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How to Prepare a Tax Return

Tax Return

Preparing a tax return each year is a basic responsibility that most taxpayers face. While this is an important responsibility, it need not be frightening – if you know what you’re doing and approach things in an orderly fashion.

For example, right from the start, it’s essential that you have the necessary tax forms and schedules on hand. If you filed a tax return last year, then the IRS sent you a tax package in the mail containing not only tax forms and schedules you’ll probably need, but also some valuable instructions. Tax forms and instructions are also available from IRS offices and at many banks and local Postal Service stations. This leads to the next step.

Read the instructions. They can not only save you time as well as effort, but also, in some cases, money because you may become aware of a deduction or exemption to which you are entitled.

When preparing your tax return, make sure that you are in shape to do a good job. Don’t pick a day when you are not too alert or not feeling well. It’s also important to make sure you are in the proper surroundings – a well lighted and ventilated room, no distractions and that you have the necessary supplies on hand – scratch paper, pens, pencils, a pocket calculator, if necessary.

Speaking of supplies, you can hardly expect to prepare a tax return without records such as Forms W-2 received from employers and 1099 forms issued by savings and loans, banks, and other financial institutions. If you think it might be to your advantage to itemize deductions, have your expense records on hand, such as medical and dental bills, real estate taxes, State income tax, home mortgage interest, and charitable contributions.

It would pay you to double check the instructions to find out just what types of expenses you can deduct. When preparing your tax return, make sure you use the mailing label on the forms sent out by the IRS. Correct any name or address changes right on the label. Using the label can help to avoid errors and also speed processing for the IRS and delivery of any refund due you.

As you proceed to prepare your tax return , it makes good sense to have the instructions handy for ready reference. For example, one important consideration is whether or not to itemize. The instructions can help you decide.

As you move through the return you will finally come to a point where you find out whether you owe tax or can expect a refund. For the taxpayer owing tax, attach a check or money order for full payment when filing. The check should be made out to “Internal Revenue Service” and it’s advisable to put your Social Security number on the check in case it becomes detached during processing. This way the money will be credited to your account.

For the taxpayer with a refund, of course, it’s a matter of waiting for the check to arrive. Bear in mind that early filers always get their refunds faster. Whether you owe taxes or receive a refund, double check your return. Go over all items and make sure they are correct. Double check the arithmetic and see to it that the return is signed – two signatures are required on a joint return.

Also, be certain you have attached everything – W-2′s from all your jobs, schedules, and a check if there is a tax liability . Finally, after double checking everything, the wise taxpayer mails his or her tax return in the preaddressed coded envelope provided by the IRS and found in the tax package. This also speeds up processing of your return.

Remember to affix the proper postage to the envelope. Otherwise the tax return will be sent back to you. If you move after filing your return and are expecting a refund, you should notify both the post office serving your old address and the service center where you filed the return of the change in address. Here again, be sure to include your Social Security number on any correspondence with the IRS.

That’s basically how to prepare a tax return. Of course, everyone does it a bit differently. The important point, however, is that you prepare your tax return in an orderly way and know what you’re doing. While perhaps not the most pleasant of tasks, the annual ritual of preparing a tax return need not be overwhelming.

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