April 2018 is just around the corner, which means tax season is nearly here.
While you may think you have plenty of time to get your finances and documents in order, you don’t want to be rushing at the last minute, as could create a higher chance of error and cause you to receive any expected refund slower. Instead, start preparing as soon as you can. You’ll find that when April gets here, you are ready to go and ready to receive your refund as fast as possible. Remember, the more organized you are when you start the process, the easier it will be.
In 2018, your taxes will be due April 17th, giving you nearly five months to ensure that you have gathered all relevant records, claimed all available deductions, and prepared your returns appropriately. Learn how to get started filing your taxes, what the filing process will look like and what you can expect after you’ve submitted your return with this handy guide to get prepared for the 2018 tax season.
How to Start
The tax return process can be intimidating, no doubt about it. However, when you start organizing your information and preparing in advance, you have plenty of time to make sure you are accurately filling out forms and correctly calculating items.
To get started, you’ll want to figure out what documents you need. These will depend on factors like your type of employment, any benefits you may receive, and any additional income you may receive from other sources. Come up with an organizational system for these documents, such as storing them in a folder or scanning them to your computer. Every time you receive a new one, add it to your system immediately.
What documents do you need to start preparing your tax return? The most commonly used tax forms include:
- Form W-2: Did you fill out a W-4 when you started working for a full- or part-time employer? If so, you will receive a W-2 form in the mail, which will highlight your income and any taxes withheld by that employer. Employers are required to mail these out by January 31st, so make sure you are keeping an eye out for it so you can follow up on a late or missing form.
- Form 1099: If you receive income over $600 from somewhere that you are not an employee, you’ll receive a form 1099. 1099s also cover things like prize money, so you may receive more than one depending on where your money came from this year. Employers should also mail 1099 forms by January 31st.
- Form 1095-A: If you receive your healthcare through the Marketplace, you’ll receive a form 1095-A verifying that you were enrolled during the applicable tax period. This form will also make sure that you are receiving the correct tax credit for your insurance—so it can actually end up getting you more money back.
- Form 1098: A 1098 form will be issued if you paid $600 or more on mortgage interest in the past year. Any mortgage interest paid up to $1,000,000 can be deducted so that you are not responsible for paying tax on that interest.
- K-1: If you are a partner in a business, a K-1 form will be required to accurately report any income or losses that the business may have incurred.
While these are the forms most often used to prepare taxes, there are other documents you’ll want to gather when applicable, including:
- Charitable Donation Receipts: It’s been a challenging year for many Americans, with hurricanes and natural disasters damaging areas from coast-to-coast. Maybe you donated some money to help out, and if so, you can use those donations to reduce your owed taxes. Keep a receipt of all donations, either in an organized folder or on your computer. Remember, even small donations you made can have an impact on your final tax refund.
- Expenses: Are you self-employed? Make sure you keep track of all business expenses as you can use these to offset some of your income during the year. Save receipts in your organizational system, and consider having them emailed, which will also be a way to ensure you can access them at any time.
How to File Your Return
Once you have received your tax documents and prepared your return, it is time to file with the IRS. You can typically start submitting returns as soon as they are ready come mid- to late-January, but the IRS has not yet announced the official opening date for 2018 yet, despite speculation on blogs and other media. Expect the official date to be announced soon, but you should still start preparing now.
When it comes to submitting your tax documents, you have two options: e-filing and mailing a paper version.
- E-Filing: You can e-file immediately through several methods. The IRS provides a free fillable form and filing process for those who earn under $64,000 a year. Aside from that, you can use a commercial software system, although these will cost additional money. If you work with a tax preparer, he or she will be able to e-file on your behalf.
- Paper Filings: You can also still mail in a hard copy of your forms to the IRS. You’ll need to find the right IRS address to send to, and you run the risk of your mail getting lost. It’s important to track your refund using the IRS system if you mail in your documents, so you’ll want to verify that they were received and are being processed.
If you’re unsure about any part of the process, consider contacting a tax professional with any specific questions about filing your return. If you make a mistake, not only can you miss out on potentially larger refunds, but you could be on the hook for significant penalties from the IRS.
What to Expect After You File
You’ve prepared your returns and filed your forms… now what? Unfortunately, there is a bit of a waiting game when it comes to receiving your refund, which is why it is crucial to be prepared in advance.
If you’ve e-filed your taxes, you can expect to receive your refund much sooner than paper filers; the IRS estimates that you’ll get your return within just three weeks of filing. Best of all, you can get your tax refund faster than a paper check when you have the IRS deposit the money directly into your bank account or a prepaid card like the Green Dot Prepaid Visa® card.
If you prefer to file your return by mail, it may take a lot longer to receive your refund. The IRS estimates six to eight weeks of processing time for paper returns.
If there are any errors or missing documents submitted with your return, your refund could be further delayed. This is why starting early and asking for help from a professional can really help get your money faster.
When you take the time to prepare for your taxes, you won’t feel as overwhelmed when tax season arrives. Arm yourself with the right resources and inform yourself by staying up-to-date on any news from the IRS. So, why wait for a paper check? Get your very own Green Dot Prepaid Mastercard® or Visa® Card today and have your refund direct deposited to your account. Learn more about Green Dot and their simple fees today.
The views and opinions expressed here are those of the author and do not necessarily represent the views of Green Dot Corporation.