Filing tax online can seem like a pretty tricky affair to someone who isn’t very well-acquainted with the process. Please know that it isn’t as hard as it is made out to be! In fact, you can do it on your own with a little learning and some help from the technology.
Filing Tax Online? Key Points to Remember
Following are few important points you should keep in mind when you go about this process yourself:
1. Report all incomes
Anyone who wants to file taxes online by himself/herself should know that it is very important to report all your incomes. Avoiding doing so is the quickest way to get yourself picked for an audit. Look out for all those 1099 forms about income received from the dividends, bank interest, asset sales, freelance work etc. If you think you’re missing some 1099 you should have received, get in touch with the issuer to obtain a copy before the tax filing deadline. Don’t just assume you are exempt on something either, it is always best to check.
Although you aren’t required to attach any 1099 copies to your tax returns, you must make sure that the numbers on the forms and your report match with each other. Else you may attract unwanted attention from the IRS.
2. The keyword is accuracy
The best way to avoid any trouble from IRS is by being accurate about your tax information. Hence, ensure that you properly go through all your records and claim only the correct deductions. Playing a guess game in this matter can prove to be a very costly mistake, as you may end up paying heavy penalties.
Furthermore, steer clear of any round figures while claiming deductions. For instance, although you’re allowed to deduct any out-of-pocket medical expenditures that are over and above 10% of the adjusted gross income, you should have proper records to prove them. You’ll be attracting IRS attention if you claim to have spent $ 20,000 on meds, as that might seem like a too well-rounded figure to be true!
3. Electronic filing has its pros
If you still use the old school paper method to file tax returns, you should know that electronic filing offers various advantages, and can significantly reduce the stress involved in the process. To begin, the error-rate of electronically filed returns is very low at less than 1%, while the error rate for paper-returns is in the vicinity of a whopping 21%!
Majority of the tax-filing software available these days help you easily identify money-saving deductions and credits. In addition, the funds from IRS get processed much faster in case of electronic returns. It takes IRS anywhere from 6 to 8 weeks to issue refunds for paper returns, while this timeframe gets reduced to 3 weeks or less in case of electronically filed returns.
4. Don’t hesitate to ask for an extension
You should never hesitate to ask for an extension if you are unable to gather all your tax documents by the deadline. It’s much better to request an extension than filing an inaccurate tax return.
To conclude, filing taxes doesn’t necessarily have to be a stressful task and it doesn’t have to be full of mistakes. Following the above tips can help you make this process hassle-free and smooth for yourself.