Doing Your Own Taxes? Make Sure You Follow These 15 Tips

Couple and their financial planning in the kitchen with laptop.

Tax season is underway, and millions are hoping for a refund or, at the very least, to minimize what they owe. Whether you plan on filing your taxes early or procrastinating until the last minute, knowing a few basics can help put more money in your pocket.

See: The Major Tax Changes for 2021 You Need To Know About

Here are 15 tax tips you need to know before filing your taxes:

Table of Contents

1. Find Out If You Need To File

If you need help determining whether you’re required to file a federal income tax return this year, use the IRS’ online Interactive Tax Assistant. You need to answer a few basic questions about your filing status, gross income and whether you had federal income tax withheld, and then the IRS tool can help.

2. Gather Social Security Numbers

To prepare any tax return, you will need your Social Security number, the nine-digit piece of information that follows you throughout life.

“Make sure you have the Social Security numbers for yourself, spouse and all dependents,” said Kay Bell, tax journalist for the blog Don’t Mess With Taxes. She added that to claim some credits — such as the child and dependent care credit — you’ll need to provide a Social Security number or other ID numbers.

Read: 10 Signs You Really Do Need Professional Filing Your Taxes

3. Determine Your Filing Status

Your filing status is based on what your marital status was on the last day of the tax year, and it applies to all of the tax year. There are five possibilities:

If you legitimately fit into more than one category, pick the one that requires you to pay the least amount of taxes.

4. Review Your Previous Returns

Pull out your federal and state tax returns from the previous year. The information will help you start your tax return because some of your entries will be the same. Other entries will prompt you for missing information or forms you need to collect.

Also, you might need to make changes if you had important life events in the last year, such as getting married or divorced, having a child, going to school or changing jobs.

Important: Best and Worst States for Taxes — Ranked

5. Gather Your Documents

For income information, you’ll need the forms you received from employers and banks, which might include some of the following:

Form W-2 (wages)
1099-INT (interest)
1099-DIV (dividends)
1099-B (investment sales)
1099-MISC (independent contractor work, royalties)
1099-R (retirement distributions)
K-1 (MLP, partnership or S-Corp share of income)
SSA-1099 (Social Security benefits)
1099-G (unemployment benefits and state tax refunds)
W-2G (gambling winnings)
1099-C (forgiven debt)

Next, if you had any adjustments to income, you might need any of the following forms:

Finally, if you itemize your deductions or receive tax credits, you might need forms such as:

1098 (mortgage interest)
1099-LTC (long-term care benefits)
1099-SA (HSA/MSA distribution)
1095-A (insurance marketplace statement)
1095-B (health coverage)
1095-C (employer-provided insurance coverage)

You’ll also need any personal receipts for expenses such as charitable contributions, unreimbursed employer business expenses, medical expenses, and moving expenses.

6. Know Which Deduction To Take

If you’re not sure if you should itemize your deductions, there’s a relatively simple way to determine the best choice for your situation. “If you have enough itemized deductions to exceed the standard deduction, itemize. If you don’t, take the standard deduction,” said accountant Eric J. Nisall, founder of AccountLancer, which offers accounting help for freelancers. “If you’re not sure, put everything in and let your tax program of choice tell you what to do.”

If you don’t itemize, you’re in the majority. Just around 30% of taxpayers itemize their deductions.

More Details: Here’s Every Single Tax Deduction You Could Possibly Ask For

7. Know the Deadline To File

Your income tax return has to be postmarked on April 15.

8. File Your Federal Tax Return for Free

Free tax filing is available to taxpayers who meet certain requirements — the IRS offers Free File where you can file your federal taxes without paying any fees. The version you can use depends on the amount of your adjusted gross income.

If it’s below $66,000, you can use the available free filing software.

9. Deduct Your Medical Expenses

If you itemize deductions, you might be able to deduct specific medical expenses for the costs of diagnosis, cure, mitigation, treatment and disease prevention. These costs include payments you made for medical services provided by physicians, surgeons, dentists and other medical practitioners. The costs also include spending on equipment, supplies and diagnostic devices. In addition, you might be able to deduct:

However, there is a threshold you must meet before you can deduct such expenses. You can deduct qualified medical expenses that exceed 7.5% of your adjusted gross income on Schedule A (Form 1040).

