Few things inspire procrastination more than having to do your taxes. If you owe Uncle Sam this year, you might be thinking there's no reason to jump the gun and pay your tax bill any earlier than the April 17 deadline. Even if you're expecting a big refund, you may be putting it off.
Of course, it's not time to panic yet. You still have more than six weeks left. However, even if you decide that you're not going to get your returns completed quite yet, now is an excellent time to make sure you won't come across any unexpected surprises that you otherwise wouldn't have time to fix at the last minute. By taking an initial look at your taxes now, you may decide whether you're comfortable doing your taxes on your own with a software package like Intuit's
The biggest problem many taxpayers face is making sure they've gotten all their tax documents. By now, you should have most of the forms you need, including W-2 statements from your employer and 1099 forms from other types of income, including interest and dividends from investments and self-employment income. But you'll want to have a number of other records handy, including expense information for possible tax deductions as well as a variety of other specialized tax forms that apply to specific situations. As part of last month's edition of Motley Fool Green Light, the Fool's personal-finance newsletter service, fellow Fool Dayana Yochim put together a comprehensive list of all of the forms and records you should have ready before you start working on your taxes.
Although most forms go out in late January, it's possible that you haven't received all your information returns yet. Some types of investments, such as partnerships and royalty interests, are notorious for waiting until the last possible moment before providing you with the necessary information to complete your tax returns. If you jump the gun and neglect to include that income, you may have to file an amended return or else face the possibility of an audit.
Dealing with mistakes
Once you have all the forms you need, you're still not done. Take a close look at your forms to make sure the information on them is correct. With some figures, such as your total wages and tax withholding, it's pretty simple to check your W-2 against pay stubs or other payroll records. On the other hand, figures for more complicated calculations, such as qualified dividend income, may not reflect the correct numbers. As a previous article discussed, while brokers do their best to report information accurately, they don't always get it right.
If you find an error on a tax form that was also sent to the IRS, then it's best to have it corrected. You'll need to contact whoever issued the form, inform them of the error, and ask to be sent an amended tax form that reflects the correct figures. Again, if you don't follow this step and instead just use the correct numbers on your tax return, the discrepancy between the numbers you use for your tax return and the figures on the forms may raise a red flag.
Even though you still have plenty of time before taxes are due, take a few minutes now to go over your tax materials and make sure you have everything you need. Come mid-April, you'll be glad you did.
For more helpful information related to your taxes, head over to take a look at The Motley Fool's Tax Center. You can also take advantage of the Fool's 30-day free trial to take a closer look at Motley Fool Green Light. There's no obligation, and you'll find useful information that will help you not just with taxes but with every element of your financial life.
Fool contributor Dan Caplinger isn't done with his taxes yet, but he's got a good idea how much he'll owe. He doesn't own shares of any of the companies mentioned in this article. Intuit is an Inside Value recommendation. The Fool's disclosure policy isn't taxing.
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