February 4th, 2017 7:39 AM by Jackie A. Graves
Tips on choosing tax
preparation software to help get all the homeowner benefits.
Ready or not, the tax
man’s coming. Filing your taxes yourself may not be your idea of a fun night at
home, but even so, it doesn’t really have to be that bad. Yes, even if you own
a home. Even if you itemize your deductions.
Even if you’re scared of making a mistake.
We turned to the tax pros and nailed down
their top tips to make DIY tax filing as easy and painless as possible — as
well as how to ensure you don’t miss any possible deductions. Here’s what they
Pick the Right
Unless you qualify for
a free version (more about this
below), software prices are all over the place. Still, you get what
you pay for. TurboTax is pricey at almost $60 for the Deluxe version, but both
our tax experts agree: If you’re going the DIY route, it’s their favorite
“It’s user-friendly,” says Cathy Derus,
founder of Brightwater Accounting, who, despite being a CPA, admits she’s used
the program herself in the past. “It offers an online questionnaire. Then, it
walks you through exactly what you need to do.” That questionnaire does a good
job of helping you identify possible deductions.
But it’s not fail-safe, she added. It’s only
as good as the information you feed into it.
To really make sure
you’re aware of all possible deductions,
get a copy of Form 1040, Schedule A, (and Schedule C if
you’re a sole proprietor for your own business), says Derus. Then, “scan the
forms and take note of any items you think you might be eligible to take.”
If you’re a homeowner, here are some examples
of deductions you can take:
Some costs of buying a
Some costs of selling
For a full list of
your possible homeowner deductions, go here.
Free Software Can Be
If your adjusted gross income is below a
certain threshold — typically $62,000 — you may qualify to use one of about a
dozen free software options. TurboTax has a free option, but its income
threshold is lower at $31,000. H&R Block, Jackson Hewitt, and TaxACT also
have free versions.
Some companies also impose other restrictions,
such as age and state of residence, to qualify for a free version. That’s
because for some firms, the free offering is a way to find clients who might be
willing to pay for other services.
Watch for extra costs:
Some companies will file your federal return
for free, but then charge you for the state return, to e-file, or ask questions
of a live person.
Filing for an
Extension Can Be a Smart Thing to Do
If you find yourself butting up against the
tax filing deadline, you can always request an extension, “so you’re not
stressed out,” says Derus.
Most people don’t fully understand how
extensions work, and often make mistakes that cost a bundle. Here’s what you
need to know:
How to file a tax
File an extension
anytime before or on April 15. You’ll avoid the late filing penalty,
which is a whopping 5% of your outstanding balance, due for every month you’ve
failed to file.
If you owe money, pay
as much as you can by April 15 to avoid the late payment penalty of 0.05%
interest. (A whole lot less than the late filing penalty, though!)
Make arrangements to
complete your tax filing by the October 15 deadline to avoid adding extra
Get the Benefits of
You’ve probably already been e-filing your
taxes, but are you aware of the benefits?
Why it’s better to
24 hours after you
e-file, you can start checking on your return via the IRS’s “Where’s My
Refund” online tool or IRS2Go app.
You’ll get any refund
due to you faster.
You’re also more likely to know if you filed
your forms correctly, avoiding a scary encounter with the tax man. Because if
you e-file, you’ve got to use software. And these programs “run a check for
questions that need to be answered, numbers that don’t add up, and missing
Social Security numbers,” says Tai Stewart, accountant and owner of Saidia
Financial Solutions in Houston. Those mistakes tend to flag your return for a
You’ll also wait up to six weeks for your
return if you use snail mail.
So, what are you waiting for? “Fill a pot of
coffee, and get to work,” encourages Derus.
By Alaina Tweddale - To view the
original article click here