Your tax preparation for income made in 2012 doesn't have to reach a boiling point of anxiety as April 15 nears if you remember a few important tips.
Monica Gamblin of The Gamblin Group blogged on Patch this week about W-2 forms and how to file your taxes even if you have yet to receive it in the mail.
In her blog she said you don't have to wait for your employer to send your W-2 by the Feb 14 deadline.
"Don't get frustrated if you haven't yet received your W-2 and are ready to file your taxes," she said. "Many taxpayers don't receive their W-2 within the IRS required time guidelines and the IRS has outlined the appropriate procedures if you want to file your taxes."
Once you have contacted your employer, contact the IRS. After February 14, you may call the IRS at (800) 829-1040 if you have not yet received your W-2.
Gamblin said it is ultimately the taxpayer's responsibility to file taxes on-time, even if the employer has not provided the W-2.
Don't forget to report your 1099 work, which is self-employment or contract income. Not receiving a 1099 form from the entity in which you provided goods or services doesn't mean you are off the hook with regards to reporting the income. A lot of Self-employed persons often get paid in cash, and the temptation to not report that revenue can be alluring, but dangerous. The IRS now has sophisticated tools to enable it to reconstruct a person’s actual income vs. reported income, and don’t forget that it may be a crime to under report one’s taxable income, if the IRS can prove fraud.
Payors have to send payees 1099 forms by January 31, but they don’t have to report to the IRS until the end of February. As a result, if you receive an inaccurate 1099, you still have time to get it corrected.
One of the best ways to prepare to file your taxes is to have a great record keeping system.
“A good rule of thumb is to begin every new year with an updated filing system,” . “Create some sort of organized system, even if it's just in a notebook, that stores information on properties you own, schooling, charity donations and receipts.
"Be sure to include logs for vacation homes, car mileage, and computer and cell phone use, if applicable."
Be sure to separate your business expenses from your personal expenses, particularly if you are self-employed.
Another beneficial area in which to keep accurate records is in charitable contributions. Making contributions via check, ensures you always have proof of your donation.
If you donate non-cash items to a charity, tax practitioner, Fran Seward said you have to document how you came up with the value of the donation that you claimed, and it's always a good idea to have the charity write on the receipt.
“When itemizing charitable contributions, make sure to keep good records and all receipts," she said. "If you give away tangible items make sure to take a photo and know the fair market value of each item given away."
There are some common mistakes that could cause you to be audited. Some of these red flags include:
- Filing too many deductions
- Incorrectly claiming dependents
- Differences in state and federal returns
- Large swings in income
- Rounded numbers on a return
- Sloppy, handwritten or incomplete information