While not a favorite season for many, tax season returns at the end of the month.
On Jan. 27, the IRS will begin accepting returns 鈥� if they’re ready.
鈥淚 recommend people file early and file electronically,鈥� said Bryan Lake, with the Alexandria office of Sikich, which offers tax preparation services.
Lake said his first tip is get your documents together now, and make sure you have all of them before you either sit down to do your taxes yourself or take them to a tax professional.
This year, you have until April 15 to file.
Lake said the first thing tax filers should check on their return is their information, and make sure their names and social security numbers match exactly what is on your social security card and W2s.
鈥淭he IRS is constantly going through the W2s and matching that Social Security number with what was reported, and that’s what generates notices,鈥� he said.
As you report your income, he said it is important not to forget any cryptocurrency losses or gains, because since the IRS considers it property, it needs to be reported.
鈥淚f you had any virtual cryptocurrency, Bitcoin transactions, make sure you鈥檙e reporting that and if there’s gains, they go on Schedule D capital gains,鈥� Lake said.
One big tax saver, according to Lake, is one that comes for those who sold a home that was a principal residence, in which they lived for two out of the last five years. For people who fall into that category, you can exclude up to $250,000 of capital gain if you’re single, and up to $500,000 for a married couple.
鈥淚t’s a really big tax save, a lot of people miss it,鈥� he said.
Lake warned that how the home that was sold and titled is also important for people who own a piece of property sold jointly. You can only take the $500,000 exclusion if both people were on the title of the home that was sold.
鈥淚’ve had this in the past, where people thought they owned it jointly, but when they went to closing, only one person signed off,鈥� he said.
Lake said there are still a lot of people who do their taxes by hand, and for those individuals, he said it is important to check your math before dropping them in the mail.
鈥淕o through and make sure you check to make sure that all the numbers add up and that your calculations are correct,” he said.
For those who send in their returns by mail, Lake recommended sending it via certified mail, so there is proof it was sent out on or before April 15.
For those who plan to use tax preparation software, Lake said while it does the math, you should keep in mind that those programs are not perfect and can lead to errors.
鈥淵ou can’t just go with what your tax software says. Make sure you check, make sure it makes sense to you,鈥� he said.
He recommended opting for direct deposits, because it is the quickest way to receive your refund. But make sure to triple check your bank account information on the return.
“Otherwise, that refund is going to go elsewhere and you’re going to have a hard time getting it back and clawing it back,鈥� Lake said.
Finally, you can file for an extension, which gives you an extra six months to file your return, but that extension doesn鈥檛 allow you to delay paying the IRS what you owe.
鈥淧ay as much as you can by April 15, otherwise you have penalties and interests which are accruing,鈥� Lake said.
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