For many of us in New Jersey, the harsh winter can’t end fast enough. But now we’re facing another chilling event: tax season. To help make this year’s filing easier, we’ve prepared a few helpful tips.
Using an Accountant
If you have multiple sources of income or experienced major life changes in 2013, hiring a professional tax preparer may be the best option. An accountant stays abreast of the ever-changing tax regulations, helping to ensure you are abiding by the law while also uncovering credits or deductions you might miss.
According to the National Society of Accountants, taxpayers looking to hire a professional this year can expect to spend an average of $261 for an itemized Form 1040 with Schedule A and a state tax return. You’ll pay about $152 for a Form 1040 and state return without itemized deductions. However, an accountant may earn that fee simply by finding one credit or deduction you would have missed. You’ll also save time; what could take you three hours may only take a professional one.
Some people depend on large, popular tax preparation companies; others rely on accountants who they have known and trusted for years. A Certified Public Accountant (CPA) may offer you more personalized service and will keep your records on file, ensuring consistent tax returns each year. If you decide to take the CPA route, ask for a cost estimate ahead of time.
Over 100 million people filed their taxes electronically last year, according to USA.gov. This rise in popularity may be due to the fact that filing online can reduce the risk of error that exists with “the old fashioned way” (by hand), and that electronic refunds are often received faster.
Utilizing an online tax service is typically a good choice for someone whose filing is fairly straightforward. If you are a single person with few investments, or if little to nothing has changed since last year, an online filing may be the right choice for you.
Doing your own taxes, of course, comes with risks. If you make a mistake or overlook a deduction, you could miss out on money that is rightfully yours. Worse, you might have to pay interest or penalties associated with a mistake. If you decide to go it alone, IRS.gov is a great resource. The site contains links for deductions, as well as for tracking your refund or making alternative payment arrangements.
File Taxes for Free
Yes, you read that correctly: free. The IRS teams with a nonprofit group comprising 14 commercial tax software companies to provide free online tax software called Free File. This is for qualifying taxpayers only. If your adjusted gross income (AGI) for 2013 was $58,000 or less, you may be eligible for one or more reduced-rate options for completing and electronically filing your federal income tax return. If you are unsure of your AGI for 2013, look at last year’s tax return (2012) for an estimate. Note: some Free File participants include state return preparation and filing with your federal return. Others may charge a fee (the Free File Fillable forms don’t include state tax forms).
These are just some of the tax-filing options available to you. Tax exceptions and laws change each year and from state to state, so is important to always do your research. Consult with your tax preparer, if you have one, before making any claims or deductions.
Resist the temptation to spend your tax return as quickly as you receive it. Instead, watch it grow by depositing the money into an interest-bearing account, such as savings, money market, or certificate of deposit (CD). Visit the NVE website, one of our convenient neighborhood branches in Bergen County, or call 1-866-NVE BANK to learn more.