Even if we didn’t have a single calendar in our office, we would know when February came around each year because of the number of calls we get from clients who are anxious to get their tax documents so they can get their taxes done. And rightly so!
If you are expecting a refund, you should want to get your tax returns filed as quickly as possible. The refund you are getting really amounts to an interest-free loan that you have made to the government. Today, we are going to cover how to get your taxes done right.
First, let me make clear that we do not give tax advice. The intent of this column is to give you some ideas to keep in mind as you work on your taxes with your professional preparer, or as you work on them yourself.
Filing tax returns is a tedious task, whether or not you engage professional help.
The first step is get organized. Gather all the documents you’ll need. If you work as an employee, you will need your W-2 forms which will be delivered to you by your employer. If you have taxable investments or bank accounts, you will need your 1099s which report interest and dividends. If you sold stocks or bonds or other securities or investments during the year, you’ll need your 1099B. On the deductions side, mortgage interest is reported on form 1098, which you’ll need to deduct that interest. Gather the other things you’ll need for your deductions, such as receipts for charitable donations and anything else you can deduct.
Even if you are going to hire a professional to prepare your returns, it might be helpful to do some research on any changes in the tax code that happened over the previous year. If you find a change that might be applicable to you, ask your preparer about it. Also, if you’ve had major changes in your life like marriage or divorce, a birth or death, sale of a home, child starting college or any other life event, do some research to find out how that might affect your taxes. Make sure to alert your tax professional to these changes as well.
If you are using a professional, you should make your appointment as soon as you have your documents together. Obviously, February and March are very busy months for tax preparers. Even if you have always done your taxes yourself, it might make sense to have a professional check them over every so often to see if you are missing anything. The IRS will certainly let you know if they think you have under paid your taxes, but it’s unlikely they will show you any deductions you’ve missed! Plus, the fees you pay to have someone prepare your return may be tax deductible, making it even more attractive to ask for help.
For most people, the fastest way to get your refund is to file your return electronically (e-file) and have your refund direct deposited into your bank account. Most professional tax preparers will help you to file your return electronically, as will most tax preparation software.
If you make less than $73,000 per year, you can access Free File software directly from the IRS website (www.irs.gov/freefile) or you make more than that amount the IRS website provides fillable forms you can use to file electronically for free. The fillable forms do basic math functions, but provide no assistance beyond that. According to the IRS, they are perfect for “the true do-it-yourself taxpayer who prefers paper tax returns” but wants the speed and convenience of e-filing.
Even if you ultimately decide to file by sending in a paper return, you can still speed up the process of getting your refund by using direct deposit.
Finally, it is never too early to start planning for your 2025 taxes. If you have a professional preparer, ask for advice on how to lower your taxes. If you have investments with a financial advisor, you might share your return with your advisor to see if it might be possible to improve the tax efficiency of your portfolio.
For more information, you can listen to the podcast of Smart Money Management radio show on this topic, along with others, at www.alderferbergen.com.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Securities and Advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.