Tips to get you through tax season

illustration of woman burried in paperwork

Here in the US, it’s tax season! Unless you’re a CPA (and if you are, thank you for your hard work and sorry for not sorting that shoebox filled with receipts), this fact is unlikely to fill your heart with joy, especially if you’re one of the millions of Americans who does her own taxes.

It’s an annual headache. It’s awful. Did you know that in some other countries, citizens are simply mailed a form that has all their tax data pre-filled? Then they simply check it for errors, make any necessary corrections or additions, and mail it back in. Done and done. Of course, here in the US, we don’t do things that way, because that would be simple and easy, and simple and easy is in direct contradiction to our rough-and-tumble pioneer spirit. Or something like that. But hey, good news: April 15 falls on a Sunday this year, so you have a whole extra day to prepare.

So. We have a tax code the size of a refrigerator. A walk-in refrigerator. It’s written in impenetrable bureaucrat-ese, and it has so many loopholes that even the exceptions to the exceptions have exceptions. So buckle in as we take a look at some important things to know about getting your taxes done right.

Get (More) Organized

Every year you tell yourself you’re going to be better organized next year. It happens. But it’s hard to maintain the discipline in June that will pay off next April. Still, the better a job you’ve done of keeping your tax-related documents organized, the easier a time you’ll have when push comes to shove.

Do Your Homework

Modern tax software is pretty good at grilling you with questions you’ll need to answer to properly complete your tax forms. But the more answers you have at hand when you fire that software up the happier you’ll be. Has your employment situation changed since your last filing? How about income you earned from your side hustle? Did you have any employees, contract or otherwise? If you’re self-employed, did you make any purchases that were a business expense, like a printer or computer? Start big and drill down.

Don’t forget deductions

Are you eligible for deductions? Check this handy summary of 2017 Tax Rates, Standard Deductions, Exemption Amounts, and more. And as insurance agents, we’d be remiss not to point out one potential deduction that shouldn’t be overlooked – non-reimbursed losses from theft or casualty events (fires, floods, storms, etc.)

Watch out for the scammers

There are a lot of bad guys out there trying to separate you from your tax refund – and the scammers get craftier every year. The IRS keeps track of the latest tax fraud schemes – there’s a lot of them! There are a lot of tax agent impersonators, too – remember, the IRS will never contact you on social media or via email. Here’s a guide to know when it really is an IRS agent and when it’s not.

Seek Help

Even the best tax software can’t anticipate the minutiae of your individual work circumstances. Spend some time looking over the IRS help pages to check for details you might have missed. If you work from home, can you write off those comfy footy pajamas as a business expense? (Probably not, sadly.) The best solution is to hire a professional tax accountant – she may save you enough to pay for her services!

Don’t Freak Out

Remember: Form 4868 is your friend! This is the form you’ll use to file for an extension, so BEFORE THAT APRIL 16 DEADLINE, submit this little beauty and feel the stress ebb away. Be aware that this form requires you to make an estimated tax payment, so it isn’t a get-out-of-jail-free card, but it can come in handy if you’re overwhelmed.

If you’re doing taxes for your business (and why are you doing that?! Get an accountant, jeez!) the form you’ll need to file for an extension is either Form 7004 or Form 1138, depending on your circumstances.

Of course, there’s a whole list of caveats, ifs, and buts swirling around any tax question. Your best guide will be a reputable tax accountant. Start looking soon, they’re very, very busy here in the depths of tax season!

Tax season prep: be sure to factor losses in

Everyone’s favorite time of year, tax deadline, is rapidly approaching. While there are still a few weeks left before it’s time to get out the balloons and party hats, it’s always a good idea to be over rather than under prepared for your yearly taxes. As you’re thinking about the past year, make sure to consider any property losses you may have incurred in 2011. Many people up and down the East Coast suffered losses due to Hurricane Irene, which was by most estimates one of the top ten most destructive and deadly hurricanes to hit the United States since 1980. Irene was a tragedy, but the silver lining is that according to the IRS, losses may well be deductible.
Keeping the terminology clear may help you understand which losses are deductible and which are not. Remember, a casualty occurs when your property is damaged as a result of a disaster such as a storm, fire, car accident or similar event. A theft occurs when somebody steals your property. A loss on deposits occurs when your financial institution becomes insolvent or bankrupt. Any losses incurred as a result of hurricane damage are considered casualties, particularly since Hurricane Irene was one of the many federally recognized disasters in 2011.
However, while losses are deductible, it’s important to know that if you have insurance, you must have filed a timely insurance claim. Any reimbursement you received from insurance must be taken into account and subtracted when figuring your loss. This includes any expected reimbursement even if you have not yet received it. This booklet on Casualties, Disasters & Theft from the IRS (PDF) will help you decide if the casualty, loss and theft deductions apply to you.
Taxes are never fun, but being prepared for all eventualities helps whether the disaster is a hurricane or a Form 1040. Make sure your accountant is aware of any losses you may have suffered in 2011.