With tax season here again, this is a very good time to start thinking about taxes and getting your documents in order. It is also the last chance to make adjustments (between now and December 31st) that will impact what you will report early next year. There are few other steps to take recommended by the IRS.
Adjust your withholding
Ideally, the withholding should be just enough to cover out tax liability. It’s certainly not perfect and we may end up with a small tax bill or a refund. Prior year tax return is a good indicator where we stand and whether or not adjustments are necessary if there were changes to our level of income. Consider that any money you make from side hassles are not subject to withholdings; unless you make additional estimated payments throughout the year, you will most likely end up with a tax bill when you file taxes.
Filing electronically and opting to receive a refund as a direct deposit is the fastest way to get it. This scenario takes on average 21 days, but the IRS advises against assuming you will receive the refund by a certain date. If you plan on paying for a major purchase with your refund money, it’s prudent to wait until you get the deposit. Taxpayers who claim Earned Income Tax Credit or Additional Child Tax Credit will not receive a refund before mid-February
Renew your Individual Taxpayer Identification Number (ITIN)
ITINs have an expiration date; ensure yours doesn’t expire before you file the tax return in 2020. Expired ITINs may cause delays in processing your refund. If you don’t need to file tax returns in 2020, there is no need to renew the ITIN.
This can be a major headache if you’re self-employed as we’re talking about a year worth of receipts. Ideally, you have developed a reliable system of keeping track of your expenses and holding on to the backup information. Having it all ready when it’s time to file will shorten the time it takes to go through the process.
- Notify the IRS if you address or name has changed – failure can delay processing the refund or correspondence
- Dependents’ information
- Sources of income from employment, unemployment, self-employment, rental income, retirement income, savings, investments and dividends
- Deductions details such as home ownership, charitable donation, medical expenses, health insurance, childcare expenses, educational and K-12 educator expenses, any state and local taxes paid, retirement and other savings
IRS.gov provides the wealth of information, which may be your best option to try first. If you still need help, consider visiting one of the offices. Keep in mind that January and February are one of busiest months for the IRS offices. If you have specific questions, consider visiting the office before the tax season is in full swing. Another reason to visit the IRS location right now is the upcoming government discussion on the budget. Remember that last year we experienced a temporary shutdown, which impacted the services. If we have a shutdown this year as well, the offices will be closed. Your last resort could be the IRS Tax Volunteers. For more details, click here.
- Pay your taxes, view balance & payment history.
- Application for an IRS individual taxpayer identification number; it can also be used to renew an expiring or expired ITIN number.