As the April 15th deadline for filing your 2013 tax return is approaching, here are some tips and guidance in preparing your tax return.
1) E-file your return
Electronically filing your tax return is not only convenient but it also ensures that the IRS has received and accepted the return. If you mail your tax return, it is your responsibility to ensure that the IRS has received it. If you must paper file, pay the extra fee to send the return via Certified Mail to ensure its receipt. There have been many instances when a taxpayer mails a tax return and finds out too late the IRS did not receive it. By the time the taxpayer mails another return to the IRS, the taxpayer could incur penalties for not filing the return timely.
Mailing your tax return also puts you at risk for identity theft. You don’t want to risk your private personal and financial information being intercepted by the wrong person. Electronically filing your tax return on a secured internet connection is safest.
2) Avoid tax return preparer fraud
Return preparer fraud is a serious criminal offense and the IRS will prosecute these tax preparers and assert appropriate civil penalties. Tax return preparer fraud involves the preparation and filing of false income tax returns; usually the preparer inflates personal or business expenses, false deductions, claim unallowable credits, or even manipulate income to obtain fraudulent tax credits.
When the IRS detects the fraud, the taxpayer is held accountable for the additional taxes and interests and may be subject to penalties and criminal prosecution. Regardless if the taxpayer had knowledge of the false information, the IRS holds the taxpayer liable for the information submitted on their tax return.
In choosing a tax preparer, it is helpful to avoid those who claim they can obtain larger refunds than other preparers. It is safer to hire an accredited tax preparer or a licensed tax professional such as an enrolled agent, certified public accountant, or tax attorney. Always ask questions, review your tax return before signing, and never sign a blank tax form.
3) Determine correct filing status
Individuals who file their own tax returns are sometimes confused as to the correct filing status. There are 5 filing statuses you can select and these are discussed in more detail below:
1) Single – this is the most common filing status. If you are not married, divorced, or legally separated, this filing status applies.
2) Married Filing Jointly – a married couple may file a return together using this status. Your marital status as of 12/31/14 determines your filing status for 2013.
3) Married Filing Separately – a married couple can decide to file their returns separately, each person’s filing status would generally be Married Filing Separately. However, if you are living in a community property state such as Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin, the community property laws affect how you calculate your income if you decide to file separately from your spouse. Seek a tax professional for guidance to ensure you are filing the return correctly.
4) Head of Household – this status generally applies if you are not married and have paid more than half the cost of maintaining a home for yourself and a qualifying person. You can claim this status only if you pass the support test, the residency test for a qualifying person, and you are unmarried at the end of the year. Seek a tax professional to help you determine if you qualify for this status. Taxpayers who qualify for this status can benefit from a higher standard deduction and a wider tax bracket.
5) Qualifying Widow(er) with Dependent Child – this status may apply if your spouse died in 2011 or 2012, you have a dependent child, and you meet certain other conditions. Seek a tax professional to help you determine if you qualify for this status.
4) Hire a tax professional for complicated returns
If you are single and only have wages as income, your tax returns are easier to prepare. However, if you are self-employed, engaged in stock activity, have investments, or other complicated deductions, hiring a tax professional may be the best solution to optimize tax savings and improve accuracy.
5) Avoid these common tax mistakes
The first common mistake taxpayers make in preparing their own return is incorrect mathematical calculations. Second, they fail to check if the itemized deductions on their Schedule A are greater than the standard deduction; choose the deduction that benefits you more. Third, the tax filing deadline is April 15, 2014. Taxpayers should not wait until the last day to file their return. The fourth and final common mistake is failing to include all income received for the taxable year. Even if you did not receive a tax document such as a W-2 or 1099, you are responsible for including all the income earned on your tax return.
Have questions or need assistance in tax preparation? Contact JV Law Group today at 714-752-3270.
