Like it or not, April 15 is going to be here before you know it. If you haven't started working on your taxes yet, you might be having a bit of a panic attack just thinking about this. But don't fret, we're going to get you through this.
Believe us -- pulling an all-nighter to get your taxes done is not how you want to be spending these first few days of Spring. We've partnered with Fidelity Investments to bring you a few tips for making tax-filing a less hectic process. Here's to making the next few days as stress-free as possible!
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The first step is realistically deciding if you're going to make the April 15 deadline. There’s absolutely nothing wrong with filing for an extension, but you must be smart about it. To avoid a fee, the key here is to remember to ask for an extension before April 15. It’s also important to estimate and pay any tax by the 15th to skirt potential interest and penalties.
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Nothing will be more frustrating, or time consuming, than having to wander around looking for paperwork once you’ve finally started working on your taxes. (Because let’s face it, if you leave the room mid-tax prep, you may not come back for a while.) Here are a few key documents you’ll need right off the bat, so make sure you have them handy:
- W-2, showing income from employment
- 1099, which covers everything from interest, investment, and self-employment income to Social Security and unemployment benefits
- 1098, for deductible items such as mortgage interest and tuition payments
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The good news is that 2013 was truly a milestone year for same-sex couples. After the Supreme Court struck down a key provision of DOMA, the IRS ruled that married same-sex couples now have the option of filing a joint return or filing as a married couple with individual returns. It’s important to remember that this rule only applies to federal (i.e., not state) filings. If you live in a state where same-sex marriages aren’t recognized, you will have to file separately from your partner for state returns.
You can reduce your taxable income by contributing to a tax-advantaged account. The explanation is pretty straightforward: the lower your taxable income, the less you'll owe. Tax-advantaged accounts, like a 401(k) or 529 College Savings Plan, are either exempt from taxes altogether or have other kinds of tax benefits. Contributions to many of these accounts, including IRAs, can be made up until April 15th. So there’s still time!
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Amidst the flurry of completing all that paperwork, it can be easier to make a typo than you think. Double-check your work to ensure you’ve:
-Entered the correct social security numbers
- Spelled all names correctly
- Only claimed dependents once (a common mistake amongst divorced spouses and adolescents who may file their own taxes)
- Added and subtracted numbers accurately
- Calculated credits and deductions correctly
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Even though many post offices stay open late on April 15th to accept paperwork from last-minute filers, it’s no fun having to wait in line. So avoid this hassle altogether and file the paperwork online from the comfort of your home. Most states are now offering this option as well, which is great news!
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It's crucial to plan ahead. You don’t necessarily have to file your tax returns early, but make sure you’re not waiting until April 14th to start filling out the paperwork. Procrastination will not only make the whole experience incredibly stressful, but it’ll also make mistakes more likely. Neither you nor the IRS wants that.