Good Question: Not too early to work at filing 2011 income taxes
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Question: I'm starting to think about preparing my 2011 taxes. What should I be aware of and what's the best use of my refund?
Answer: Good for you for getting a head start. Preparing taxes can be a tedious and overwhelming job.
Gather your pertinent tax information: W2 forms, interest statements, receipts and information for work-related deductions. Decide if you're going to do your taxes yourself or if you will use a professional tax preparer. If you're going to a professional, make sure he has a Preparer Tax Identification Number, a new requirement in 2011, and do a check with the Better Business Bureau. Also, make sure you have contact information, so you can reach him if necessary.
Also, when filing your income taxes, determine if you qualify for the Earned Income Tax Credit. The EITC was designed for tax payers with a reduced income, who meet certain eligibility requirements. For the most part eligibility is based on income. Those who qualify could receive a refund of up to approximately $5,700. More information on the EITC can be found on the IRS website, www.irs.gov.
Often, the good part of filing taxes comes in the form of your refund check, but even there, too much could be a bad thing.
If you're averaging more than $3,000 for your tax refund and you don't qualify for the EITC, chances are you're not claiming the proper amount of exemptions from your paycheck. Check with your employer to see how many exemptions you're taking and adjust as necessary.
In recent years, some professional tax preparers have been offering tax filers refund anticipation loans, meaning, they'll advance a refund, but first will take a fee off the top.
First Published January 8, 2012 12:00 am
