Even though your income tax return is not due until April, important tax documents will start arriving in your mailbox. Make this your best tax filing year ever by being organized and getting an early start.

Here are some tips to make the tax-filing process as smooth as possible.

1. Put your records together in one place. Gather up your receipts, canceled checks and other documents that support income or deductions you’re claiming on your return.

2. Watch for your W-2s and 1099s in the mail and put them with your receipts and other supporting documents.

3. Check out Free File. If you made $57,000 or less last year, you qualify to use free tax software. Visit www.irs.gov/freefile to review your options.

4. Plan to use IRS e-file. If you are getting a refund, you’ll most likely receive your refund by direct deposit within 14 days if you e-file. E-file is safe and easy and is now the most common way to file a tax return.

5. Choose direct deposit. When you choose direct deposit, especially when you pair it with e-file, you’ll receive your refund in the fastest possible time. Plus, there’s no chance of a check being lost or stolen. Last year, thousands of refund checks were lost or stolen.

6. Read the Tax Guide. Everything you ever wanted to know about filing your 2011 taxes is in the booklet here: http://www.irs.gov/pub/irs-pdf/p17.pdf

7. Visit the IRS website. www.irs.gov contains forms, publications, tips, videos and FAQs.

8. Consider using a tax professional. Although you will be charged a fee to use their services, qualified tax professionals will ensure that your returns are accurate and that all options for tax deductions and tax credits have been explored.

Daniel Stoica Accounting Professional
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Tax Topic 416  Farming and Fishing Income

If you have income from your farming or fishing business, you may be able to avoid making any estimated tax payments by filing your return and paying your entire tax due on or before March 1st of the year your return is due.
This rule generally applies if at least 2/3 of your total gross income was made from farming or fishing in either the current or the preceding year. If March 1st falls on a weekend or legal holiday, you have until the next business day to file your return and pay the tax.

If you choose not to file by March 1st, you can make a single estimated tax payment by January 15th to avoid an estimated tax penalty.
If these special rules do not apply, you may have to make quarterly estimated tax payments.
For more information on estimated tax, refer to Publication 505, Tax Withholding and Estimated Tax.

Income and expenses from farming are reported on Form 1040, Schedule F (PDF).
Additionally, self-employment tax may be required if net earnings from farming are $400 or more.
Self-employment tax is figured on Form 1040, Schedule SE (PDF).
For additional information, refer to Topic 554, Self-Employment Tax.
For more information on farming, refer to Publication 225, Farmer’s Tax Guide.

Income and expenses from fishing are reported on either Form 1040, Schedule C (PDF) or Form 1040, Schedule C-EZ (PDF).
Fishermen may also be required to file Form 1040, Schedule SE (PDF) to figure self-employment tax if their net earnings from fishing are $400 or more.
For general information about the rules applying to individuals, including commercial fishermen, who file Schedule C or C-EZ, refer to Publication 334, Tax Guide for Small Business.
Also see the article titled “Fishing Tax Center” on IRS.gov for additional information on fishing income, deductions, and other tax issues for commercial fishing.
If your trade or business is a partnership or corporation, see Publication 541, Partnerships, or Publication 542, Corporations.

Tax Topic 411 – Pensions – the General Rule and the Simplified Method

If you made after-tax contributions to your pension or annuity plan, you can exclude part of your pension or annuity payments from your income. You must figure this tax-free part when the payments first begin. The tax-free amount remains the same each year, even if the amount of the payment changes.

If you begin receiving annuity payments from a qualified retirement plan after November 18, 1996, generally you use the Simplified Method to figure the tax-free part of the payments. A qualified retirement plan is a qualified employee plan, a qualified employee annuity, or a tax-sheltered annuity plan. Under the Simplified Method, you figure the taxable and tax-free parts of your annuity payments by completing the Simplified Method Worksheet in the Form 1040 Instructions or Form 1040A Instructions or in Publication 575, Pension and Annuity Income. For more information on the Simplified Method, refer to Publication 575, or if you receive United States Civil Service retirement benefits, refer to Publication 721, Tax Guide to U.S. Civil Service Retirement Benefits.

If you began receiving annuity payments from a qualified retirement plan after July 1, 1986 and before November 19, 1996, you generally could have chosen to use either the Simplified Method or the General Rule to figure the tax-free part of the payments. If you receive annuity payments from a nonqualified retirement plan, you must use the General Rule. Under the General Rule, you figure the taxable and tax-free parts of your annuity payments using life expectancy tables prescribed by the IRS. For a fee, the IRS will figure the tax-free part of your annuity payments for you. For more information, refer to Publication 939, General Rule for Pensions and Annuities.