Here are a few simple things that taxpayers can do throughout the year to make tax filing season feel less stressful.
Organize Tax Records. Create a system that keeps all important information together. Taxpayers can use software or digital records, as well as store paper documents in organized folders in a safe place. They should collect and add files as they receive documents throughout the year. Keeping things organized will make tax season easier and less stressful.
Identify your filing status. A taxpayer's filing status determines their filing requirements, standard deduction, eligibility for certain credits and the correct amount of tax they should pay. If change occurs (marriage, divorce, birth & death), they should consult a tax advisor to understand the proper way to file.
Understand Adjusted Gross Income (AGI). AGI and tax rate are important factors in figuring taxes. AGI is the tax payer's income from all sources minus any adjustments. Generally, the higher a taxpayer's AGI, the higher their tax rate and the more tax they pay. Tax planning can include making changes during the year that lower a taxpayer's AGI.
Check Withholding. Since federal taxes operate on a pay-as-you-go basis, taxpayers need to pay most of their tax as they earn income. Taxpayers should check that they're withholding enough from their pay to cover their taxes owed, especially if their personal or financial situations change during the year. Changes can be made to withholding by providing the employer with an updated form W4.
Make Address and Name Changes. Taxpayers should notify the IRS, US Postal Service, and employers of any address change that takes place during the year. Making these changes as soon as possible will help make tax filing time easier.
Save for Retirement. Saving for retirement can also lower a taxpayer's AGI. Certain contributions to a retirement plan at work and to a traditional IRA may also reduce taxable income. 1
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1 IRS.gov