How to Make the Most of Tax Season: Tips and Strategies

Tax season can be a stressful time, but it doesn't have to be. With a little preparation and the right strategies, you can minimize the hassle and even potentially lower your tax bill. This guide will walk you through key steps to help you make the most of tax season in 2020 (and beyond!).

1. Start Early – Don’t Wait Until the Last Minute

Procrastination is the enemy of a smooth tax return. Begin gathering your documents as soon as possible, ideally in October or November. The sooner you start, the less likely you are to make mistakes or miss important deadlines.

2. Gather Your Necessary Documents

You’ll need a variety of documents to accurately complete your tax return. Here's a checklist of what to collect:

Social Security Numbers: For you, your spouse (if filing jointly), and any dependents.
W-2 Forms: Received from your employer(s) detailing your earnings and taxes withheld.
1099 Forms: These report various types of income, including freelance work, royalties, dividends, and bank interest. (1099-NEC for independent contractors)
Schedule K-1: If you’re a partner in a business or receive income from an S corporation.
Records of Deductible Expenses: This is where you can save money! Keep receipts and documentation for:
- Itemized Deductions: Medical expenses, state and local taxes (SALT), mortgage interest, charitable contributions. Note: Changes to deductibility rules may apply – consult with a tax professional.
- Business Expenses (if self-employed): Expenses related to your business, such as supplies, equipment, and travel.
Prior Year's Tax Return: Useful for reference and ensuring consistency.

3. Choose Your Filing Method

You have several options for filing your taxes:

Tax Software: Popular options like TurboTax, H&R Block, and TaxAct offer user-friendly interfaces and guided support. They can handle much of the complexity for you.
Tax Professional: Hiring a Certified Public Accountant (CPA) or Enrolled Agent can be beneficial, especially if your tax situation is complex (self-employment, significant investments, etc.).
IRS Free File: If your adjusted gross income (AGI) is below a certain threshold, you can file for free using IRS Free File. https://www.irs.gov/free-file

4. Maximize Your Deductions

Understanding and utilizing all available deductions can significantly reduce your tax liability. Some common deductions include:

Standard Deduction: A fixed amount based on your filing status.
Itemized Deductions: As mentioned above, these can often be more beneficial than the standard deduction if your itemized expenses exceed the standard deduction amount.
Above-the-Line Deductions: These deductions can be claimed regardless of whether you itemize, such as student loan interest, IRA contributions, and self-employment tax.

5. Stay on Top of IRS Deadlines

Tax Filing Deadline: Typically April 15th. Note: This date may shift if April 15th falls on a weekend or holiday.
Estimated Tax Payments: If you're self-employed, you’re generally required to make quarterly estimated tax payments.

6. Resources & Further Information

IRS Website: https://www.irs.gov/ – This is the official source for all tax information, forms, and publications.
Taxpayer Advocate Service: https://www.taxpayeradvocate.gov/ – If you're experiencing problems with the IRS, the TAS can help.

Disclaimer: This blog post provides general tax information and should not be considered professional tax advice. Tax laws are complex and can change. Consult with a qualified tax professional for advice tailored to your specific situation.