10 Tax Tips To Get You Started This Filing Season

The 2013 filing deadline this year is April 15th in the US and April 30th in Canada for all 2012 tax returns. The following is a list of tips we have compiled to help you get started this tax season:

1. Get All Your Paperwork In Order

Financial institutions had until January 31st to mail out W-2s, employers have till the last day in February to handout T4 slips.  Expect receiving yours in the mail soon and in the meantime get your expense and deductions paperwork ready.

2. Fund Your Retirement Account

You have until the April 15th deadline to contribute funds to your traditional IRA and Roth IRA, in Canada you have until March 1st till the RRSP deadline, make sure you don’t exceed your RRSP or 2013 IRA Contribution Limits. If your income is too high to contribute to a Roth IRA, try using a Backdoor Roth IRA.

3. If Using a Tax Return Preparer, Check His Qualifications

TaxesIf you are thinking of using a tax return preparer, do check his qualifications. All paid tax return preparers have a Preparer Tax Identification Number (PTIN). In addition you can inquire whether your tax preparer attends continuing education classes.

4. Be Cautious Of Unconventional Practices Used By Your Preparer

Be wary if your preparer wants to base his fee on a percentage of your refund. If this happens, the IRS suggests that you look for another professional to help you prepare your taxes. Always make sure all refunds are being sent directly to you, not your preparer. Check your return before signing it, and never sign a blank tax return.

5. Read DIY Tax Software Reviews

If you don’t want to hire a tax preparer and instead plan to use do-it-yourself tax software, use customer reviews to determine whether the software is a good fit for your needs. Check our TurboTax Review and Tax Center for discounts.

6. Consider Filing For An Extension If You Need It

If you think you won’t be able to get all your filings in order by the April 15th deadline, file for an extension now using Form 4868. You will be granted a 6-month extension.

Unfortunately you cannot file for an extension in Canada, if you owe money you will receive a 5% penalty plus an additional 1% for every month you are late.

7. Take Advantage of The American Opportunity Credit

If you, or someone you support is a student in the first of four years of postsecondary education, you may qualify for the American Opportunity Credit to receive up to $2500 in tax credit. To claim this credit, be sure to file and submit Form 8863 with your tax return.

8. Check If You Qualify For EITC

EITC is a refundable tax credit and you may qualify for it if you earned less than $50,270. For more information visit the IRS EITC Assistant page. From there you should be able to check if you qualify for this credit by answering some questions about yourself.

9. If You Can’t Afford A Tax Preparer, See If You Qualify for VITA or TCE

The IRS offers programs like VITA and TCE that help low-income or elderly communities receive free help in preparing their tax returns. To qualify to receive help from the VITA program you must earn less than $51,000. To qualify for the TCE program you must be 60 years of age or older. To find tax assistance near you, check the VITA and TCE location finder.

10. E-file Your Tax Return

You can electronically file your tax return and you will receive acknowledgment from the IRS within 48 hours when they receive it. For more information on e-filing your tax return, visit the IRS page. Make sure to submit your filings at least 3 days before the deadline in case an error occurs and the IRS does not receive it. This way you have time to correct any errors and submit your filing again by the deadline.

Check out our Tax Center for more Tax articles and discounts!

By Neda Jafarzadeh, a financial analyst with NerdWallet Investing.  NerdWallet helps consumers make better financial decisions by proving them with the tools and research to help them get there.

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Comments

  1. says

    I absolutely hate doing my taxes. I always feel like I’m missing out on something. However, these are good starting points. I will hold out doing them on my own one more year with this in mind.

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