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If you want to get your refund as quickly as possible, you’d better hustle that tax return out the door.
The IRS has received 28.6 million tax returns for the 2019 tax year as of Feb. 7, and it anticipates receiving more than 150 million returns in total.
Filers are already getting money back. The agency has paid 10.8 million refunds as of Feb. 7, down nearly 5% from last year.
On average, taxpayers are getting back $1,952 from the federal government, up $3 from the year-ago period.
There are plenty of advantages to filing early. For starters, you beat the would-be scammers who want to file a phony return using your data.
“Making sure you’ve obtained and organized all of your tax documents is going to make the tax prep process go much more smoothly,” said Andrew Phillips, director at the Tax Institute at H&R Block.
“It also ensures you’re not missing key tax benefits or income that can lead to an IRS letter,” he said.
Everything begins with getting your paperwork together to ensure an accurate and speedy filing.
The Internal Revenue Services offices in Washington, D.C.
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Use last year’s income tax return as a guideline. Go over your income sources and deductions claimed to make sure you leave no break unclaimed.
“Last year’s tax return is a good checklist for everything that you’ll need this year,” said Cristina Gugilielmetti, a certified financial planner and owner of Future Perfect Planning in Brooklyn, New York.
By now, you should have received your Form W-2 if you’re an employee, as well as Form 1099-MISC from businesses that have hired you for freelance work.
If you’re a freelancer, you should have been tracking income and expenses throughout 2019, plus paying quarterly estimated taxes.
Gig economy workers should have received a Form 1099-K, which would spell out how much they earned from debit and credit card transactions.
Here are key documents you’ll need and when you can expect to get them.
While the IRS won’t dole out penalties if you didn’t have insurance coverage in 2019, your state might impose a tax. This is the case for Massachusetts, New Jersey and Washington, D.C.
Watch out for a series of forms (Forms 1095-A, -B and -C) detailing whether you and your family members had coverage throughout the year. You’ll need them to file those with your state tax returns.
You may have to reach out to your human resources department or to your insurer directly to get this paperwork.
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Finally, while procrastination is never a good idea, sometimes taxpayers have no choice.
For instance, a delayed 1099-B from your brokerage account could potentially hold up your filing plans.
Further, investors in partnerships generally have to wait until they get a Schedule K-1 from the entity. This document spells out the filer’s share of income, losses and dividends.
These taxpayers tend to go on extension.
Grabbing deductions and credits
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Whether you itemize or not, you’ll need a few supporting documents to claim certain deductions and credits.
For instance, if you want to claim the dependent care tax credit, you’ll need to contact your childcare provider for their tax ID and a total of what you paid.
Here are the forms you’ll need to claim certain tax breaks.
Further, those who donated to their favorite causes and wish to claim a charitable deduction must have the appropriate acknowledgement letters from the charities.
Remember, you must itemize on your tax return to deduct your donations.
The Tax Cuts and Jobs Act raised the bar on who will itemize, as you now must surpass the standard deduction of $12,200 for singles or $24,400 for married filing jointly to do so.
Either way, you won’t know if you qualify to take itemized deductions until you tally up your expenses.
“Get a central repository for everything that comes in the mail or a digital folder at your desktop for electronic forms that come in so they are all in one place,” said Guglielmetti.