do fine by preparing their own taxes. There are many websites and software tools that make this process fast and easy. Plus, e-filing can expedite the process of receiving your tax refund. If you have a business or a more complicated situation, you could hire a CPA or an enrolled agent (EA) to do your taxes. An EA is cheaper than a CPA, but they are usually not the best choice if your tax filing situation is complicated.
Getting ready to file
When you’re preparing to file your taxes yourself or working with a CPA, you need to make sure to gather all the necessary documentation. This information includes:
• Social security numbers
• Dependent children information
• W2s, 1099s and other income documents
• Business income records
• Deductions such as home office details
• Copies of prior year tax returns
Maximize your refund
When you’re aiming to increase your tax refund, it mostly comes down to deductions and tax credits. If you don’t have a lot of deductions to declare, the standard deduction will give you a greater refund. You should also take advantage of various tax breaks such as student loan interest, child care credit and earned income tax credit.
The old saying about death and taxes still holds true in 2019. These tips should help get you on the right track this year. Taxes are never very fun, but the sooner you get it done, the sooner you can unburden yourself of the task and hopefully receive a nice refund check in the mail.