Tax Preparation Guide

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Are you burdened by tax season?  Concerned with owing the IRS?  Not sure if you should be getting a big tax refund each year?

Well, to help reduce some of your tax season anxiety, I’ve created this tax preparation guide with tips and links to resources to help you with all aspects of taxes.

I plan to continually update this page with more articles I publish at One Money Design as well as links to other helpful resources around the web.

It’s far from an education on the tax laws and regulations.  You’ll need to speak to a tax professional if you want to go there.  Most people can get through tax season just fine with understanding the basics.

Tax Preparation Checklist

I always find it helpful to use a tax preparation checklist to make sure I’m not missing any important steps in organizing and filing my taxes.  You might print off a checklist such as the one I’ve linked to below so you can check off the steps as they are completed, or cross out the ones that aren’t applicable to your situation.

Tax Preparation Checklist

Important Tax Dates

  • January 31st:  W2s are due from your employer and forms 1099 are due from payers of interest, dividends, and other specified types of income.
  • April 14th: Federal tax returns are due.  Submit form 4868 for a tax return extension.  Must be postmarked by on or before April 15th.  Speak to a tax professional about paying interest on your tax liability.
  • October 15th:  If you filed for an extension, file your return and pay any tax, interest, or penalties due.

Biblical Perspective on Paying Taxes

It’s certainly easy to have a negative attitude about paying taxes.  After all, you’ve worked hard to earn some money!

Jesus reminds us in the New Testament that it is our obligation to pay taxes. For Christians, we need to make sure our heart and attitude towards paying taxes are in the right place.

Here’s what Luke 20:20-26 says:

Keeping a close watch on him, they sent spies, who pretended to be sincere. They hoped to catch Jesus in something he said, so that they might hand him over to the power and authority of the governor. So the spies questioned him: “Teacher, we know that you speak and teach what is right, and that you do not show partiality but teach the way of God in accordance with the truth. Is it right for us to pay taxes to Caesar or not?

He saw through their duplicity and said to them, “Show me a denarius. Whose image and inscription are on it?”

“Caesar’s,” they replied.

He said to them, “Then give back to Caesar what is Caesar’s, and to God what is God’s.”

They were unable to trap him in what he had said there in public. And astonished by his answer, they became silent.

Estimate Your Tax Refund

Throughout the year you might consider using an income tax refund calculator, such as TaxCaster, by the TurboTax makers.  Doing so will help you determine how much in federal income taxes you can expect to pay when you file, or how much of a refund you should expect to receive.  If you stand to owe or get a refund, you’ll want to follow the next tip.

Tax Refund Estimator: Best Calculators to Estimate Your Tax Refund

Adjust Withholding Allowances

If you want to change how much income tax is withheld, you can adjust your withholding allowances based on the recommendations of the income tax refund calculator. Increase your allowances to have less taxes withheld from your paycheck.

But, how does adjusting my withholding allowances help me now, you might ask?  Well, it doesn’t for last year’s taxes, but now is the time to make adjustments for the current year so you don’t end up in the same situation.

How to Adjust Your Withholding Allowances

Organize Early for Tax Season

I think it’s important to start getting organized as soon as possible for tax season. Income tax forms will start arriving in the mail soon from your employer, mortgage lender, and others.  Don’t let those forms end up in the trash or at the bottom of a pile of papers on your desk. Keep them handy and start placing them in a folder to stay organized.  Also, pull your tax documents from the previous year so you can review them when you start the filing process. Find receipts and consider putting them in your folder for deductions, such as gifts.  The biggest battle of tax season is just getting organized and early planning will help!

Organizing Tax Documents for Tax Season 

Determine How You’ll File Your Taxes

So, do you think you’ll file your own income taxes, or will you use a tax professional this year? In the past, I would never have filed my own taxes. The funny thing is that this was when they were the least complicated. However, a few years ago I started using TurboTax online and found the tax filing process to be easy with the guidance and tips the software provides. Another option to consider is to visit a local H&R Block, or if you own a business, you might want to directly with a CPA.

Here are a few other things to keep in mind when deciding if you’ll file your own taxes:

  • Cost:It will cost more to use a professional.
  • Time:You might save a little time by sending all your information to a professional or CPA, but it’s still your job to collect the information required.
  • Confidence: By all means, if you’re concerned about making a mistake, or just feel more comfortable with a professional, don’t feel like you have to attempt filing your taxes on your own!

Should You Prepare Your Own Taxes?

Use Tax Software

If you’re set on doing your own taxes like me, you’ll want to find tax software that’s easy to use, can guide you through the steps and helps ensures you don’t miss any deductions or credits!  I’ve already mentioned I use TurboTax and you can learn more about it by reading my review.

Turbo Tax Review

Identify Common Tax Deductions

I mentioned earlier you don’t need to become familiar with all the tax rules and regulations or be a tax expert to file your own taxes. I definitely think you’re covered with most tax software if you’re filing on your own.  That being said, you need to make sure you’re aware of the most common tax deductions so nothing is missed. No one knows your finances better than you.

Make a list of the deductions you think apply to your situation and collect all the tax receipts in advance of starting the filing process.

Common Tax Deductions

What if You Can’t Pay Your Taxes

There are many options to consider if you’re going to owe money to the IRS and can’t make the payment.  First, make sure you file your taxes on time and avoid the penalties for not doing so.  Avoiding to file, will make the situation worse.  And definitely make sure you avoid owing next year by using one a tax refund estimator (mentioned above).

Options if You Can’t Pay Your Income Taxes

What to do with a Tax Refund

Sometimes you’ve done all the planning you can do to avoid loaning the federal government money throughout the year, but you still are getting a refund. That’s okay, but just make sure you make some smart decisions with how you’re going to use your refund.  In the past, we’ve used our refunds for savings, vacations and projects around the house.  A refund is also a great way to cushion your emergency savings account.

What are You Doing with Your Tax Refund?

Helpful Links

Here are some links to other websites that may be of help as you prepare for tax filing this year:

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