Important Reminders To Help You Prepare Your Taxes This Year

January 10, 2019

In the coming weeks, Americans will begin preparing their tax returns for 2018 under the tax reform changes that went into effect on January 1, 2018. While many of the changes are intended to simplify tax preparation, the very idea of change can cause anxiety. Here are some reminders to help make your tax season flow smoothly.

Don’t procrastinate

Fortunately, several people I spoke to throughout the past year took advantage of the IRS W-4 calculator and other tax estimators to monitor their withholdings and make adjustments, if needed. Still, there’s nervousness about how the numbers will all shake out.

Ideally, you’re due a refund and you want to get that in your pocket sooner rather than later, right? On the flip side, if you owe, there may be steps you can take to reduce your liability before the tax filing deadline of April 15th or to come up with the cash needed. Either way, just knowing where things stand will reduce your anxiety. Then you can plan your next step.

Understand that there is only one Form 1040 now

To help streamline things, the IRS re-worked the 1040 into a shorter form so that everyone will use the same baseline for their return. The new approach uses a shortened, simplified 1040 that can be supplemented with additional schedules if needed. In addition, they have eliminated the 1040A and 1040EZ forms altogether, so don’t spend valuable time searching for these if you’ve used them in previous years. All of the new forms are available here from the IRS.

Seek assistance if needed

Some of the anxiety associated with tax prep is the fear of making an unintentional error that comes back to bite us. Or maybe it’s just overwhelming or your to-do list just keeps growing. There are a number of options to consider to get that return finished and (fingers crossed) get your refund in your pocket ASAP.

Free filing and resources

The IRS site offers Free File software for households with income below $66,000, including state returns. If your income is greater, you can still download free fillable forms that will do the math for you, but you must know how to prepare your federal taxes. You also don’t get help with your state forms if your income exceeds the threshold, but check your state’s revenue website as they likely offer the fillable forms there.

If you don’t qualify for the IRS resources or want face-to-face help, check your community for pro bono or free tax filing services. For example, the United Way has partnered with tax prep software providers to provide free software to households earning less than $66,000 last year (go to MyFreeTaxes.com to learn more).

For people who generally make $54,000 or less, persons with disabilities, or limited English speaking taxpayers, there’s the Volunteer Income Tax Assistance (VITA) program.

Folks who are age 60 or older can seek guidance through the Tax Counseling for the Elderly (TCE) program, which typically operates through AARP locations, including your local library (search this site for locations in your area).

DIY tax prep

For those who don’t qualify for the free services above or feel comfortable with online apps, there are a number of tools available to reduce anxiety by guiding your through the process and helping to ensure you don’t miss anything. This might be especially helpful in light of the new tax laws.

For those of you who like CreditKarma for monitoring their credit score, they offer free tax prep on their website and recently added free audit defense as part of the service. Reviews indicate they’ve worked out several of the kinks from early years, so it might be worth checking out if your situation is fairly straight forward with W-2 or 1099 income. It’s not a good fit for active traders, real estate investors, or if you have to file in multiple states.

For more complex situations and apps with more bells and whistles, check out this recent comparison of online tax filing services.

Hire a professional

Finally, if your situation is too complex, overwhelming, or you find yourself in an unexpected pickle, you might consider hiring a tax professional. Although the thought of paying for a pro isn’t appealing, they can often pay for themselves by identifying tax-savings opportunities, avoiding minefields, and keeping you informed of the latest tax laws and strategies.

My colleague, Kelley Long, provides some helpful tips on finding a good tax preparer to fit your needs. If you do hire a pro, work with them to help estimate your 2019 taxes and adjust your W-4 for this year if needed as well.