10. Deduct Travel for Medical Treatment

If you drove in 2020 to get to a hospital, doctor’s office or dentist’s office for the purpose of medical treatment, the cost of getting to and from the facility or office is deductible at 2 cents per mile.

11. Deduct Your Mortgage Interest

If you paid interest on a mortgage, the interest amount might be deductible if you itemize deductions. You might also be able to deduct interest on a second mortgage or a home equity line of credit. Make sure you get Form 1098, a mortgage interest statement, from your lender if you paid $600 or more in mortgage interest.

12. Properly Deduct Charitable Donations

If you want to claim a deduction for charitable contributions, you must itemize your deductions, said Nisall. “Any single cash donation over $250 or non-cash donation in excess of $500 should have a receipt in your records — and it would be ideal to have a receipt for any donation,” he added.

However, not all donations are deductible. For example, you can’t deduct the entire amount of your donation if you received a benefit like a fancy dinner at a fundraiser. You have to subtract the fair market value of the meal from the amount of your donation.

Read: How To Avoid Paying Taxes Legally — and the 11 Craziest Ways People Have Done It

13. Gather Health Insurance Tax Documents

You might receive a Form 1095-A, Form 1095-B or Form 1095-C for the medical care coverage that you had or that was offered to you. This is yet another important document to keep track of for tax-filing purposes.

“You and each member of your family must have qualifying health insurance coverage for each month of the year, or qualify for an exemption from the coverage requirement — or make an individual shared responsibility payment when you file,” said Bell. “Filers who get coverage from the marketplace will need the Affordable Care Act 1095 forms to make sure they file properly. If you have coverage through your workplace, you’ll simply check a box on the return.”

14. Find Out If You Qualify for EITC

If you worked in 2020 but had low to moderate income, you might qualify for the earned income tax credit. You don’t need to itemize your deductions to receive this tax break because a tax credit reduces the amount of tax you have to pay. You might even get a refund. The requirements are strict, so the IRS provides an online EITC Assistant to help you figure out if you qualify for this benefit.

15. Report Your Unemployment Income

If you weren’t employed in 2020, you might think that you don’t owe any income taxes. However, if you received unemployment compensation, you have to declare it and pay any taxes you owe. So, don’t ignore that 1099-G you got. “The Internal Revenue Service got a copy, too,” said Bell.

More From GOBankingRates

Taylor Bell contributed to the reporting for this article.

Tax season is underway, and millions of us are hoping for a refund — or at the very least, to minimize what we owe. Whether you plan on filing taxes early or procrastinating until the last minute, knowing a few basics can help put more money in your pocket.

The following are 31 things you need to know before filing your taxes.

Find Out If You Need to File

If you need help determining whether you’re required to file a federal income tax return this year, use the IRS’s online Interactive Tax Assistant. You need to answer a few basic questions about your filing status, gross income and whether you had federal income tax withheld, the IRS tax assistant can help. [1]

Gather Social Security Numbers

To prepare any tax return, you will need your Social Security number, the nine-digit piece of information that follows you throughout life.

“Make sure you have the Social Security numbers for yourself, spouse and all dependents,” said Kay Bell, tax journalist for the blog Don’t Mess With Taxes. [1] She added that to claim some credits — such as the Child and Dependent Care Credit [1]– you’ll need to provide a Social Security number or other ID number.

Don’t Miss: Important Social Security Changes You Need to Know

Determine Your Filing Status

Your filing status is based on what your marital status was on the last day of the tax year, and it applies to all of the 2018 tax year. [1] There are five possibilities: [1]

If you legitimately fit into more than one category, pick the one that requires you to pay the least amount of taxes. [1]

Review Your Previous Returns

Pull out your federal and state tax returns from the previous year. The information will help you start your 2018 tax return because some of your entries will be the same. Other entries will prompt you for missing information or forms you need to collect.

