It’s that (sometimes chaotic) time of year again -- tax time. Make it go more smoothly by getting a plan in place!
Here are five important questions to ask yourself during tax season.
1) Do I need to file at all? Depending on your income and age, you may not be required to file taxes. Use the Internal Revenue Service (IRS) tax assistant tool to find out. Once on the IRS website, look under the "Get Ready" heading and click on "Do you need to file a return?"
2) Do I have all of my documentation? Be sure everyone you worked for in 2015 has your current address so they can easily mail any necessary documents to you. Then, gather all relevant information for adjustments or possible deductions (e.g., charitable donations, moving expenses or interest paid on student loans).
3) Do I know the costs? Plan for the cost of filing your taxes. A personal tax return could cost up to $50, on average, but keep in mind that many companies will let you e-file some tax forms for free. The IRS outlines several options you may consider based on your income. To find out if you’re eligible for free tax preparation advice, find a center near you. If you’re a small business owner or have a sole proprietorship, filing may cost more than filing as an individual.
4) Will I owe or get a refund? Plan ahead. For many, tax time means a refund, but for others it could mean extra expenses. For example, let’s say you started your own business in 2015. Did you pay quarterly taxes? If not, you may owe at the time of filing. Consider all of your potential costs, even if you don't plan to file until closer to the deadline (which falls on April 18 this year). That way, if you need to save money for taxes owed or the cost of a tax preparer, you can start now.
5) Do I know the signs of a scam? Tax season is a busy time of year for scammers. A common ploy is phishing, which is when someone misrepresents themselves or impersonates someone else and then asks for your personal information. If someone contacts you via phone, text message, mail or email stating you are owed a tax refund and wants your personal information, it should give you pause. To learn more, read our previous post about protecting yourself from scams. The IRS also maintains and frequently updates its own page of consumer scam alerts.
Taxes are due on Monday, April 18. Set a reminder so you don’t forget, and stay tuned for more timely tips from LendUp!
Is there an area of personal finance that you’d like us to cover in a course or Fast Financial Fact? Where do you struggle with managing your finances? We’d like to know! Or are you an organization that’s interested in collaborating? Please get in touch at education(at)lendup(dot)com.