With the New Year comes the time for filing your taxes. You should already be preparing to get your information together to file last year’s taxes.
When the time comes to officially file, you do not want to end up with missing documents or information. This can significantly lengthen the filing process and even result in delays in getting a tax refund. This is why tax preparation is so important.
Let’s take a closer look at what you need to file your taxes.
Before You Begin Filing: Protect Yourself from Tax-Related Identity Theft and Scams
As digital technologies evolve, we often turn to tax software and other platforms to make our lives easier when filing our taxes. The increase in the use of digital technologies has also brought about the need to protect ourselves from cybercriminals.
A report from Fornuly found that about 33% of people in the United States have experienced some form of identity theft. The FTC has also reported 2.2 million causes of fraud reports a year.
These activities continue to rise, with an estimated 15 million individuals in the United States being the victim of an identity theft attack annually.
Protecting yourself against identity theft and tax scams is crucial. Taking a few steps before you decide to file your income tax return can help prevent your tax identification number, Social Security numbers and other confidential data from getting into the wrong hands.
Some signs of tax identity theft include:
- An e-filing return was rejected because the Social Security number was already used on a different tax return for the given year.
- You may receive more acknowledgment emails compared to the number of returns you file.
Even tax professionals need to be careful, as cybercriminals target both clients and agencies that work with tax returns.
A great way to protect yourself is to use an identity theft protection service. These platforms can notify you should fraudulent or unusual activity happens with your identification number or other personal information.
Additionally, you should also opt for an IRS PIN to add a greater level of protection to your e-filing account.
Items Needed for Filing Your Taxes
Here are some items the IRS suggests having when filing for your taxes.
Personal information refers to information that identifies you. This can include:
- Your tax identification number
- Social Security number as per your government-issued identity card
- If you have an identity protection PIN with the IRS
- Bank account information to deposit refunds or to deduct money due on your return.
Income information refers to your earnings or income for the year.
According to the IRS, if a company employs you, you must complete Form W-2. Also self-employed people need to complete 1099 Forms and Form 1040-ES to provide evidence of tax payments that have been made.
Other types of income and losses to consider include:
- Income from gambling
- Income from hobbies
- Royalty income
- Refunds from state returns.
Deduction information is used to reduce the total amount of tax that you have to pay for the year.
Deductions that are allowed on an income tax return can include:
- Payments made for property taxes
- Cash and non-cash charitable donations
- Healthcare insurance and other medical expenses (Form 1095-A needs to be completed if you use an exchange for your insurance plan)
- Expenses related to childcare for children up to the age of 12
- Complete Form 1098-T if you have paid money to an educational institute within the tax year
Important Tax Deadlines
The IRS always has a start date and deadline to accept tax returns. Recent reports suggest that the IRS has invested a significant amount of funds into improving the filing experience for customers.
Individuals can submit a request for an extension on their tax return deadline. In cases where an extension is requested, the deadline is only moved when the request is approved.
Preparing for your tax returns is essential, but you must also protect your confidential data to help keep it away from cybercriminals. Review our checklist and consider what you need for to file your taxes. At the same time, consider using the right strategies to prevent tax identity theft and scams.
IdentityIQ services provide credit report information from Experian®, Equifax® and TransUnion®. IdentityIQ services are not tax preparation services and do not provide tax advice.