A new year also means we’re in refund season once again. If you are a first time filer, there are things you can do before you sit down to prepare your taxes so you can get your biggest tax refund.
Your tax documents have probably started to roll in so here is a list of tax tips for first-time filers to get you through your first time and set you up for success.
Gather Tax Documents in One Spot
Before you even get down to preparing your income tax return, you will need to gather your documents. You will be asked information from your forms when you prepare your taxes so here is a breakdown of the most common tax forms and documents you may see.
- W2, for salary income
- 1099s, for contract or self-employment income
- 1099-DIV (dividends), 1099-INT (interest income), 1099-B (investment sales)
- 1099-G, income from government sources (tax refunds, unemployment income, etc.)
- Investment Brokerage Statements
- 1098, reporting mortgage interest and real estate taxes paid
- 1098-T, shows expenses paid for college that may be deductible
- 1098-E, shows student loan interest paid that may be deductible
- Written proof of tax deductible expenses – medical expenses, charitable deductions, taxes paid and miscellaneous deductions
- Closings statement on any real estate purchased or refinanced
- Evidence of IRA contributions made
- Purchase records for any assets used in connection with a business or trade
- Total, business, commuting and personal mileage, if you use your vehicle for business or employment (other than for just commuting)
- 1095-A, for reporting details of Marketplace insurance
Other information you may need:
- The correct Social Security number for each dependent you are claiming
- Your bank routing number and account number (for direct deposit of refund)
- If you use third party childcare providers, you will not only need evidence of payments made, but also of the provider’s Social Security or Employer ID number
When you begin accumulating documents, you should set up a file folder and place all the documents into the folder as they arrive.
Getting the Biggest Tax Refund
There are different ways that you can increase the size of your refund before filing your tax return. Some you can do up until you file your taxes and TurboTax will ask you questions related to you and check for over 350 tax deductions and credits you may be eligible for.
File your taxes today. Now that you have these tax tips and have gathered your tax documents, there’s no reason to wait to file. About 73% of taxpayers received a tax refund last year and the average tax refund was close to $2,800 last refund season. The sooner you file the sooner you can get your tax refund. The IRS expects to issue 9 out of 10 tax refunds within 21 days after acceptance of your tax return.
Make an IRA contribution. Even if you’re covered by a retirement plan at work, you may still be able to make a tax deductible contribution to a traditional IRA in the amount of $5,500 (or $6,500 if you’re 50 or older) that applies to your 2014 taxes.
Don’t forget tax credits. Tax credits are even better than tax deductions because they produce a direct reduction of your income tax liability. Such credits include earned income credit, foreign taxes paid (check your investments!), child and dependent care expenses, education credits, retirement savings credits (you may be eligible based on contributions to either an IRA or employer plan), child tax credit or residential energy credits.
Final Filing Tips
Double check numbers like Social Security numbers. Make sure you have the correct social security numbers for you, your dependents, and spouse. Correct Social Security numbers are necessary in order to get valuable tax deductions and credits you’re eligible for.
Keep copies of your returns. Always keep copies of your returns and keep them for seven years. You never know when you may need to return to them.
Keep copies of your supporting information. Most of the documents we listed in the opening section don’t get filed with your return – but be sure to keep them with the return they support anyway. If you keep them stored in digital form, be sure that the file is backed up and stored at a different location.
Get Help If You Need It
If you have a question while you’re preparing your taxes with TurboTax you’re never alone. TurboTax has tax professionals who are CPAs and Enrolled Agents available to answer your tax questions.