Good news! It's April 16th. You can breathe again. The tax-filing deadline has passed. No more dealing with the IRS, or even thinking about taxes, until next year.
Think again. For one thing, many taxpayers still are dealing with the IRS, having either filed for an extension, having had their identity stolen or become embroiled in some other sort of ongoing situation. But even if you filed on time and got your refund or made your payment, tax time isn't over. That's because it never really ends. And if you can make peace with that, things may go more smoothly down the road.
The first step is to be organized all year long. Imagine sitting down to do your return next year and having everything you need right in front of you, neatly separated and color-coded. Now, think about frantically searching through desk drawers, glove compartments, clothes dryers and garbage cans, trying to find receipts at the last minute.
I'm guessing you'd prefer the former. And it's easy enough to do. Get some folders or envelopes today for next year's tax documents. Keep all receipts and other paperwork you think you might need, and put each into the proper folder (mortgage, investments, charitable giving, business expenses, etc.) You can even do this on a computer or mobile device, because as you might have guessed, there's an app for that. It's called Shoeboxed.
Staying organized not only makes your tax life easier, it'll also allow you to file early. That's key because the earlier you file, the greater your chances of avoiding tax-related identity theft. Thieves filing fraudulent returns tend to do it early in the season. But if you've got your ducks in a row, you can beat them to the punch. Even if you get your return in early, it pays to file IRS Form 8821, which triggers IRS correspondence on any suspicious tax activity using your name, address or Social Security number.
Once you've got everything organized, the next key word is "backup." Make a copy (or two) of any tax document you're submitting, and keep it in a safe place. Computer malfunctions happen, so if you have any tax-related spreadsheets or other organizing documents on your desktop, save them to a flash drive.
And keep in mind these tips from HLN Money Expert Clark Howard.
- Reduce your withholding at work so you don't get a big refund. This puts more money in your pocket all year long and takes away the bait for tax ID thieves.
- Before you pay someone to do your taxes, see if you're eligible to file for free. The IRS says more than 70% of taxpayers qualify for its Free File program.