Tax season is just around the corner with the Internal Revenue Service (IRS) announcing that it will begin accepting returns on January 26. It’s important to meet with a tax preparer each year after you have received and gathered up all documents to determine if you need to file a tax return, if you are eligible for a refund or owe taxes, and if you might qualify for refundable tax credits (credits available even if you don’t owe any tax or potentially have any income). A reminder that individual returns are due by April 15, while other entity types may have different deadlines. So don’t delay, utilize the following information to get ready to file your taxes.
What’s New
Recent federal legislation signaled many changes for tax filers for the upcoming season including new additions or extensions and some expirations of credits. Some of those changes include changes to taxes on tips and overtime pay, enhanced deductions for seniors, and a deduction on personal car loan interest. Parents can now sign up for the new Trump account (a retirement-based account for children).
Health Savings Accounts also saw changes for those who can contribute and surrounding telehealth services. It’s important to check with your preparer on all the changes and what may or may not be applicable. Remember to sign up for an IRS Individual Online Account to access your information and return history.
What Do I Need to Gather Before Filing
Social security number for you and others you will claim as
dependents on your return, bank account information if receiving a refund, a current address, your IRS “PIN” that you filed with last year, and filing status.
Make Note of Life Changes
Did you get married, lose a spouse, buy a house, move to a new state, have a child stop being a dependent, etc.?
Income Sources
Gather W-2’s from all employer’s, 1099’s (if an independent contractor or if you sold items electronically (i.e. Venmo), or other income), interest income, hobby or gambling winnings, side business income, social security or other retirement plans, etc. Be sure to inform your preparer about any income your children may have received to determine if they will need to file as well.
Expenses or Contributions
Business, hobby, childcare or dependent care expenses, education expenses (teacher or student), etc.), retirement accounts, health savings accounts, etc. If you itemize your deductions (gather up donations to charity, home mortgage and property taxes, health care expenses, etc.).
Where to Get Help
The Colorado Department of Revenue and Get Ahead Colorado has many resources for finding free or reduced filing tax preparers both online and nearby in your local community. They also offer learning resources and information regarding many topics including if you were a part-time resident, filing deadlines, and information on tax credits specific to Colorado.
The IRS also has resources for free income tax filing assistance
through their Volunteer Income Tax Assistance (VITA) program or (800) 906-9887 and/or AARP Tax-Aid site or (888) 227-7669 for the elderly and other qualified individuals.
You can find a directory for credentialed tax preparers and what to consider before hiring a tax professional on the IRS website as well.
Need Ideas for Your Tax Refund
- If your refund is very high, consider adjusting your withholding from your paycheck to reduce what you pay out of pocket up front. This lets you use more of your money now instead of letting the government hold onto it all year.
- Utilize your refund to pay down credit card debt or make an extra vehicle payment.
- Contribute to a retirement account.
- Contribute to a savings account for emergency or maintenance expenses.
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