Unlike the past few tax seasons, you have a few extra days to file your taxes in 2016. This is because 2016 is a leap year and Emancipation Day, a recognized Washington, D.C. holiday, is on Friday, April 15th. In addition to having until April 18th to file your taxes, the following tips can provide additional help in wrapping up your 2016 tax season.
Tax Tip Number 1: File Your Taxes Electronically
E-filing your taxes provides several advantages, especially if you are expecting a refund. This is because the IRS can process electronic returns much faster than paper returns. Filing electronically also reduces the number of errors. According to the IRS, the error rate of paper tax returns is 21%, but the error rate for e-filed returns is only 0.5%.
Tax Tip Number 2: Avoid Identity Theft and Beware of Scams
In 1938, E.H. Feree sold wallets that contained a sample social security card with the actual social security number of the company secretary, Hilda Schrader Whitcher. Despite the fact that the social security card was clearly marked as not being real, by 1943, 5,755 people were using Mrs. Whitcher’s social security number.
Luckily, identity thieves don’t have it that easy anymore. Even so, you can take several steps to reduce the chance of being scammed or having your identity stolen this tax season:
- Don’t carry your social security card with your tax documents. Having your social security number memorized should be sufficient.
- Monitor your credit and financial accounts often.
- Beware of tax scams, whether it be over the phone or through e-mail. One such scam involves IRS impersonators calling victims claiming to be IRS employees and asking for personal information and immediate payment for taxes. Another scam is a phishing e-mail asking the victim to update their tax information by clicking on a link contained in the e-mail.
Tax Tip Number 3: Avoid Rapid Refunds
Some tax preparers claim you can get your tax refund faster if you use their rapid or instant refund service. If you can avoid it, do not accept these offers. What’s really being offered is a short-term loan, which has fees and interest rates that are extremely high.
Tax Tip Number 4: Don’t Forget to Provide Dependent Taxpayer IDs
If you’re claiming a child or other dependent on your tax return, you must include the dependent’s taxpayer ID number, which is usually her or his social security number. If you fail to include the taxpayer IDs, the IRS will refuse to grant the personal exemption and/or child credit for each dependent.
Tax Tip Number 5: Get Your Documents in Order
Whether you prepare your taxes yourself or use a professional preparer, it helps to have all your tax documents, receipts, financial statements and the like organized ahead of time. It will especially be helpful to a professional tax preparer.
Tax Tip Number 6: Double Check for Incorrectly Spelled or Inconsistent Names
If a name on the tax return doesn’t match the name on file at the Social Security Administration, the processing of your return may be delayed. This is more common when people have name changes, such as women changing their name after getting married or divorced.
Tax Tip Number 7: Use the Best Filing Status
Many newly single parents don’t realize that they can file as head of household, which often provides the best tax benefits. And sometimes married couples are best served filing separately, but it depends on their unique tax situation.
Tax Tip Number 8: Don’t Be Afraid to Hire a Tax Professional
Did you know that in Ancient Greece, tax professionals were considered the noblest people in society? There is a reason tax professionals exist today, as filing your taxes is quite complicated. A lot of this complexity is aimed to provide tailored benefits to many taxpayers, but in order to take advantage of these benefits, professional help is often required.