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Banking Education 3/27/2019 2:21:58 PM

Tax Time Tips

Springtime is finally here! That means longer days, warmer weather, and an approaching deadline of April 15th to either file your taxes or file for an extension. Here are a few key concepts to focus on that can help take the stress out of filing personal taxes. Number one is just to relax – you’ll get through this!

Organizing Your Documents

Gathering all of the required paperwork can seem like a daunting task, but once that’s completed the rest usually falls into place fairly quickly. Here’s a checklist for organizing your tax documentation. If any forms are electronic, printing them out can make it easier for viewing, organizing, and storage.

Income:

  • Last year’s tax return
  • W-2 forms for each job held by you, your spouse, and all dependents
  • All 1099s
  • Trust and estate forms (1041)
  • Forms from all other income

Deductions:

  • Homeowner expenses (mortgage interest Form 1098, tax payment receipts, energy efficient upgrades and qualified moving expense receipts)
  • Charitable contribution receipts
  • Education expense receipts
  • Self-employment expense receipts
  • Childcare expense receipts
  • Other receipts (alimony, health care, job-hunting, job-related, tax preparation)
  • Tax payment receipts
  • IRA (5498) and HSA contribution (5498-SA) receipts

Self-Filing vs Using a Tax Pro

After you’ve gathered the needed documentation, the big decision is whether to file the taxes yourself (either with a redesigned Form 1040 or by using online tax software) or to use a professional tax preparer. There are many online software options for federal and state returns, each with different features, costs, and degrees of audit protection. Or, if your adjusted gross income was $66,000 or less in 2018, you may want to explore the free file software offers from the IRS. 

When deciding whether to do-it-yourself or to use a tax pro, some questions to consider are, “How complicated is my tax situation? How comfortable am I with doing my own taxes? How much time can I devote to this? How much money do I want to spend on tax preparation?” Thinking about the answers to these questions can guide you to a solution that works for you. Remember, though, that no matter how your taxes get prepared you are ultimately personally responsible for their accuracy.

Protect Yourself

Whichever method you choose to file your taxes, it’s critical to protect yourself from scammers and fraud by using common sense and best practices for computer security. First and foremost, do not use unsecured, public Wi-Fi. An open network leaves your computer and sensitive information exposed to potential hackers. Always do your taxes (or online banking, etc.,) from a home computer using password-protected Internet access, or from a mobile device that’s not connected to public Wi-Fi. And it’s a good idea to save your returns on a removable USB drive or similar device—not on your computer’s hard drive—to protect fraudsters from gaining access to all the important data in your returns.

The IRS also warns of an increase in scams designed to trick taxpayers, including phone scams where callers claiming to be IRS agents (with bogus names and identification numbers) insist that you owe taxes and must pay or risk jail time. Delete these messages. Do not give personal information to callers or respond to emails asking for account numbers or cash payments. The IRS does not use phone calls, text, or email to request personal or financial information.

These tax tips can make this time of year one that you won’t dread, especially if you plan ahead now for next year’s taxes. Get organized, do what works for you, and above all – be safe and protect your financial information. And, as always, contact us if you have questions or need tax forms for your interest-bearing bank accounts.