Seems as if the end of the year just slipped by, and that means a lot of things to many different people. There is the joy of the Christmas season filled with gatherings of friends and family. There is also the celebration of ringing in a New Year. But for those who work, the end of 2016 signals something else – filing a tax return.
If you are like many Americans and expect an income tax refund, get ahead of the game and prepare now. Your employer will send W-2s and 1099s by Jan. 31. You may also be able to obtain them even earlier if your employer makes them available online. As soon as you have those documents, you can file your tax return. Until then, here’s what you can do to make sure you are prepared to file as soon as possible.
- Gather all receipts and relevant paperwork. You want to make sure you have everything you need to begin filing your return. If you have any investments such as stocks, bonds, brokerage accounts, mutual funds, etc., you will need to have year-end statements for each. You may have medical receipts or maybe you are self-employed, which in that case you will have paperwork showing your business expenses and profits or losses.
- If you are planning a donation to charity, do it before the end of the year. Any donations made to qualified 501(c)(3) organizations can be used as a tax write-off. If you donate housewares or clothing items, take them to your local drop-off and get a receipt.
- Have you experienced any life changes in 2016? Several things will affect your tax status and how you file your return. If you got married in 2016, you must figure out if you will be filing a joint or separate return. The same holds true for other life changes such as having a child, divorce, or returning to college.
- Prepare to take full advantage of potential tax deductions. Tax deductions lower your overall taxable income. If you own a home and have a mortgage, you can deduct the interest you paid for the year. If you took out a car title loan from Embassy Loans to pay for emergency expenses during the year, you should do some research to see if you can deduct any of the interest payments. In most cases, you cannot deduct interest paid on personal loans, but you may be able to if you used the loan for business purposes.
If you are looking to get the most from your 2016 income tax refund and want to get your hands on it as soon as possible, begin taking these steps in preparation. You can have your hands on your tax refund long before the April 15 tax deadline.