Posted on: 11 July 2016Share
Filing your income taxes on paper returns can be easier than many people think. For a young taxpayer new to the process, it may simplify your life, save money and allow you to file for yourself. But there are a few things to remember when filing your taxes this way. Here is a 5 step guide to filing on paper forms.
File Early. Most people know that the deadline is April 15 (April 17 in 2017), but paper filers should do their returns as early as possible. Why? Paper returns are processed manually at the IRS and state levels, so you will need to allow extra time to receive your refund.
Choose the Simplest Form. There are basically three Forms 1040 to choose from. As a paper filer, you want to use the least complicated one to prevent errors and save time. You can use this handy information page at the IRS' website to determine which form is appropriate for you. If your tax situation is such that you cannot use the simplified forms -- either Form 1040-EZ or Form 1040A -- you should consider seeking out professional help filing your taxes rather than attempt them on paper.
Check Your Numbers. One of the easiest ways to make a mistake filling out paper returns is to enter information incorrectly. Take the time to double check each entry you make on any forms or schedules -- paying particular attention to the numbers. Transposing numbers, missing digits, entering into incorrect boxes and using wrong data are common mistakes and could affect your refund. Also, check your direct deposit information twice to avoid problems having your refund sent in a timely manner.
Learn About Credits. Missing out on tax credits can cost you money, so it's a good idea to know what kinds of credits are available to you and when you may qualify for others. The IRS posts guidance on its website for taxpayers on common credits and deductions, but keep a lookout for credits related to such changes in your situation as:
- Having children whom you can claim on your taxes
- Caring physically or financially for other family members
- Attending higher education or repaying student loans
- Turning 25 and earning less than $47,747 individually or $53,267 jointly (to qualify for the EITC)
- Earning income other than wages or receiving a Form 1099
- Purchasing health insurance through your state's Affordable Care Act marketplace
- Contributing to an Individual Retirement Account
These types of events usually offer some tax relief through either tax credits or money you can deduct from your taxable income. However, they may make your situation more complicated and you may want to find a qualified accountant or tax preparer.
Keep a Copy. When filing on paper, it's more important than ever to keep a copy of what you sent in. Because there are no digital copies, you will want to have your own proof of what you filed. The IRS has posted guidelines for how long you should keep tax records. Generally, you should keep tax returns at least 3 years in case you need to file an amendment or at least 6 years if you may have understated your income.
By knowing when it's advantageous to file your own simple return on paper and how to do it, you can make your tax filing easier each spring. Doing so can not only save you time and money but also leave you feeling more empowered and in control of your financial life. To learn more, contact a company like Johnson & Associates, CPAs, P.S.