By Gordon Chavez, innergyfinancial.com
Taxes are due by April 15. You can turn them in now and get a refund right away or avoid penalties later.
Some people are exempt from filing their taxes. Still if you earned income, you may consider filing yours, even if you’re exempt. It could lessen the chance of being audited or having your identity stolen. Plus, it’s easier to find you when stimulus checks go out.
First, you’ll need to choose a tax preparer. You can start by getting a referral from friends and family. A tax attorney may also be able to help. Your tax preparer should have a preparer tax identification number (PTIN). The IRS shares tips on how to choose a tax preparer at https://irs.treasury.gov/rpo/rpo.jsf
File for free: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
Information to Gather
Tax Documents
- Last year’s tax returns
- Social Security and/or tax ID numbers
- Identity protection pin (if you were issued one)
- Bank account number(s)
Income (documents from your employer)
- W2s
- 1099s
Deductions
- Retirement contributions
- Medical bills
- Property taxes and mortgage interest
- Charitable donations
- Classroom expenses (schoolteachers and educators)
- State/local taxes
Credits
- Child tax credits
- Retirement contribution credits
Payments
- Estimated tax payments
Filing your taxes is a way to figure out whether you paid enough taxes throughout the year. If you paid more than you were supposed to, you’ll get a refund. If you paid less, then you will have to pay the difference.
Getting a refund is always exciting, but it would mean that you paid more taxes than you needed to, and the government had your money for a year before giving it back. My personal goal is to break even. I don’t want to pay taxes at the end of the year, but I also don’t want to get a refund. Wouldn’t you rather earn interest on your money than get it back from the government with 0% interest? Your money most likely lost value due to inflation.
If you are getting a refund, you may consider ways to make that money earn interest for you.
