Tax season 2018 is just around the corner. Now’s the time to get organized. It’s important to have one place where you keep all your tax information as it arrives so when it is finally time to fill out the tax return, you won’t miss thing. Every details counts.
Find Out if You Need to File
If you need help determining whether you’re required to file a federal income tax return this year, you can use the IRS’s online Interactive Tax Assistant tool. You need to answer a few basic questions about your filing status, gross income and whether you had federal income tax withheld. The first question asks you which tax year you’re asking about. Make sure you select 2017
Gather Social Security Numbers
One of the most important pieces of information you will need to prepare any tax return is your Social Security number. This is the nine-digit piece of information that’s as important as your life. Make sure you have the Social Security cards for yourself, spouse and all dependents.
Protect your identity
If you received an Identity Protection PIN, or IP PIN, in the past, then you must provide this number on your tax return. Be sure to keep this piece of information safe to stir clear from tax fraud. An IP PIN is a six-digit number assigned to eligible taxpayers that helps prevent fraudulent returns from being filed under your Social Security number. Remember, the IP PIN is your friend in getting the IRS to accept your tax return. However, this is no ordinary IP PIN, as it changes every year. You read that correctly: every year! If you do not receive the notification in the mail, you will need to go to the IRS Website to retrieve it.
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Declutter and reap a tax break
With the New Year fast approaching, is one of your resolutions to simplify and declutter your life? If so, we have the perfect solution for you! Donate! Yes you heard me correctly. There are many charitable organizations that accept items other than cash such as clothing, books, electronics and other household items. The deduction is limited to the item’s fair market value and the items must be in good condition or better to be deductible. If the value of the noncash items is more than $500, then you must file Form 8283, Noncash Charitable Contributions, and fill it in with some details. But it is well worth the effort.
Maximize retirement plan contributions
If your employer offers a 401(k) or other type of deferred pension plan, make every effort to contribute the maximum amount allowable — especially if your employer matches your contribution. Otherwise you are leaving money on the table that could benefit you in your retirement. Think of the employer match as an immediate 100 percent return on your money. Even if there is no match, all of the funds are tax-deferred and grow tax-free.
If your employer does not offer a retirement plan, then consider making a contribution to a traditional individual retirement account or a Roth IRA. The former potentially offers a tax deduction for the year the contribution is made, but both offer tax-deferred gains.