Tips from the Internal Revenue Service to Make Filing Season Less Stressful
Tax season can be a stressful time for many taxpayers, but there are simple steps that can be taken throughout the year to make the process easier. The Internal Revenue Service (IRS) has provided some helpful tips to help individuals prepare for tax filing season.
One important tip is to organize tax records. By creating a system that keeps all important information together, taxpayers can make tax return preparation easier and potentially discover overlooked deductions or credits. Whether using a software program for electronic recordkeeping or storing paper documents in labeled folders, having organized records is key.
Another important step is to identify filing status. A taxpayer’s filing status determines their filing requirements, standard deduction, eligibility for certain credits, and the correct amount of tax they should pay. Changes in family life, such as marriage, divorce, or the birth of a child, may affect a person’s tax situation and filing status.
Understanding adjusted gross income (AGI) is also crucial, as it is a key factor in figuring taxes. AGI is a taxpayer’s income from all sources minus any adjustments. Making changes during the year to lower AGI can help reduce tax liability.
Checking withholding is another important tip. Taxpayers should ensure they are withholding enough from their pay to cover their taxes owed, especially if their personal or financial situations change during the year. The IRS Withholding Estimator can help taxpayers determine if they need to adjust their withholding.
Additionally, taxpayers should make sure to notify the USPS, employers, and the IRS of any address or name changes. This will help ensure that important tax documents are delivered to the correct address and that the taxpayer’s information is up to date.
Finally, saving for retirement can also lower a taxpayer’s AGI and reduce taxable income. Contributions to a retirement plan at work or a traditional IRA can help individuals save for the future while potentially lowering their tax liability.
By following these simple tips throughout the year, taxpayers can make the tax filing season less stressful and ensure they are prepared when it comes time to file their taxes.