Tips for Preparing Your Tax Return

Preparing your tax return can be overwhelming, especially for beginners. The most basic advice before even focusing on your state return is that you first have to make sure you can indicate complete and accurate information in your federal return. You can always call and hire a professional to do the work for you but preparing your own tax return means that you do not have to spend extra money. It is a great thing because nowadays there are a lot of options in preparing your tax return. You can choose from customary paper filing, utilizing software for a more organized tax preparation or preparing and submitting your tax return using the online processing.

You also need to organize a few documents before preparing for your tax return: 1.Financial records or documents – you need these to check on the amounts to indicate at each item of your tax return. Even if you hire a tax agent, you will still need your financial records. 2. You also need the tax file number. If you do not have a tax file number, then you are required to apply for one. Once you obtain the needed documents, you may now begin to work on your tax return, here are a few tips:

Make the necessary adjustments on the details from your federal return to your state income tax return. – You have to make sure that you make the adjustments on the information on your state income tax return. A few of these modifications will require addition, which are added back because of federal deductions that you may have subtracted that aren’t accepted on the income items or state return that are exempted from tax for federal purposes, but are processed on state income tax. Other modifications will be deductions, commonly from income items that are taxable under the law of the federal tax, but are exempted from tax under law of the state tax. A few of these deductions can also be deductions exclusive to state tax laws. The total amount of required tax return adjustments will be based upon the scope that the state conforms to the federal tax law.

What are the usual deductions? The customary deductions to federal tax income consist of: Contributions to the state’s 529 college savings plan, refunds on state income tax, retirement benefits and social security that are federally taxed, subtractions for federal income taxes if it applies in your state, and state lottery winnings.

What are the usual additions? The customary additions to federal tax income consist of: Moving expenses, municipal bonds from other state interests, depreciation of bonus and interest on student loan.

Determine your state tax accountability – After you have computed your taxable income, you have to determine your gross state tax accountability. A few states have a fixed rate for its residents regardless of the individual income. On the other hand, a lot of states have tax brackets with tax amounts that elevate as income also rises.

You have to compute the total tax due – After you have determined your tax accountability, you may deduct that by the credits of your state tax you are eligible for. The credits for state tax are different from one state to another but a lot of states have different versions of credits for child tax and credits for earned income. A lot of tax credits can only decrease your tax accountability to 0 but there are a few credits that are refundable tax, in other words, they are processed or treated as a tax payment with balance credit that will be refunded to you.

File your state income tax return – A lot of the tax payers prefer filing the tax return electronically because it’s secure, it’s convenient and it’s fast. But you can still opt for paper filing. Just make sure that you have the right address to send it to. You can check irs.gov for address information.

On getting the tax refund – The quickest way to collecting your tax refund is if you submit the Form electronically and have your tax refund sent straight to your bank account. When you opt for paper filing, it’s takes about one whole week for processing, exclusive of the mailing time. If you file electronically, the whole process normally takes just about 10-15 days.

Additional Quick Tips:

  1. Accuracy and completeness – Make sure that all of the information you are entering in the form are comprehensive and correct. Being organized, especially when it comes to your financial records, will make your life easier when it’s time to prepare for your tax return submission.
  2. Make sure that the forms are organized – Placing the pages of the form in order would make it convenient for you and for the IRS to go through and review.
  3. Avoid rounding off – This may indicate that you are not completely sure of the exact figures, therefore, giving the IRS a reason to audit you further.
  4. Be careful with your calculations – Make sure that you double check on your computed figures indicated in your tax return form. You have to pay attention to child tax credit and earned income tax credit – these are the figures that are prone to error.
  5. Make sure that you have signed the form – A lot of people think it’s trivial but one of the most important thing to do and the most frequent miscue (according to IRS) when preparing your tax return is signing the form.
  6. Prepare early, file and pay on time – A lot of people are tax procrastinators. But do not wait until the last minute to prepare for your tax return, you want to have more time to recheck and do some adjustments when necessary.
  7. If you’re certain you can’t file on due date, file for an extension – You can accomplish and submit Form 4868 to obtain extension and to avoid penalties for late filing.
  8. Always keep a copy of your tax return – Even after several years of filing your tax return, keep those for reference, you never know when you’re going to need it.