With tax season just around the corner, organizing W-2s, mortgage interest statements, dependent care forms, and other essential documents now can help reduce stress, avoid delays, and ensure taxpayers receive the refunds to which they are entitled.
Regardless of whether the forms are digital or paper, it is vital to organize them into one folder, said Mengya Wang,Oklahoma State University Extension personal finance specialist.
“Tax season can be stressful, but being organized is the best way to make sure you don’t overlook important documents and to get your paperwork filed on time,” Wang said. “Taxpayers will feel more prepared and be less likely to get scammed.”
While gathering tax documents, review the Internal Revenue Service website for additional details on tax forms, taxable income, charitable donations, address changes, individual tax identification numbers and more. Additionally, update life changes, such as marriage, divorce, a new baby or buying/selling a home.
Tax season is also a good time to review household income and withholdings. Wang said people receiving large refunds are withholding more funds than necessary.
“Many people could benefit from adjusting withholdings, so they take home more money each paycheck,” she said. “If you owe taxes, adjust your withholdings to have more taken out each month or make estimated quarterly tax payments.”
Taxpayers who owe taxes but don’t have the resources to pay them in full when filing have some options to resolve the tax bill. They may pay part of the balance and set up a payment plan, or they may see if they qualify for an offer in compromise. If a taxpayer can’t pay any of the amount when filing, ask to delay collection. More information is available in the Get Help with Tax Debt section of the IRS website.
Taxpayers who are due a refund should have it electronically deposited into their bank account. The IRS encourages people to use direct deposit because it’s safer and faster. Be sure to include the correct account and routing numbers on tax documents.
Be wary of scammers during tax season. Taxpayers who receive phone calls, emails, text messages and other communications indicating taxes are due or that legal immigrants will be deported if taxes aren’t paid immediately are being scammed. The IRS will never call or email requesting immediate payment in the form of gift cards or Bitcoin.
For those who will receive a refund, plan now how the money will be used.
“Don’t think of a refund as a bonus. Instead, add to your emergency fund, reduce high-interest debt or add it to an education fund for your children,” Wang said. “It’s financially wise to use these funds as a way to help build your assets.”
Many taxpayers qualify for free filing options through the IRS Free File program or volunteer programs such as the Volunteer Income Tax Assistance program. Some OSU Extension county offices are partnering with the United Way of North Central Oklahoma to bring the VITA program to several locations around Oklahoma. The VITA program assists qualified taxpayers with free tax preparation. The volunteers are certified by the Internal Revenue Service. Check with the nearest county OSU Extension office to see if the program is available.
“Tax season can be stressful. Getting organized early can help alleviate some stress and help ensure taxpayers get back everything they’re entitled to receive,” Wang said.
