Don’t Make These Tax Filing Mistakes

From math errors to missing Social Security Numbers to forms that aren’t signed, there are plenty of common tax mistakes that taxpayers can make when filing their returns. These mistakes can lead to delays in processing returns and issuing refunds. If serious enough, they might even lead to an IRS audit. Fortunately though, the IRS does allow do-overs. You can usually file an amended return if you realize that you’ve made a mistake. But that’s the problem — you might not realize you’ve made a mistake. Brush up on the following tax fails before you file, so you can avoid making the same errors this tax season.

Waiting Until the Last Minute to File

Although plenty of people put off doing their taxes, waiting until the last minute to file a tax return can backfire.  Do you really want to be scrambling to make the tax filing deadline (April 15th)? In a rush to file, you may forget to actually pay your taxes if you owe – which can result in a late payment penalty from the IRS (0.5% of taxes owed each month the payment is late). File as early as possible and avoid this headache altogether.

Forgetting to Pay Taxes on a Cashed-Out IRA

Did you cash out IRA money last year or plan to roll one over and then never did? If you forget to do this, the amount that has been cashed out is taxable. You also need to report any IRA changes on your tax return. If you forget to do this, it could result in a tax audit. And once that happens, everything will be checked with a fine tooth comb. The moral of the story: don’t forget to report any retirement account changes you made in the last year.

Mailing the Tax Check to the Wrong Agency

If you owe taxes or have a situation in which you have to pay taxes on an employee during the year (you hired a nanny to watch your children and are paying taxes on the nanny’s wages), be sure your payment is going to the right place. Failure to do this can again result in late fees and a giant headache. The same goes for electronic payments. Double check the mailing address and then check again.

Not Knowing the Filing Deadline for Businesses

Are you an S corporation? Typically, an S corporation business must file a return by the 15th day of the third month — not the fourth month, according to the IRS. Failure to file by the correct deadline could result in a file penalty fine of $450.

Not Making Estimated Tax Payments

Because self-employed workers don’t have employers to withhold taxes from their paycheck for them, they have to make estimated tax payments to the IRS throughout the year.  A good habit to get into here if this pertains to you, is to set aside money each month and try to estimate as accurately as you can – should you owe more on taxes when you file.

Forgetting to Make Tax Payments

This is a pretty straightforward one – don’t forget to make your tax payments if you owe this year. And if you are self-employed, don’t forget to send in your estimated tax payments. If you are required to send in estimated tax payments and you forget, you could receive an underpayment penalty fee.

Trying to DIY Tricky Tax Returns

If your tax situation is simple enough to file the 1040 form, you don’t need to hire a professional to prepare your return. But if you don’t have a simple tax situation and have multiple sources of income, own a home (or two), have investments, a military pension, etc. – it might be a good idea to let a professional handle filing your return for you.  A tax accountant can help you identify expenses you hadn’t previously been claiming as deductions, which can ultimately lower your tax bill. They’ll also look at your withholding with you, and see if it can be adjusted if you always seem to owe the IRS money come tax time each year. Sure – you’re going to have to pay for this service, but if you have a complicated tax return it will probably end up saving you money (and aggravation) in the long run.

More sound advice: it’s best to prepare for tax season all throughout the year. As you collect receipts, paperwork, statements, and so forth during the year – put them in a file and take them out and go over them right at the start of each new year. This way you stay on top of any changes that come up throughout the year, and aren’t digging for items at the last minute. Be prepared and organized, and filing your taxes each year will become second nature.

Article Source: Cameron Huddleston for Gobankingrates.com

3 Ways to Prepare for Next Tax Season

Tomorrow tax season is finally coming to a close. Believe it or not, it’s never too early to start thinking about next year. If filing your taxes was a headache and a hassle this year, here are a few tips to get you prepared for 2019.

Get organized: Did you waste a bunch of time looking for receipts this year? Create a system, whether it’s a file cabinet or a shoebox, and keep track of those receipts and other financial documents you may need at the end of the year. Keep a tally of your charitable and retirement contributions and you’ll be ready to go as soon as you get that W-2 in the mail.

Keep track of changes: What’s happened to you this year, and what will be happening in the next few months? Are you getting married? Having a baby? Buying a house? Opening up a Roth IRA? All of these things will affect your filing status, so make sure you’re up to speed on how any of things will affect your filing process.

Be patient: Do you have a side business or do freelance work? If so, any number of hiccups can occur during tax preparation. Be prepared – but know it’s not a huge deal if you have to file an extension. If you find yourself in this boat, head on over to IRS.gov and get an extension form.

With a little preparation, you can make the tax season process a lot easier.

Article Source: John Pettit for CUInsight.com

 

3 Ways to be Financially Responsible with Your Tax Return

Here are some smart ways to spend your tax refund this year:

Pay down your debt. This may be the smartest choice when deciding what to do with your refund. Decreasing your debt helps alleviate the interest you’re paying, which will be a huge weight off your wallet and credit score. Debt can feel like a mountain, so use this opportunity to start digging yourself out from under it.

