Tax Day (April 15th) is fast approaching, but filing doesn’t have to be a frantic scramble. Take control of your taxes with our ultimate Tax Filing Checklist. It’s your guide to a smooth and stress-free filing experience.
Ditch the dread. Below we break down a tax filing checklist to help simplify the process.
Pre-filing preparation
Whether you hire a professional or plan to do it yourself, the first thing you’ll need to do is gather and organize your tax documents. For each person on your tax form (yourself, your spouse if filing jointly, and any dependents) you’ll need:
Personal info
- Social Security and/or tax ID numbers
- Birth dates
- Copies of last years tax return: Helpful but not required
- IP PIN: The IRS may have issued an Identity Protection PIN for you, your spouse, or a dependent. If so, you’ll need that PIN when you file.
- Bank Account Numbers: If you elect to receive your refund or make your payment directly from your bank account.
Income documents
- W-2s: From your employer(s), showing wages earned and taxes withheld.
- 1099s: For various types of income, such as self-employment income (1099-NEC), interest income (1099-INT), dividends (1099-DIV), or other miscellaneous income (1099-MISC).
- 1099-B: For proceeds from broker and barter exchange transactions.
- 1099-R: For distributions from pensions, annuities, IRAs, or other retirement plans.
- Records of any other income: This could include alimony received, unemployment compensation, or income from rental properties.
Documents for deductions
If you’re claiming any deductions or credits, you’ll need supporting documentation such as:
- Receipts for charitable donations: Especially if you’re itemizing.
- Records of medical expenses: If you’re itemizing and your expenses exceed a certain percentage of your adjusted gross income.
- Records of education expenses: For deductions or credits related to tuition, books, or other qualified education expenses.
- Records of child care expenses: If you’re claiming the child and dependent care credit.
- Records of business expenses: If you are self-employed or have a business.
- Records of contributions to retirement accounts: Such as 401(k)s or IRAs.
- Records of student loan interest paid: For the student loan interest deduction.
- Real estate tax bills: If you own property and are itemizing.
It’s best to create a dedicated folder or digital system for keeping all of these documents together. Categorize income and expenses separately, and make sure all documents are legible and complete.
Determine your filing status
Next, determine what your filing status will be.Your status directly affects your standard deduction, tax bracket, and eligibility for various tax breaks. Here’s a brief overview of the available statuses:
- Single: For unmarried individuals who are not claimed as a dependent by someone else.
- Married Filing Jointly: For married couples who file one tax return together, combining their incomes and deductions. Generally offers the most tax advantages for married couples.
- Married Filing Separately: For married couples who choose to file individual tax returns. This option is less common and often results in a higher overall tax burden compared to filing jointly.
- Head of Household: For single individuals who are not claimed as a dependent and have a qualifying dependent living with them for more than half the year. This status often provides more favorable tax rates than filing as Single.
- Qualifying Widow(er): For a surviving spouse whose spouse died in one of the two previous tax years and who has a dependent child living with them. This status allows them to use the more favorable tax rates for married filing jointly.
Pick your deduction method
Deductions allow you to subtract certain expenses from your gross income, resulting in a lower amount that’s actually subject to taxation. This, in turn, can lower your overall tax bill. There are two ways to claim deductions: the standard deduction and itemized deductions.
Standard deductions
The standard deduction is a set amount of money the government lets you subtract from your income before calculating your taxes. It’s a simple way to lower your tax bill without having to list out lots of individual expenses. The amount depends on your filing status (like single or married), and it changes a little each year. If your total expenses that you could list (like medical bills or donations) are less than this set amount, the standard deduction is usually the easiest and best way to go.
Itemized deductions
Itemized deductions are specific expenses you can subtract from your income when filing taxes. Instead of taking the standard deduction (a fixed amount), you list out these individual expenses, like medical bills, charitable donations, and state/local taxes. If the total of these itemized deductions is higher than the standard deduction, itemizing can lower your taxable income (and thus your tax bill) more than the standard deduction would. However, it requires more record-keeping and calculation.
Determine what credits and deductions you qualify for
Tax credits and deductions both reduce your tax burden, but they work differently. Credits directly lower your tax bill, while deductions reduce the amount of your income that’s taxable.
To determine which ones you qualify for, begin by researching potential credits and deductions on the IRS website (irs.gov). Carefully review the rules for each, paying close attention to income limits and other requirements.
Once you’ve identified potential credits or deductions, gather all necessary documentation, including receipts, invoices, and tax forms. Tax software can help you pinpoint eligible credits or deductions based on the information you provide, but for complex situations or if you have any doubts, consulting a tax professional is always a wise decision.
Popular tax credits and deductions to explore:
- Child Tax Credit: Helps families with the costs of raising children under 17.
- Earned Income Tax Credit (EITC): A valuable credit for low-to-moderate-income workers and families, potentially leading to a refund.
- Child and Dependent Care Credit: Assists with childcare expenses for children under 13 or other dependents so you can work.
- Medical Expense Deduction: You can deduct qualified medical expenses that exceed a certain percentage of your adjusted gross income (AGI).
- Charitable Contributions: Donations to qualified charitable organizations can be deducted, but there are limits based on your AGI.
- Mortgage Interest: If you own a home, you can usually deduct the interest you pay on your mortgage.
Choosing a filing method
With your tax documents gathered and filing status determined, you’re ready to choose how to submit your return. Here’s a breakdown of your options:
E-filing
E-filing is the most popular method for a reason: it’s fast, accurate, and secure. Your return is electronically transmitted to the IRS, leading to quicker processing and refunds. Tax software guides you through the process, often flagging potential errors and ensuring you don’t miss any deductions or credits. Popular options include TurboTax, H&R Block, and TaxAct. For those who qualify, the IRS offers Free File, providing free online tax preparation and filing services.
Paper filing
While less common, paper filing remains an option. You’ll need to download the appropriate forms from IRS.gov, carefully complete them by hand, and mail them to the designated IRS address. Be aware that paper filing is more time-consuming and carries a higher risk of errors, which can lead to processing delays or even rejection of your return. Double-check all calculations and ensure your handwriting is legible.
Tax professional assistance
For complex tax situations, such as self-employment income, multiple investments, rental properties, or if you’re facing an IRS audit, seeking professional help is highly recommended. A qualified tax professional (CPA or Enrolled Agent) can provide expert guidance, ensure you’re maximizing deductions and credits, and represent you before the IRS if needed. Even if your return isn’t overly complex, a tax professional can offer peace of mind and ensure you’re complying with all tax regulations.
Reviewing and submitting the return
Before submitting your tax return, Double-check all information for accuracy, including Social Security numbers, income figures, deduction amounts, and credit claims. Verify your bank account and routing numbers if you’re expecting a direct deposit refund or making a direct payment to ensure the funds go to the correct account. Understand that filing errors can lead to processing delays, reduced refunds, or even penalties and interest. Finally, be aware of the tax filing deadline (April 15th) and ensure you submit your return on time. If you need more time, explore the possibility of filing for an extension, but remember that an extension grants you extra time to file, not extra time to pay any taxes owed.
Post-filing steps
After you file, make sure to keep copies of the filed return and all supporting documents (W-2s, 1099s, receipts, etc.) for your records. These documents may be needed for future reference or in case of an audit. If you’re expecting a refund, you can track its status using the IRS “Where’s My Refund?” tool on their website. Finally, use the experience of this year’s filing to plan ahead for next year. Organize your financial documents throughout the year, stay informed about any tax law changes, and consider adjusting your withholding if necessary to avoid surprises come tax time.
