5 Things to Know About Filing Your Taxes (Plus an Infographic)

5 Things to Know About Filing Your Taxes (Plus an Infographic)

Tax season is right around the corner and for many of us that means stress, frustration and lack of preparation. Below you will find five things that you should know before filing your taxes so that your stress will turn into refund success.

1. Tax Fraud

With Tax Identity Theft Awareness Week approaching (Jan 29-Feb 2), it is important to be aware of new and common fraudulent activity that occurs during tax season. According to IRS Commissioner John Koskinen, “Taxpayers can and should stay alert to new schemes which seem to constantly evolve.”

Here are some tips for staying safe during the tax season:

Staying safe during the tax season - infographic

To help keep your identity from being stolen this tax season, sign up for a service like LifeLock that specializes in identity theft protection to ensure your personal safety.

2. File Early

Filing your taxes early can benefit you in more ways than one. For instance, not only will you receive your tax return sooner, but you will also have more time to pay back the taxes you owe. Avoiding tax extensions is a perk as well. Individuals who wait until the last minute to file their returns commonly need more time to look for additional deductions or obtain receipts. Not to mention, if you push the process too close to the filing deadline, you are increasing the chances that you will need a tax professional’s help to sort your finances and complete your return. This can all be avoided by simply filing early.

3. E-filing is best

In addition to filing early, e-filing your taxes is a smart move as well. Not only is it convenient and more user friendly, but it is also safer. Because there is no mailing involved, this lowers your chances of tax fraud. Getting a faster refund isn’t too bad either.

Tax deductions and exemptions

4. Exemptions

Did you know that you can receive a tax discount just for the simple fact that you are married, have children, or that you give back to the community? These discounts are also known as exemptions, and they diminish the income amount you will be taxed on. Who doesn’t love a way to get money back in their pockets? There are different forms of exemptions that you should have knowledge of each so you can recognize when to take them.

5. Find an Accountant

Don’t think of this as a negative. Yes, some people are able to file their taxes on their own, but a lot of people need the assistance of a professional to funnel through the process of filing taxes. For instance, if you are trading in investments regularly, have had a life-changing event such as purchasing a house or having a baby, own your own business or are self-employed, then hiring an accountant may be the wise choice to make.

While filing your taxes may seem like a no brainer, it is important to be aware of the ways you can be severely impacted- both negatively and positively. Make sure to remember these five tips when you file this tax season- you may impact your pocket in a big way!

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