Put it into retirement. If you’re not steadily adding funds to your retirement account (401k, Roth IRA), you’re doing yourself a disservice. Even if you’re young and it doesn’t seem that important right now, you’ll be 65 before you know it.

Need help with retirement planning? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, contact us at 732.312.1500, or stop in to see us!*

Build up an emergency fund. If you’re doing a good job of saving for retirement, congratulations. But you may get yourself into trouble if that’s all you’re saving. Take this opportunity to use your tax return to create an emergency fund in case things go south (you lose your job, car dies, etc).

*Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

Article Source: John Pettit for CUInsight.com

4 Smart Ways to Spend Your Tax Return

Tax form with paper money, silver pen, calculator on white background

Here are some smart ways to spend your money once you get that tax return this year.

Pay down credit card debt. This may be the smartest choice when deciding what to do with your refund. Decreasing your debt helps alleviate the interest you’re paying, which will be a huge weight off your wallet and credit score. Debt can feel like a mountain, so take the opportunity to dig yourself out from under it.

Put it into retirement. Your retirement account (401k, Roth IRA) can sometimes be neglected if you’re not steadily adding funds, so use your refund as a chance to jump start your contributions for 2017. It may not seem super important now, but you’ll be retirement age before you know it.

Questions about retirement savings or investments? To set up a complimentary consultation with the Investment & Retirement Center located at First Financial Federal Credit Union to discuss your savings goals, contact us at 732.312.1500, or stop in to see us!*

Build that emergency fund. Even if you’re doing a good job of saving for retirement, that may be all you’re saving. If this is you, use your tax return to create an emergency fund in case things go south. It’s never a bad idea to be prepared!

Invest in yourself. This could have a lot of different meanings. Exercise is good for your body and taking a trip can be a good way to unwind and refresh your mind. If these sound like good ideas, join a gym or book a flight. Have a favorite charity? Give some of that money away. Helping others can be good for the soul too.

*Representatives are registered, securities are sold, and investment advisory services offered through CUNA Brokerage Services, Inc. (CBSI), member FINRA/SIPC, a registered broker/dealer and investment advisor, 2000 Heritage Way, Waverly, Iowa 50677, toll-free 800-369-2862. Non-deposit investment and insurance products are not federally insured, involve investment risk, may lose value and are not obligations of or guaranteed by the financial institution. CBSI is under contract with the financial institution, through the financial services program, to make securities available to members. CUNA Brokerage Services, Inc., is a registered broker/dealer in all fifty states of the United States of America.

Article Source: John Pettit for CUInsight.com

3 Ways to Ensure Cyber Safety During Tax Time

Income Tax File Meaning Paying Taxes 3d Rendering

The IRS is now officially open for business as tax season gets underway. Here are three ways you can protect yourself over the next few months as you manage important and sensitive, financial documents.

Stay on secured networks: As with other financial transactions, make sure to only e-file your taxes (or view private documents) on a protected Wi-Fi network. You may be tempted to work from a coffee shop or the library, but remember using a public server can make you an easy target for cyber thieves.

Beware of IRS emails: The Internal Revenue Service will never directly reach out to you; if you receive a fraudulent message report it immediately to phishing@irs.gov. Use caution when dealing with these and be sure not to click on web links or open suspicious email attachments.

Set strong passwords: Most of us may think that choosing a password such as “password” or “123456” is an obvious mistake but according to TIME, these are in fact the most popular password picks. Review their list of these commonly used passwords and make necessary adjustments to yours to ensure your information stays safe online.

First Financial members get discounts on TurboTax products – get started today!

Article Source: Wendy Bignon for CUInsight.com

5 Reasons You Should File Your Taxes Early

Printed copy of Form 1040 for income tax return with reminder for April 18 deadline

You’ll get your money as soon as possible.

This one may seem obvious. The sooner your file for a refund, the sooner you’ll get it back. The closer you wait until Tax Day, the busier the IRS is, and the longer it’s going to take to get your money back.

You can prevent your return from being stolen.

Criminals would love to have your tax return, so filing quickly will give them less opportunity to commit fraud and steal your money.

You’ll be less stressed.

If you find out your taxes are going to be more difficult than past years, you may find yourself scrounging around for paperwork and the process may take a lot longer than you planned. By filing early, this date shouldn’t be a source of stress for you.

You’ll have more time if you have to pay.

Hopefully you’re looking at a refund this year, but if not, you’ll have to be paid in full by tax due date. If this is the case, you’ll give yourself more time to pay by filing early. Think about that if you know you owe money this year.

Tax pros are less busy.

Not only is the IRS less busy at the beginning of the year, but tax professionals are as well. Keep this in mind if you’re not filing on your own. For those of you who file online, this won’t be a big deal, but if you need a pro to help sort you out, you’ll be glad you made an early appointment.

First Financial members get discounts on TurboTax products – get started today!

Article Source: John Pettit for CUInsight.com