With less than a month to go before your taxes are due, even procrastinators are starting to chomp at the bit to get going with preparing their returns. But whether you've gathered everything together to sit down and do your returns or haven't even thought about your taxes yet, there are a few things you should do before you do your taxes.
Make sure you have all your forms
Countless taxpayers have made the mistake of doing their tax returns thinking that they had all of their forms, only later to get a last-minute W-2 or 1099 form from an unexpected source. The result: plugging in new numbers and rerunning projections in the best case, and having to completely rework your return in the worst case.
Before you start your taxes, look closely and make sure you have all the forms you expect. In particular, if you own investments like master limited partnerships for which you'll get unusual tax information forms like Schedule K-1, keep in mind that many companies get out their tax information very late. Rather than having to amend your return later, it can be smart just to hold off on finalizing your returns until you're certain that you have everything you need to do an accurate return.
Pick your preparation method
Another key question to answer is how you intend to do your taxes. Paying a professional is the easy way to put responsibility on someone else's shoulders, but as the April deadline approaches, schedules for qualified tax preparers get full quickly. The longer you intend to wait, the more important it is to make an appointment early.
Many people do their taxes themselves using tax software. If you go that route, make sure you allot yourself enough time to deal with any problems that can arise in the installation process. Nothing's more frustrating than sitting down to do your taxes only to have to deal with computer problems for hours before you even start on tax prep. Doing the legwork early on can save you a lot of stress later.
Look closely at e-filing
The majority of taxpayers use electronic filing for their tax returns, but a few holdouts still don't. There are many advantages to e-filing, including faster processing times, reduced chances for erroneous information, and a fast acknowledgement from the IRS that it has received your return information. There's also a quicker turnaround on getting your refund, especially if you combine electronic filing with direct deposit of your refund amount.
Most tax software comes with free or inexpensive electronic filing options, and many taxpayers can qualify for free electronic filing under the IRS Free File system. Given how easy it has become to file electronically, doing a paper return increasingly makes little sense.
Get up to speed on tax law changes
Many people go through the motions of filling out their tax forms without a clue about how tax law changes will affect the amount they pay. But by knowing what happened over the past year on the tax front, you can look out for items that might appear different than you remember from previous returns.
For example, those who had to wrestle with Obamacare-related tax forms last year will notice that penalties for not having qualifying health insurance coverage will rise dramatically, with per-person charges tripling and the overall income-based penalties doubling for the 2015 tax year. Knowing what to expect can help you from getting tripped up when something doesn't quite look right based on your memory of last year's returns.
Getting your taxes done before the last minute is a good idea, but you still have to prepare to do a good job. Keep these things in mind, and you'll have a much better chance of ending up where you want to be on the tax front.