Tax Talk: What You Need to Know for Smart Tax Filing

Tax Talk: What You Need to Know for Smart Tax Filing

Couple sitting in living room working on taxes

With income tax preparation, a little planning can help you minimize filing stress and streamline the process. Consider these tips and reminders to approach tax filing thoroughly and thoughtfully, this year and beyond.

Put it on the calendar

Taxes are generally due by April 15, unless that date falls on a weekend or holiday. (For 2017 taxes, the due date is April 17, 2018.) Need more time? You can consider applying for a six-month extension by filing Form 4868. But be sure to read all of the fine print. Even with an extension, you still need to pay any taxes you owe by the April deadline. Estimate the amount you expect to owe, and consider rounding up, as you will pay interest and penalties on any payments made after the due date.

Collect important documents

Gather up all your W-2s and 1099s to report your income. In addition, you need documents showing non-earned income such as interest payments, dividends and capital gains. Your bank, brokerage firm and other financial institutions can provide those. If you claim any deductions, make sure you maintain proper records.

Know your deductions

Common deductions for 2017 include state, local and property taxes, mortgage interest and charitable donations. (The new tax laws that change deductions and exemptions apply to income in 2018 and going forward.) You can choose to take the standard deduction or itemize your deductions. The standard deduction is a flat amount that depends on your filing status. If your deductions exceed the standard amount, you might fare better by itemizing, which involves listing each qualified deduction.

Plan ahead for 2018

Will you receive a sizable refund? Or do you face a big tax bill? Consider changing your withholdings so they better match up with your tax liability (the amount you owe the government) for 2018.

If you get a refund, it’s smart to have a plan in place for what you’re going to do with it. The average refund in 2015 was $3,120. Consider ways you can put that money toward your goals — whether that involves paying down debt, growing your emergency fund or saving for retirement.

disclosure

Neither State Farm® nor its agents provide tax or legal advice.

State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates) is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites hyperlinked from this page. State Farm has no discretion to alter, update, or control the content on the hyperlinked, third party site. Access to third party sites is at the user's own risk, is being provided for informational purposes only and is not a solicitation to buy or sell any of the products which may be referenced on such third party sites.