The best way to prepare to do your taxes – or even get your taxes done – is to take a deep breath, gather your thoughts and start scrambling for your paperwork.
Your 2018 federal income tax return will be unlike much of what you’ve seen in the past. We’re looking at a wide array of major changes – and plenty of tripwires – under the new tax law.
But some sensible, first steps can help you fight the anxiety and tackle your taxes.
The tax deadline is April 15. The earliest the Internal Revenue Service will accept returns is Jan. 28.
Before you even think about trying to understand the new tax rules, though, try to remember what’s new in your own life. Did you have a baby in 2018? Buy a new house? Get a new job? Retire?
New things in your life last year could mean a whole new set of paperwork this year when it comes to your taxes. Here’s a quick to-do list:
1. Grab a copy of last year’s tax return
Sure, the tax rules changed dramatically and we’ve got a 1040 form with a new look.
But your old return for the 2017 tax year can be a road map for making sure you’ve gathered all the paperwork you need to file your 2018 tax return.
Maybe you took a new job in March or April? Do you have two W-2 forms? The one for your current job? And the W-2 you need from the old job you worked for a few months?
Cathy Anderson, owner of Anderson Financial Services in Fraser, said often tax filers only show up with one W-2 when they’ve changed jobs in a year. Some forget to look for the paperwork for the old job. You need it.
Your old 1040 might remind you that you still don’t have the latest 1099-DIV from a mutual fund to report dividends and capital gains. Or maybe you don’t have a 1099-INT from a bank account yet.
2. Find valid Social Security numbers, IDs
Make sure to have the accurate Social Security numbers for you and your spouse as well as your children. Did you have a baby in 2018? You need the newborn’s Social Security number for your tax return.
Take along your driver’s license, too. Some tax preparers will ask you for a driver’s license or state identification number to prove you are who you say you are.
In addition, some states will reject an e-file on a state return if you don’t submit information from a driver’s license or state ID. States that currently require driver’s license information are: Alabama, Connecticut, New Mexico, New York and Ohio, according to the American Institute of CPAs.
Not all states had yet released their 2018 tax forms as of Jan. 16, so more states might be added later to that list, the American Institute of CPAs warned.
Many states are requesting, not requiring such information, which can be entered by tax practitioners through the tax software that they use. States that request the ID information include Louisiana, Vermont, Virginia and Illinois.
TurboTax will request your driver’s license or state ID information based on the individual state rules.
TurboTax also has a new feature this year that allows new customers to jump start their taxes by scanning their driver’s license bar code to quickly upload your name address, and birthday without tedious dfinnata entry.
3. See if you can file for free
The IRS site offers a “Free File” program that allows taxpayers, depending on their income, free access to brand-name tax products to prepare a federal tax return and file it for free. The program, which includes 12 partners, has reportedly been made more consumer-friendly to cut out some outside marketing efforts.
Free File tax software is available if your adjusted gross income was $66,000 or less last year. Some participants in the program also offer both free federal and state tax preparation to some filers.
For taxpayers who earn more than $66,000, Free File Fillable Forms are available, as electronic version of IRS paper forms. Those free forms are available when the IRS tax filing season begins on Jan. 28.
The new consumer protections include: Free File members will email prior year participants to welcome them back but that email cannot contain any information about other products or marketing, except for free or paid state tax preparation services.
To use Free File, taxpayers must use the IRS.gov site. In some cases, a tax filer may not qualify for a specific company’s offer in the Free File program. But the new agreement requires that the companies offer taxpayers an easy way to return to the IRS site to see if they qualify for any company’s Free File program.
Several big names participate in the program, including TurboTax, H&R Block and TaxSlayer.
TurboTax, for example, notes that it offers its TurboTax Free File program via the IRS site to taxpayers with an adjusted gross income of $34,000 or less, active military personnel with adjusted gross income of $66,000 or less, or those who qualify for the Earned Income Tax Credit.
H&R Block offers its Free File program via the IRS site to those with an adjusted gross income of $66,000 or less and your age is between 17 and 51, or you are eligible for the Earned Income Tax Credit, or you’re active military with an adjusted gross income of $66,000 or less. H&R Block offers free file of a state return, if you qualify for the federal return.
4. Take time to review a checklist
If you’re working with a tax professional, you might receive a checklist in the mail or via email.
Some sites, such as H&R Block, also provide a checklist that anyone can use to help figure out what information they need to complete a tax return.
Consider things like: a 1099-G if you received unemployment benefits, which are taxable; a Form 1098 for your mortgage interest statement; paperwork relating to retirement income, such as a 1099-R.
If you receive Social Security benefits, watch out for the SSA-1099, which is mailed each January so you know how much Social Security income to report on your tax return.
An SSA-1042S is sent to noncitizens who live outside of the United States and received or repaid Social Security benefits last year.
If you currently live in the United States and you need a replacement form SSA-1099 or SSA-1042S, the Social Security Administration allows you to go online and get an instant, printable replacement form with a my Social Security account at http://www.socialsecurity.gov/myaccount.
A replacement SSA-1099 or SSA-1042S is generally available for the previous tax year after Feb. 1. The Social Security phone number is 800-772-1213.
5. Know your bank account information
Triple-check your bank account number and routing number if you want your tax refund directly deposited into your account.
Plenty of headaches can be avoided if you make sure to enter the correct number.
If the IRS accepts your tax return and is unable to direct deposit your refund, then the IRS will mail your refund check to the address listed on your tax return. There’s no way to change your bank information once the IRS has accepted your e-filed tax return.
If the IRS rejects your return, you may be able to make the correction to your bank information before e-filing your tax return again.
Typically, you’d get your refund faster by using direct deposit. Direct deposit also helps avoid the chance that a tax refund check could be lost, stolen or returned to the IRS because the post office said it could not be delivered.
The IRS reminds taxpayers they should only deposit refunds directly into accounts that are in their name, their spouse’s name or both if it’s a joint account.