Tax season has officially begun! Although Tax Day isn’t until Tuesday, April 18 this year, W-2 statements must be received by employees no later than Jan 31, which means you probably already have yours!
The earlier you prepare to file your taxes, the better. You’ll avoid the stress of a last-minute rush and have time to deal with any issues that may arise. Plus, the sooner you file, the sooner you’ll potentially get a refund!
Better Business Bureau (BBB) serving the San Francisco Bay Area and Northern Coastal California offers the following early tax preparation tips to make filing your taxes as smooth as possible:
- Decide how you’ll file. When it comes to filing your taxes, you have a few options. Your first option is to file your taxes manually (by hand). There are also a plethora of online programs you can use. Using tax preparation software or electronic filing cuts down on errors in your application compared to manual filing. Your third option is to hire a tax professional. If you haven’t worked with a professional before, you may want start meeting with multiple preparers to choose the right one for you. Schedule your appointment early, as calendars fill up quickly during tax season. You can find a trustworthy professional or software service through BBB’s Accredited Business Directory.
- Organize your paperwork. Organize your receipts, necessary forms (including W-2s and 1099s) and proof of charitable contributions, and keep everything in one place. Determine whether you’re missing any necessary forms, and take the time now to reach out to the appropriate organizations and ensure that you receive them. Figure out if you’ll take the standard deduction or if you’ll exceed it. If you plan on itemizing your deductions, now is a good time to start. You can find all necessary forms on the IRS’ website, gov, under “Forms and Publications”.
- Watch out for scammers. Scammers love tax season. Tax scams were BBB’s #1 scam for both 2015 and 2016. In 2016, consumers nationwide reported more than 7,500 of them to BBB Scam Tracker. Watch out for any phone calls, emails or other contact from the “IRS”. These scams are designed to convince consumers of their legitimacy, but don’t be fooled. The IRS will never initiate contact with you over phone, social media or email. It’s also important to watch out for tax-related identity theft, which occurs when someone fraudulently uses your Social Security Number to file a return and claim a refund. If you’ve encountered any type of scam, make sure to report it to BBB Scam Tracker to help warn others.
- Think about milestones. Start by looking over your tax filings from previous years and take note of what’s changed in your life. Old filings can remind you of forms and income/expenses that are easy to forget about. Milestones like buying or selling a house, starting or graduating from college, having a child or getting married can have big effects on your taxes.
- Do your research. Look in to new tax laws and interpretations, both federally and in California. This may alter your filing. If you are a foreign national that uses an Individual Taxpayer Identification Number (ITIN), you may need to renew your number. This process can take up to 11 weeks, so start now if necessary.
- A note about refund advances. According to the IRS, beginning in 2017, if you claim the Earned Income Tax Credit or Additional Child Tax Credit on your return, the IRS must hold your refund until February 15. This measure is intended to combat tax fraud, but may cause financial problems for struggling families. Perhaps in response to this, big tax preparers are offering refund advances that have no fees and charge no interest. The main requirement, according to BBB Accredited Charity Consumer Reports, is that you must file your taxes with the company offering the advance. Be very careful before applying for an advance. Look out for hidden costs and read the fine print and contract very carefully.