You probably feel a sense of relief when your family's taxes are filed, but you're not quite done. Before you consider tax season to be done, there's important steps you should take to put your family in the best position. Use these six easy steps to successfully close out tax time and help put your family finances on the best path.
#1: Return Status
When you file your taxes electronically, you’ll be able to see if your family’s return was accepted by the IRS right away. Many tax filing services and CPAs will take care of this step for you and let you know the return was accepted. If you want to verify the status yourself or check refund progress, you can do so on the IRS website.
#2: Watch for a Rejection
The IRS can reject electronically filed returns. There’s no need to panic. The most common reject reasons are for simple clerical errors like a date of birth listed differently from what IRS has on file. Rejections can be for other reasons, but most can be corrected easily and quickly. Most tax preparers will notify you right away and offer to help resolve the error. Although some will require more effort, most errors can be taken care of electronically. Be sure to note the reason for a reject to avoid the same thing next year.
#3: Beware of Scammers
Scammers love tax time. Be vigilant for scams via text, phone calls, email, and more. The most common tax-related scams will be someone impersonating the IRS saying you have to take action right away to avoid losing your refund. The bad guys use the alarming message to steal your personal or financial information. Do not be fooled! If you are concerned the IRS may be contacting you legitimately, you can contact the IRS using information on IRS.GOV or by speaking with a tax professional.
#4: Be Wise with Your Refund
If your family is getting a refund, be thoughtful about the way you spend it. Companies and advertisers know when American families start to see refund checks. Marketing aimed at tax refund recipients ramps up around the same time every year. Consider using your family’s refund or at least a portion for something with a longer lasting impact. Uses like paying down some debt, saving for college or retirement, or bolstering your emergency fund could all be options to consider.
#5: Put Your Return in a Safe Place
After tax filing season is over, you may still need your tax return. Audits, while unlikely, can happen and could require your family to revisit some portions of your taxes for a past year. You could also need your return for other purposes down the road like a loan application. Here’s our recommendation for what to retain and for how long.
|How Long?||What to Keep?|
|At least 3 years||Paper copies including all backup, proof, and tax forms (W-2, 1099, receipts, etc.)|
|At least 4 years||Paper copies for some jurisdictions like California*|
|At least six years||Proof and paper copies if you believe you're at risk of an audit or believe you may have underpaid taxes owed|
|Forever||Electronic copies of your return with multiple backups|
*Some jurisdictions, like California, reserve the option to audit your taxes longer than the federal standard from the IRS
#6: Plan for Next Year's Taxes
Taxes are one of your family’s largest bills. It’s worth your time to plan for next year’s taxes. If you had a big refund or a big bill, now is the time to plan ahead. Consider other actions that can impact taxes for better or worse. Conversations and analysis like this may be best suited for a professional that can help identify ways your family can save on taxes in future years.
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