Also, you might need to make changes if you had important life events in 2018, such as getting married or divorced, having a child, going to school, or changing jobs.

Gather Your Documents

For income information, you’ll need the forms you received from employers and banks, which might include some of the following:

Form W-2 (wages) [1]
1099-INT (interest) [1]
1099-DIV (dividends) [1]
1099-B (investment sales) [1]
1099-MISC (independent contractor work, royalties) [1]
1099-R (retirement distributions) [1]
K-1 (MLP, partnership or S-Corp share of income) [1]
SSA-1099 (Social Security benefits) [1]
1099-G (unemployment benefits and state tax refunds) [1]
W-2G (gambling winnings)[1]
1099-C (forgiven debt) [1]

Next, if you had any adjustments to income, you might need any of the following forms:

Finally, if you itemize your deductions or receive tax credits, you might need forms such as:

You’ll also need any personal receipts for expenses such as charitable contributions, unreimbursed employer business expenses, medical expenses and moving expenses.[1]

Know Which Deduction to Take

If you’re not sure whether to itemize your deductions, there’s a relatively simple way to determine the best choice for your situation. “If you have enough itemized deductions to exceed the standard deduction, itemize. If you don’t, take the standard deduction,” said accountant Eric J. Nisall, founder of AccountLancer, [1][1] which offers accounting help for freelancers.[1] “If you’re not sure, put everything in and let your tax program of choice tell you what to do.”

If you don’t itemize, you’re in the majority. Around 30 percent of taxpayers itemize their deductions. [1]

Deduct Your Medical Expenses

If you itemize deductions, you might be able to deduct specific medical expenses for the costs of diagnosis, cure, mitigation, treatment and disease prevention. These costs include payments you made in 2018 for medical services provided by physicians, surgeons, dentists and other medical practitioners. They also include spending on equipment, supplies and diagnostic devices. In addition, you might be able to deduct:

However, there is a threshold you must meet before you can deduct such expenses. For 2016, you can deduct on Schedule A (Form 1040) only the dollar amount that is more than 10 percent of your adjusted gross income. If you or your spouse were 65 or older during the 2016 tax year, the threshold is 7.5 percent of your adjusted gross income.

Deduct Travel for Medical Treatment

If you drove in 2016 to get to a hospital, doctor’s office or dentist’s office for the purpose of medical treatment, the cost of getting to and from the facility or office is deductible at 19 cents per mile. You can also deduct the costs of tolls and parking.

Include the total transportation costs in your medical expense deductions. You can only claim these costs if you itemize deductions and meet the minimum threshold for total medical expenses. Keep good records of this type of travel to differentiate it from the driving you do for work, errands or leisure.

Deduct Your Mortgage Interest

If you paid interest on a mortgage, the amount of interest might be deductible if you itemize deductions. You might also be able to deduct interest on a second mortgage, a home equity line of credit, a home equity loan or a vacation home. Make sure you get Form 1098, a mortgage interest statement, from your lender if you paid $600 or more in mortgage interest.

Look for New Mortgage Documents

In recent years, changes to mortgage financing disclosure laws also altered the type of document you need when filing taxes.

Within 30 days after closing a refinance or home purchase, you will get a final closing statement, where any last-minute changes in costs — such as recording or prepaid finance charges — are disclosed. This is the form to use for filing purposes, said Casey Fleming, author of “The Loan Guide: How to Get the Best Possible Mortgage” and founder of LoanGuide.com.

Properly Deduct Charitable Donations

Read: How to Know If You Can Really Write Off That Donation

Know How to Handle Political Donations

Perhaps you wanted to help your favorite candidate reach the White House this year by giving money to the campaign. However, such a donation doesn’t count as a charitable contribution. The same rule applies to political parties or groups — you can’t deduct the amount of your donation.

Check Your Volunteer Driving Expenses

If you volunteered with a charitable organization, you can’t deduct the value of your time. However, you might be able to deduct the cost of driving if you itemize deductions. Miles you travel on behalf of charity are deductible at 14 cents per mile, and you can deduct tolls and parking costs. Make sure you keep good records of your mileage for this travel to differentiate it from your personal or work travel.

