Tax Tips for 2009: Part 1

IRS TAX TIP 2010-01

While the tax filing deadline is more than three months away, it always seems to be here before you know it. Here are the Internal Revenue Service’s top 10 tips that will help your tax filing process run smoother than ever this year.

1. Start gathering your records Round up any documents or forms you’ll need when filing your taxes: receipts, canceled checks and other documents that support an item of income or a deduction you’re taking on your return. [Written records to be retained for three years after filing is important.]

2. Be on the lookout W-2s and 1099s will be coming soon from your employer; you’ll need these to file your tax return. [W-2's, 1099's and any IRS reported information needs to be cross checked by matching with those documents to avoid refund delays or subsequent IRS correspondence.]

3. Try e-file When you file electronically, the software will handle the math calculations for you. If you use direct deposit, you will get your refund in about half the time it takes when you file a paper return. E-file is now the way the majority of returns are filed. In fact, last year, 2 out of 3 taxpayers used e-file. [Congress has mandated that 80% of all returns be e-filed by 2012. Paid preparers who submit 10 or more returns are being mandated to e-file as well, by statute nor IRS regulatlion.]

4. Check out Free File If your income is $57,000 or less you may be eligible for free tax preparation software and free electronic filing. The IRS partners with 20 tax software companies to create this free service. Free File is for the cost conscious taxpayer who wants reliable question-and-answer software to help them prepare a return. Visit IRS.gov to learn more. [Many governmental resources are being channeled into enabling free filing. [Many paid preparers are thriving on the free filing process by cleaning up the IRS correspondence directed to self prepared returns - the Code is extensive and at times apparently contradictory. Filers get what they pay for.]

5. Consider other filing options There are many different options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free face-to-face help at an IRS office or volunteer site. Give yourself time to weigh all the different options and find the one that best suits your needs. [Paid preparers are guided to ask many more questions, seek more supporting documents and to facilitate taxpayer compliance while maximizing the refund potential or minimizing a balance due.]

Stay tuned for 5 more tips next month!