As we welcome the first quarter of the year, we also prepare ourselves for tax season. Some of us may find ourselves dreading this task, knowing that we typically feel a little lost or overwhelmed when it comes to the specifics of filing our taxes. Rather than dealing with the same old confusion, use these tips to help guide you in preparing for a productive, stress-free tax season.
Make a Designated Tax File
You’ll want to make sure you have all the appropriate documentation to file your taxes. Gather everything before you physically sit down to do them or have an accountant begin the process. You should be receiving tax forms in the mail the next few weeks. This includes your W2 as well any 1089, 1099 or other forms applicable to you. It’s recommended that you set these forms aside in a specific drawer or file folder. Then you know where they are when it’s time to use them. Organize your tax forms in a way that best works for your lifestyle but allows you quick and easy access for the day you file or send off all your documents.
Choose How You Will Prepare
Prior to the deadline of April 15, 2020, you will want to determine how you’re going to file. Will you be doing your own taxes online through tax software? Or are you more comfortable having a professional accountant handle your taxes?
There are pros and cons to both, however, if you’re worried about accuracy you might want to learn more about tax implications affecting you or consider hiring a tax preparer who is aware of your specific situation. Although it comes with a price, they will most likely be able to get you a higher return in the end—well worth the money you spend to pay them. Additionally, it’s important to submit all of your documents to your tax preparer well in advance so they have plenty of time to complete your taxes before the deadline.
Streamline Any Business Finances
If you’re an entrepreneur or business owner, it’s helpful to have all your financing tracked in one place. Utilizing accounting software throughout the year is one way to ensure all income and expenditures are accounted for.
A recommendation to all business owners, regardless of size, is to maintain separate business and personal financing accounts. This will help you get the most from your tax return and overall keep you more organized throughout the fiscal year.
If it will help your cause, you can even budget your finances with an online banking app that can help you track accounts using your mobile device. It’s true that the busier you are, the more important it is to stay organized—which is why a mobile banking solution might relieve some additional work-induced financial stress. There is plenty of information online about business tax preparation if you are interested in filing yourself or learning more about the process.
Make a List and Timeline
It’s required that your employers, mortgage lender, and student loan services send your tax documents by the end of January. In this time, you should make a list of any employment you have maintained and the banks you have active accounts with. Compare your pay stubs to all your financial records to ensure the information is accurate. This is important—the reason being—if you don’t include all of your forms initially or forget one because you received it later, you will have to amend your return and adjust accordingly. This would require additional effort and steps you don’t want to have to take. By making a list of your employment history you lessen the risk of forgetting any forms and having to refile.
Consider Filing Early
If you’re looking for more time to utilize your hard-earned money, filing your taxes earlier might be in your best interest.
Although you might have budgeted for the holidays, it’s easy to get caught up and overspend. This can put your finances in a rocky state to start off the new year. If you file your taxes early, you will get your refund before most people—allowing you to use this money to pay off pre-existing debt. It will be worth your while to clean up your finances and continue this year with more confidence in your financial state. If you’re currently not in debt, early filing gives you an opportunity to spend your money how you want, possibly putting it towards a trip or larger purchase.
Reaping the Benefits
Tax season should not feel like a major chore or strain on your life. Instead, it should provide you with an opportunity to revisit your personal and professional portfolio, prompting you to organize and prepare for what is ahead. Don’t procrastinate filing your taxes this year, utilize the resources and professional options available that can help you navigate and prepare for tax season.