Gather Health Insurance Tax Documents

Find Out If You Qualify for EITC

If you worked in 2016 but had low to moderate income, you might qualify for the Earned Income Tax Credit. You don’t need to itemize your deductions to receive this tax break because a tax credit reduces the amount of tax you have to pay. You might even get a refund. The requirements are strict, so the IRS provides an online EITC Assistant to help you figure out if you qualify for this benefit.

Report Your Unemployment Income

If you weren’t employed in 2016, you might think that you don’t owe any income taxes. However, if you received unemployment compensation, you have to declare it and pay any taxes you owe. So, don’t ignore that 1099-G you got. “The Internal Revenue Service got a copy, too,” said Bell.

Learn: 5 Tax Tips for Claiming Unemployment Benefits

Check Your Job Search Expenses

Did you look for a new job in your current profession in 2016? “You should be aware of the income tax deduction that may be available with respect to job search costs,” said Rosen. “Qualifying expenses are deductible even if they do not result in a new job being offered or accepted.” However, you cannot deduct expenses if you search for a job in a new profession.

Calculate Business Auto Expenses

If you used your car for business purposes, the costs might be deductible. You have two choices for deducting expenses. The first method is to use the standard mileage rate of 54 cents per mile for 2016, plus business tolls and parking. Or, you can use the actual expenses method, in which you deduct the costs to operate the car when using it for business. Such expenses might include:

Make sure to keep meticulous records of business travel. Don’t claim mileage or expenses for personal trips you made, or for driving to work for an employer.

See If You Qualify for an Adoption Credit

If you adopted a child in 2016, you might be eligible for a tax credit for your qualified adoption expenses. There are strict requirements for eligible expenses. For example, you are not eligible for the credit if you adopted your spouse’s child.

The maximum amount of the credit for 2016 is $13,460 per child. Another benefit of the adoption credit is that if your employer provided you with any financial assistance, the amount is excluded from your taxable income.

Don’t Forget Lottery and Contest Winnings

If you won a big jackpot, Uncle Sam took a big cut before you got your hands on it. If you won contests or prizes, the company might report your winnings to the IRS. Even if it didn’t, you’re required to report it as income.

Report Your Gambling Wins and Losses

If you struck it rich in Las Vegas last year, you might have to report it on your tax return because your gambling winnings might be taxable income. If you weren’t so lucky, your gambling losses might be deductible if you itemize deductions instead of taking the standard deduction. Gambling transactions include betting on games and contests such as poker, horse racing and even bingo.

However, you can’t take the amount of your gambling winnings, subtract your losses and claim the net amount as your gambling winnings. You have to report the entire amount of your winnings as income. Your losses are reported as an itemized deduction, up to the amount of your winnings. The IRS requires you to keep accurate records of your winnings and losses.

Also Read: 50 Tax Write-Offs for 2017

Properly Deduct for Uniforms

You might be able to deduct the costs of purchase and upkeep of certain uniforms if your employer specifically requires you to don clothing items that aren’t suitable for wearing as your regular clothing.

Employees who might be able to claim a deduction for their uniform costs include:

Delivery workers
Firefighters
Health care workers
Law enforcement officers
Letter carriers
Professional athletes
Transportation workers (air, rail, bus, etc.)

Protective clothing or safety items might be deductible for people who work as:

Special rules apply to military uniforms.

Know What Expenses You Can’t Deduct

If you itemize deductions, make sure the items you claim are actually deductible. Here’s a list of some nondeductible expenses from the IRS:

Adoption expenses (although you might be eligible for an adoption credit)
Broker commissions
Burial or funeral expenses, including the cost of a cemetery lot
Club dues
Fees and licenses, such as car licenses, marriage licenses and dog tags
Fines and penalties, such as parking tickets
Health spa expenses
Hobby losses (although certain hobby expenses might be deductible)
Home repairs, insurance and rent
Home security systems
Illegal bribes and kickbacks
Losses from the sale of your home, furniture, personal car, etc.
Lost or misplaced cash or property
Lunches with co-workers
Meals while working late
Personal, living or family expenses
Professional accreditation fees
Professional reputation, expenses to improve
Wristwatches

Remember Your State Income Taxes

In most states, you have to file a separate income tax return. However, if you live in one of these seven states, you don’t have to:

Alaska
Florida
Nevada
South Dakota
Texas
Washington
Wyoming

If you live in New Hampshire or Tennessee, you don’t have to pay state income tax, but there is a tax on interest and dividends. States that do not collect income tax manage to find it elsewhere. For example, you often pay higher sales taxes.

