Important Tips to Prepare for Filing Your 2016 Taxes

 

 

As the year draws to a close, your thoughts may soon turn to filing your income tax return. Tax season will be here before you know it. You can start preparing now to file your 2016 taxes by heeding some precautionary steps and by gathering information that could be critical to completing your return.

Review Your W-4 Form

Keeping your W-4 form at work up-to-date and relevant is important to filing an accurate tax return. You should update this form anytime there is a notable change in the makeup of your household.

For example, you should file a new W-4 form after the birth or adoption of a new child. You should also change it if you get married or divorced. These changes are relevant to your tax filing status and exemptions to which you may be entitled.

Update Your Healthcare Marketplace Account

If you and your family get your health insurance from the ACA Marketplace, it is important that you keep your account updated and correct. Accurate information is especially important if you receive subsidies to help you pay your policy's premiums.

You should report any changes to your income to the Marketplace before the end of the year. You also should tell the Marketplace about any changes in your household's size, such as if one of your children move out or if you have a new baby.

Research Any New Tax Laws

The U.S. tax code is always changing. Before you file your 2016 taxes, you should read up on any new laws that could pertain to your return.

You can find details about the latest tax code changes online at websites like IRS.gov. You can also get help by contacting a licensed tax professional.

Gather Personal Identification Information

To file your return, you will need to get personal identification details for you, your dependents, and to any ex-spouses to whom you pay alimony or spousal support. The most important details that you will need include these individuals':

• Full legal names
• Dates of birth
• Social Security or tax identification numbers
• Addresses

The IRS will need this information to verify your return and to ensure that you receive any refund to which you are entitled.

Obtain Earning and Income Documentation

Of course, you know that when you file your tax return that you must provide proof of your earnings. You can prove how much money you brought into your household by providing documentation for income generated from:

• Wages or salaries
• Self-employment
• Investment annuities and dividends
• Rental income
• Pensions and IRAs
• Game winnings
• Alimony
• Jury duty payments

And any other source of earnings. The IRS will expect you to submit a W-2 or a 1099 for each type of income that you claim on your return.

Document Your Expenses for Tax Write-Offs

The IRS allows many taxpayers to claim deductions and credits on their returns. These exemptions help lower what you owe in taxes and could even result in you getting a refund. To claim these exemptions, however, you will need paperwork for deductions like:

• Business expenses
• Medical costs
• Mortgage interest payments
• Non-cash charitable contributions
• Contributions to a Health Savings Account
• Energy-saving improvements on your house
• Costs incurred from job hunting
• Student loan interest payments

All of these expenses can be deducted from your return if they meet the required criteria. You can recoup the allowable amounts by including receipts and other documentation with your return.

The end of the year makes for the ideal time to start preparing for filing your 2016 taxes. You can get a head start now and make filing taxes easier by taking these proactive steps.