Earlier is better when it comes to working on your taxes, for both you and the Internal Revenue Service. By getting a head start on tax preparation, you avoid the last-minute rush, when many filing mistakes are made. And the sooner the tax agency gets your return, the sooner it can process it and get your refund on its way to you.
Here are eight ways to get a jump on your taxes long before the April 15 deadline rolls around:
1. Track down your rebate data. Did you get an economic stimulus payment last year? That amount really was an advance credit against your 2008 return. The amount you received in 2008 could affect your 2009 credit claim. If you got less than the maximum amount, which for most employed taxpayers was $600 per single filer ($1,200 for married couples filing jointly), you might be able to claim the rest of it this filing season. All versions of the individual tax return (Forms 1040, 1040A and 1040EZ) have a new line to claim the Recover Rebate Credit. You'll need the statement you got from the IRS in connection with your payment. That's the amount you'll use to determine if you can claim more on your 2008 return. So find that rebate statement now.
2. Get ready for the arrival of records. When your W-2s, investment statements and other tax-related documents start coming in, create a collection point and put them there. It could be as simple as a large envelope. You might have received a few documents in December, but most will arrive throughout January. Just make sure that whenever the material shows up you put it all together in an accessible place, so when you are ready to fill out your return you have all the data you need. Remember, the IRS gets a copy of most of these, too, so figures on those statements are critical to ensuring your return sails through the system.
More Tax Help from Bankrate.com:
- Daily Tax Tip
- Bankrate's Tax Calendar
- Ten Must-Know Tax Terms
3. Track down Social Security numbers. Before the IRS will process any return, the agency must have your correct Social Security number, as well as your spouse's, if you file jointly, and those of any dependents you claim. These numbers are crucial because so many transactions -- income statements, savings account interest, retirement plan contributions -- are keyed to them. The IRS also checks the identification numbers against any tax breaks you apply for, such as the Child Tax and Additional Child Tax credits, credits for educational expenses and the dependent care tax credit. So make sure everyone in your tax family has a valid Social Security number and that you have them written down correctly. It wouldn't hurt to put this information in that envelope where you're stashing your incoming tax statements.
4. Find your forms. Slightly more than half of all taxpayers filed their returns electronically last year, meaning all the forms were provided in the tax software. The other half who filed the old-fashioned way will get a tax packet in January, but it never hurts to have backup forms in case you make a mistake. Plus, your tax situation may have changed, meaning you need material other than what's in the IRS package, since it's based on your past filing history. A few of the most common forms are available at post offices and libraries. Most of the rest can be downloaded from the Internet. Check out Bankrate's tax forms library or the IRS' Forms and Publications Web page.