1. Gather personal information
Make sure you have basic information, including Social Security numbers and employer information, for each person on your return. Create a folder on your personal computer with this type of information so you always know where to find it.
2. Collect income data
Gathering tax forms for you and your spouse is a good first step, but remember that you may have income that is not included on your W-2. Don’t forget to claim any income you’ve received throughout the year, including:
- Money from investments
- Rental properties
- Home businesses
- Lottery or casino winnings
It can take some time to collect all of the necessary income information, so be sure to give yourself plenty of time.
3. Make a note of itemized deductions and credits
Tax deductions decrease your total amount of taxable income. So, it’s important to keep track of everything you can deduct. A few standard deductions include:
- Child care costs
- Education costs
- Mortgage interest payments
- Charitable donations
Most deductions require receipts and other documentation, so check with your tax advisor to make sure you have the necessary paperwork.
4. Document taxes you’ve already paid
Most employers take federal, state and other taxes out of each paycheck. These deductions will be detailed on your W-2 form.
If you’re a contracted employee or own a business, you’ll have to keep tax records yourself.
5. Note life changes in the past year
Significant life events can affect your tax return. You may be eligible to claim additional deductions if you had an IRS-recognized life event, such as:
- Got married
- Had a baby
- Moved to a new state
6. Learn about upcoming tax changes
The federal tax code changes all the time. Make sure you talk to your tax advisor about how these changes may affect you each year.
Upcoming tax law proposals may have an effect on higher tax brackets. Be sure to read up on these bills, especially if your family income exceeds $250,000 per year.
While processing your taxes, you may realize that your employer deducted more taxes from your paychecks over the course of a year than you owe. If you do get a tax refund, start your year off right by saving it.
Neither Nationwide nor its representatives give legal or tax advice. Please contact your attorney or tax advisor if you have specific tax questions.