Don’t Make Simple Mistakes

It’s easy to use the wrong dollar amount on your return, whether you prepare the tax return yourself, use a human preparer or use an online service.

Nisall said you should double-check and triple-check your figures. “Making an input error can mean getting back too much and having to pay it back later — sometimes with interest and penalties,” he said. Or, you might not get back what you deserve and can lose the money permanently if neither you nor the IRS catches and fixes the error, he added.

Take a deep breath and step back for a moment when you finish your returns. Look at the bottom-line numbers. “If anything looks off — either owing too much or receiving too large of a refund, or if you simply have no clue what you are doing — hire a qualified tax preparer,” said Nisall.

Check Your Tax Preparer’s Work

If you use an accountant or other human tax preparer, remain vigilant. The IRS won’t let you off the hook if the preparer makes mistakes or tries to claim excessive deductions for you.

“It is your tax return, and even though someone else prepared it, you are responsible,” Rosen said. “Do not take a refund that you are not entitled to, or you can likely owe it back one day with interest plus penalties.”

In addition, a tax preparer should sign his name on your return. “If your tax preparer will not sign their name, you should walk away,” Rosen said. “That means they are hiding from something, and it is a sign you need to worry.”

Rosen urges you to find a tax preparer with a good reputation. “You do not want to be audited because you had a questionable tax preparer,” he said.

Don’t Fall for Tax Scams

Unscrupulous people might call you, pretending they are IRS employees and demanding that you pay taxes you owe. The IRS will never:

Call to demand immediate payment
Call about taxes owed without first having mailed you a bill
Demand that you pay taxes without giving you the opportunity to question or appeal the amount the IRS says you owe
Require you to use a specific payment method for your taxes, such as a prepaid debit card
Ask for credit or debit card numbers over the phone
Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying

If a caller makes any of these demands, do not give him any personal information. Instead, hang up the phone immediately and report the suspicious call.

Report All Your Income

Be honest when reporting your income. “Report every penny of income,” said Nisall. “It doesn’t matter that a tax form wasn’t issued. If you earned money — either income from a bank account or working for cash on the side — it’s all taxable income.” [1]

Don’t overlook non-wage income, Bell said. “You might, or might not, get an official tax statement for this,” she said. Regardless, it’s taxable. This includes tips you receive as part of your job. [1]

Don’t Miss: Everything You Need to Know About Tax Brackets

File Electronically or Mail a Paper Return

It’s your choice whether you want to file online or submit all the paper forms to the IRS. [1] “Many clients tell me they do not want to file electronically, since they do not want their information going over the internet,” said Rosen.

However, Rosen noted that IRS employees “touch” paper returns, so there is a security issue there as well. “In addition, you statistically get your refund much quicker filing electronically, plus you have less chance of an error rate,” he said.

File Your Federal Tax Return for Free

Free tax filing is available to taxpayers who meet certain requirements. The IRS offers Free File to file your federal taxes without paying any fees. The version you can use depends on the amount of your adjusted gross income. [1]

If it’s below $66,000, you can use the available free filing software. [1]

Know the Deadline to File

Usually, your income tax return has to be postmarked on April 15. [1] But for the 2018 tax year, residents in Maine and Massachusetts have until April 17 to file because Patriot’s Day and Emancipation Day are holidays in each state. [1]

Read: Take Advantage of These 10 Little-Known Tax Deductions

This article originally appeared on GOBankingRates.com: Doing Your Own Taxes? Make Sure You Follow These 15 Tips