Tax time is quickly coming upon us as we move into the new year. A lot of people actually look forward to tax time because they plan on getting a big refund around this time -and it's often used as a time to splurge on vacations, big screen TVs and more! While I personally try to work out my withholding so that it comes out about even with no refund and no taxes owed, the fact is most people don't do that. In fact, the average tax refund for 2010 was around $2,892, so a lot of people will be ready to file as soon as they can. They want their money!
So today I thought I'd get everyone ready for the day that they finally plan to file by giving a tax checklist you can use – so you have everything you need in one place on tax day.
Tax Preparation Checklist
When you're filing your taxes there is a ton of information that you'll need to have at the tip of your fingers when filing. There are a lot of blank spaces on that tax form! In fact, there are 165 blanks on tax form 1040, 127 on Form 1040A, 94 on Schedule C, 77 on 1040EZ, 55 on Schedule A, and 44 on Schedule B! Do you have all of that information ready to go – ready to fill in all those blanks? Here are some of the pieces of information you'll need.
Tax Information To Have Handy
- Tax returns for the last two years
- Birth dates and occupation(s)
- Change of address (if you moved)
- Bank name, routing and account numbers (for refunds or payments)
- Spouse name and social security number
- Dependents names and social security numbers
- W2s and 1099s for all income and compensation
- 1099 Interest, 1099 dividends, 1099 Misc, 1099C cancellation of debt, 1099G unemployment compensation, 1099R distribution from IRA, 401k, etc.
- Last year’s state tax refund
- Health care costs if they were greater than 7.5% of AGI
- State and local income tax, car sales tax
- Charitable contributions
- Theft and casualty losses
- Home office deductions
- IRA contributions or retirement plan contributions
- Student loan interest
- Moving expenses
- Student tuition fees
- Estimated federal and state tax payments
- Energy efficient home improvement tax credit info
- Credit for child and dependent care info
- Education credit info
- Child tax credit/adoption credit info
So there’s a good start on the information that you should have handy when filing your taxes this year.
What Does It Cost To Prepare And File Your Taxes?
How much it costs to do your taxes will vary pretty widely depending on how you file. You can hire someone to file for you, file a paper form yourself (does anyone do this anymore?), or use a software like TurboTax like I do. 32% of people did in 2010 used a software to file, so you'd be in good company if you did that. Your amount of income made can also have an impact as there is free-file available for some lower income folks.
- Hiring a CPA or company: On average around $230.
- Tax preparation software: About $18-60 on average, depending on which software or site you use.
- Doing it yourself with paper forms, or using low income free file: Free. Click here read up more on free tax filing options.
Why Would You Ever Pay Someone To Do Your Taxes?
There are quite a few situations where it would make sense to hire a professional tax preparer to help you with your taxes. Here are a few:
- You’re self employed, have your own business and a complicated tax situation.
- You got married or divorced in the past year, and your situation is changing.
- You’ve bought or sold investments during the year, or received a large windfall.
- You just don’t do well with complicated topics like taxes.
- You think you could save a lot of money using tax strategies you don’t understand.
These reasons are only the beginning of why you might want to hire someone to do your taxes. What other reasons can you come up with?
Do you think we missed anything on our tax preparation checklist? Did we leave anything off the list – what would you add? Any other tax time tips for the rest of us?