January is the traditional start of tax-filing time, but there’s no need to stress. Here are tips to get this filing season off to a good start.
Begin by gathering the items you need to complete your 2015 individual income tax return in one place such as a file folder. Official forms include W-2s and 1099s that you receive from your employer, broker, bank, or other financial institution. Before you put them in the folder, look them over for errors. Getting a corrected copy may take time, so asking early is a smart move. Though you have until April 18, 2016 to file your return (April 19 if you live in Maine or Massachusetts), who needs the stress of waiting until the last minute?
While you’re pulling the paperwork together, remember you’ll also need documentation for all your 2015 charitable contributions, or you risk losing your deduction. Even gifts under $250 require a bank record or a receipt from the charity.
Check whether your children need to file a 2015 tax return too. A return is needed if wages exceeded $6,300, the child had self-employment income over $400, or investment income exceeded $1,050. If the child had both wages and investment income, other thresholds apply.
Now is also a good time to consider whether you’ll contribute to a Roth or traditional IRA. Since you have until April 18 to make a contribution (April 19 if you live in Maine or Massachusetts), you can schedule an amount to set aside from each paycheck for the next few months. The maximum contribution for 2015 is the lesser of your earned income for the year or $5,500 ($6,500 when you’re age 50 or older).
Another filing requirement to consider: the need for a gift tax return. For 2015, you may need to file a return if you gave gifts totaling more than $14,000 to someone other than your spouse. Some gifts, such as direct payments of medical bills or tuition, are not subject to gift tax. Gift tax returns are due at the same time as your federal income tax return.