Review your last year’s return. Millions of taxpayers rush to file their return each year without taking the time to review last year’s. That glance can be the difference between getting every dollar you deserve and losing out on valuable deductions or credits.
Take a few minutes to look over last year’s return so you won’t make the same errors, spot trends, and be ready for this tax year.
Why is it a Good Idea to Review Your Old Return
The previous year’s tax return tells a story — your life changes, your income, your deductions, your credits. A look through it gives you a decent notion of what did and did not work. It also lets you know whether you were eligible for any tax savings that you may not have received.
Reviewing last year’s return, you can:
- Spot errors that will affect this year’s filing
- Don’t forget carryover deductions (for example, education or capital losses)
- Tip off Uncle Sam to changes in income or dependents
- Become familiar with your refund or balance due tendencies
A quick look now saves time, stress, and money down the road.
Look for Missed Deductions or Credits
Things happen annually — you might have started a business, had a baby, or bought a house. Certain changes qualify you for new deductions or credits you weren’t claiming before.
Some of the most forgotten deductions are:
- Student loan interest
- Home office deduction
- Charitable donations
- State or local tax credits
- Energy-efficient home improvements
Go over what you earned last year and add or change as appropriate. Get previous errors fixed.
We all make mistakes. Maybe you put down the wrong Social Security number, left out income, or claimed the wrong credit. Reviewing your prior return lets you spot mistakes while it is still early.
If you find something important, you can file an amended return on Form 1040-X. It is better to do it now than to be contacted later by the IRS.
Learn from Your Refund or Balance Due
Did you owe the IRS money last year? Or did you get a large refund? A look at last year’s return indicates how you can adjust this year’s withholding or estimated tax payments.
A large refund is like giving the IRS an interest-free loan. Owing a lot could mean you did not withhold enough. You can correct it now to surprise yourself next year.
Prepare for This Year
While you are doing last year’s return, gather forms you will be using again — W-2s, 1099s, receipts, or charitable donation receipts. Getting it done ahead of time will ensure you will do it on time.
Being organized also makes it less painful in the event that you get audited. Having records handy from last year allows time to be ahead in challenging your figures.
Final Thought
Glancing back on your returns is not time lost. It is one of the smartest things you can do as a taxpayer. A quick look at last year’s return could save you money, save you hassles, and bring you peace of mind when you file again.
AutomaticTaxReturns.com enlightens taxpayers that success in tax return is achieved by learning and improving each year. Look back, correct, and move forward in peace of mind.
About the Author
