The 2017 tax season is here. Whether residents are anticipating a sizable return, dreading the tax bill, or hoping to just break even, a little organization beforehand could be the difference between writing a bigger check and keeping a few extra dollars, experts say.
Filing season officially opened Jan. 23. The Internal Revenue Service announced earlier this year it expects more than 153 million tax returns to be filed.
Since the traditional April 15 deadline falls on a Saturday this year, taxpayers have until April 18 to file returns. Even with the extra days, now is the time to organize documents to ensure things go as smoothly as possible, experts say.
According to Laura Hendrix, an assistant professor of family and consumer economics for the University of Arkansas System Division of Agriculture, taxpayers will need to have more than just a W2.
“W2s, 1099s, Social Security numbers, interest and other income statements and bank account numbers for direct deposit of your refund, are the basics for 1040 EZ and 1040A filers,” Hendrix said. “For those with dependents and/or itemized deductions, you’ll need supporting documents for those items to complete form 1040 and other related forms such as Schedule A for itemized deductions.”
Additionally, contributions to a Traditional Individual Retirement Account are deductible for those who qualify. These contributions can be made up to the April 18 deadline. Itemizing or not, the IRS has a complete list of documents needed at their website, http://www.irs.com/articles/tax-form-checklist. It’s worth taking a look before making an appointment with a tax professional or setting off to conquer your own forms to guarantee you have what you need to get deductions you are eligible for, a spokesman said.
“Filers may not be claiming all the deductions and credits for which they qualify,” Hendrix said. “Even moderate income filers qualify for the Earned Income Tax Credit and child tax credits.”
The IRS has already told filers claiming the EITC or additional child tax credit to expect refunds to be delayed until Feb. 15. While delays are anticipated every year, the method of filing may impact how fast the return is processed.
“For the earliest possible refund, file electronically ASAP,” Hendrix said. “Use Form 8888 to have your refund deposited directly into your account. Filers can designate up to three savings and/or checking accounts. This is a great opportunity to save.”
Once all tax documents are organized or ready, many ask the debatable question – hire a tax expert or do it yourself?
“The more complicated your return, the more it pays to have a professional prepare your taxes,” Hendrix said. “However, for simple returns, consumers are much better off preparing their own. Anyone who only needs 1040 A or 1040 EZ can prepare their own return. IRS makes it easy with Free File. Filers with an adjusted gross income less than $64,000 qualify for free tax assistance. I would caution consumers about using advance refund loans. Filing electronically and using direct deposit of your refund is typically a quick turnaround. Regardless of the service you use, make sure it is reputable.”
Filers meeting the qualifications for free tax assistance can visit http://www.unitedway.org/myfreetaxes for more information.
Along with gathering documents and filing in a timely manner, Hendrix’s also warns consumers of tax scams that may be circulating.
“It seems like there are more tax scams every year. Consumers need to be extremely cautious of solicitations via phone, text or email for tax information or any other personal or financial information,” she said. “Scammers may claim to be with the IRS.”
Find basics on IRS tax form checklist
The IRS offers a checklist of items needed when taxpayers are getting materials ready for filing.
Personal Information: Social Security numbers for yourself, spouse and any dependents;
Income Information: W-2 Forms from all employers you (and your spouse, if filing a joint return) worked for during the past tax year; 1099 Forms if you (or your spouse) completed contract work and earned more than $600;
Investment income information (including: interest income, dividend income, proceeds from the sale of bonds or stocks, and income from foreign investments);
Income from local and state tax refunds from the prior year; business income (accounting records for any business that you own); unemployment income, rental property income, Social Security benefits;
Miscellaneous income (including: jury duty, lottery and gambling winnings, Form 1099-MISC for prizes and awards, and Form 1099-MSA for distributions from medical savings accounts.) For more information about taxes, visit a tax preparer or IRS.gov.
— Lisa Lakey is with the U of A System Division of Agriculture.