Overview of Tax Preparation and Filing Process

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What is the tax filing process?

Overview of Tax Preparation and Filing Process

To prepare for the final income tax return filing of your return, there is a process that happens. Hopefully, to ease your year-end frustrations, your income tax process has been yearlong. You have been maintaining the appropriate logs, recording your expenses and income properly, and doing monthly bank reconciliations. If not, it is never too early to start for next tax year. First, you receive your income documents before January 31, 2007. Regardless of whether you work as an employee or are self-employed, there is a January 31, 2007 deadline for issuing these documents to you. If you do not receive them by this date, call the IRS. They can help you obtain this form.

Employees will receive a form W-2. Known as Withholding Allowance, these tax forms will be mailed to you by your employer. And, if you worked for more than one employer, you will have more than one W-2 to file along with your 2006 income tax return. You will send the Federal copy of your W-2 along with your 2006 income tax return. If you are self-employed, you will receive the IRS Form 1099 for various reasons. The only time you will receive these forms, however, is when an entity or individual paid you any money during 2006. These income reporting tax forms need to be mailed to you by anyone who paid you money and did not withhold any income taxes. For instance, your client will send you a 1099-MISC for the job you completed that cost them $2,000. If you are not self-employed, you may also receive a 1099. For instance, your bank will mail you a 1099-I for interest paid on your savings account. If you received any dividends from your stock, you will receive a 1099.

The first step, therefore, in your income tax return filing process will involve gathering all your tax documents together. Have all your income documents ready. Get all your receipts, cancelled checks, and bank statements together. You want to verify the amounts you paid to see what expenses you can claim and possibly deduct on your income tax return. Go through your checkbook for 2006 and be sure you catch everything that you paid and can deduct. Hopefully, you included an explanation for applicable expenses. That makes it easier come tax time.

Secondly, get a hold of any tax forms, publications, schedules, and instructions you need in order to file your income tax. These can usually be obtained from the IRS via various methods (online, in person, local sites).

Third, fill in your income tax return. Or, take it to a tax preparer for double-checking and submission.

Fourth, double-check your return for mathematical errors, or missing information. Be sure every applicable line has something on it.

Fifth, sign and date your return. If filing jointly, be sure your spouse has signed the tax return. Last, if mailing your return, attach all documents. This includes your W-2. Staple them. Do not use a paper clip or leave them unattached. Do not forget to include your tax payment, if you owe any 2006 taxes. Put in envelope, attach postage, and mail.

H&R Block Tip: If filing electronically, have all the information available to transfer over into your e-file return. Find a computer. Find a suitable service provider who charges a reasonable fee (or free). Then, the software will take you step-by-step into the income tax return filing process. Then...take a deep breath and relax.

   

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