How to Alleviate Some of the Stress that Tax Time Brings

With IRS audits on the rise and continually changing tax laws, it is important for taxpayers to stay informed when it comes to paying taxes. Many U.S. citizens are caught unaware at tax time by recent tax law changes that affect their personal situation and directly impact the amount of their return or the tax that they owe.

Making an effort to stay informed regarding federal tax laws and your local and state tax laws can help you be better prepared when tax filing season arrives. Following these tips can help to alleviate some of the stress that tax time brings to most households.

1. Be aware of the tax consequences of various life changes

Some life changes that could potentially affect your tax situation include:

A change in marital status

Household size increased through the birth/adoption of a child

Supporting an elderly family member or a disabled family member

A member of your household attending school full time

Making contributions to or distributions from a retirement plan

Purchasing or selling a home

Starting or selling a business/Becoming self employed

Making a work-related move

2. Wait to file your income tax return until you have received all tax related documents, including but not limited to:

a. W-2's from any and all employers for the tax year

b. 1099's which report miscellaneous income

c. 1099-DIV for dividend income

d. 1099-INT interest statement

e. 1099-G for certain government payments including unemployment or state tax refunds

f. 1098-T's for education expenses

g. 1098 for mortgage interest

h. 1098-E for student loan interest

i. W-2G's reporting certain gambling winnings

3. Seek the advice of a qualified tax professional - When in doubt, speak to a tax professional who is qualified to answer your questions. Many national tax preparation chains have preparers available who will offer free advice and are ready to answer your tax questions. Benefits of speaking to a qualified preparer include:

a. Understanding recent tax law changes

b. Being able to maximize deductions and credits

c. Receiving tax advice that will benefit you in the coming year

d. Help you determine what to claim for your W-4 federal and state tax withholdings

e. Answer your questions regarding dependency exemptions and credits

One final tip:File as early in the tax season as possible. Many people mistakenly believe that they have to pay their tax balance owing at the same time that they file their return and therefore put off filing until the last possible moment if they believe that they are going to owe money on their taxes. Other people will go so far as to file an "extension" form to give themselves even more time, though they often do not realize that an extension relates only to "filing" their return, not to "paying" their taxes-your tax balance will still be owing on April 15^th whether or not you have been granted an extension to filing your taxes.

By filing early in the season you will be aware earlier on of how much money you owe and you will grant yourself more time to come up with the exact amount needed to pay your tax balance. There are even ways that you can reduce your tax liability after January 1^st and before April 15^th (such as contributing to a qualified retirement savings plan such as an IRA).

Filing your income tax return does not having to be a scary, stressful experience. If you are hesitant about paying a tax professional to assist you, keep in mind that companies such as H&R Block offer satisfaction guarantees and even have plans available that you can purchase much like an insurance that will protect you from having to pay any additional tax liability if the IRS disagrees with the way that your return was prepared and determines that you owe additional taxes.

If you determine that you want to file your taxes on your own even after speaking with a tax professional, be assured that the advice that you receive during your time spent discussing taxes and tax laws will ensure that your time was not wasted.