Plan ahead for your income tax preparation

Reminders and tips when preparing for tax season.

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. 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 generally pay interest and penalties on any payments made after the due date.

What documents will you need?

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 include mortgage and home loan interest, state and local taxes, and charitable contributions. 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 next year

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).

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 received in 2019 (for 2018 filing) was $2,729. Consider ways you can put that money toward your goals — whether that involves paying down debt, growing your emergency fund or saving for retirement.

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

The information in this article was obtained from various sources not associated with State Farm® (including State Farm Mutual Automobile Insurance Company and its subsidiaries and affiliates). While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. State Farm is not responsible for, and does not endorse or approve, either implicitly or explicitly, the content of any third party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. State Farm makes no guarantees of results from use of this information.

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