Ten Top Tips for Tax SeasonPosted: January 1, 2013
Ten Top Tips for Tax Season
- Open mail from the IRS immediately and follow up. You get a letter from the IRS and just know that it cannot be good news. It is so tempting to not even open the envelope. But, ignoring correspondence from the IRS does not make them go away. The longer you wait, the fewer the options you have in dealing with the IRS. Open the envelope, scan the letter and call your Acuity Tax Advisor. Do not pay the tax due without reviewing the notice with your tax advisor.
- Be honest with your tax advisor. To provide you with the best tax advice, your tax advisor needs you to be 100% honest. Tax professionals adhere to strict confidentiality standards, so you are assured that all the information you share will remain private.
- Delete IRS emails as spam. The IRS never contacts taxpayers by email to request information. If you have received an email from the IRS, you have received spam. Replying will put your personal information and your computer system at risk.
- Always file on time. One of the rules that the IRS enforces vigorously is the requirement to file by the due date. Missing due dates subjects you to late filing penalties and may preclude you from obtaining refunds that belong to you.
- Review your return before filing. You should have a complete printed copy of your tax returns to review before filing. Be particularly alert for omitted information. Compare the return with your prior year return, keeping in mind changes that have occurred.
- Double check that all 1099 data is included on your return. The IRS already knows about these items and is expecting to find them on your tax return. If something has been omitted, the IRS will increase your taxable income and tax in a way to maximize the amount that you owe the IRS.
- Be precise. Keep records of mileage, receipts for charitable donations and other deductions. For many deductions, an estimate is not allowed.
- Plan ahead. If your income has increased or something unusual has occurred, think through the tax effect. You may want to increase your tax withholding or your estimates to avoid paying interest to the IRS. At a minimum, you will need to reserve enough to pay the taxes due. If your income has decreased, tax planning will let you use this lower income year to your advantage.
- Take the deductions you are entitled to. The law does not require you to pay more in taxes than you have to pay. It doesn’t even reward you if you do so. But, do not inflate deductions and do not exaggerate the truth.
- Start early. Tax returns are complicated and require much detailed information. And our lives are busy. By starting early, you give yourself enough time to gather all the information needed to prepare an accurate tax return that will withstand IRS scrutiny while paying the minimum tax required.