The best defense against tax season is a good offense. I plan to be prepared for next year’s tax returns. And it’s never too early to start planning.
Here are some tips to help you create a stress free and enjoyable tax season:
Save your previous tax returns
You may need to refer to your old tax returns at some point. The IRS could send you a notice about your most recent taxes. Or, you may need to look at them for next year’s taxes. I keep all of my previous returns in one folder in my filing cabinet. I haven’t needed to look back at them often, but when I do I know exactly where to find them.
Consolidate your paperwork
Designate a spot right now to put all your paperwork for next year. I have a cabinet in my kitchen where I keep writing supplies, pens, sticky notes, and current magazines and sales flyers. I keep an expandable file folder in that cabinet for my tax papers. I have several manila files within the folder for my husband and myself so that we can keep our stuff separate. For instance, I have one file for my freelance writing invoices and another to keep track of my tax-deductible business receipts.
Save your tax-deductible receipts
Start keeping receipts now! It’s so much easier to stick the receipts in the designated folder as you get them. Did you buy office supplies? Put the receipt in folder. Do you deduct your Internet bill, or do you have a separate business phone line? Put those monthly statements in the folder. You will save so much time next year, and you’ll be more thorough in including all of your potential deductions.
Adjust your withholding
If you had a substantial return this year, you may want to adjust your withholding for next year so that you receive a smaller return at tax time and can enjoy the benefits of that money during the year. On the other hand, if you had to pay in at tax time, you may want to have more money withheld. You can use the online Withholding Calculator – created by the IRS – to check your withholding amount.
Keep abreast of tax changes
I will be the first to admit that I am not good at keeping up with tax code changes that may affect me. However, there are changes that occur throughout the year. It can be beneficial for you to be aware of the latest developments so that you know what you can deduct on your taxes. For an easy way to stay informed, you can sign up for IRS Tax Tips, and the IRS will periodically send you timely updates.
Get professional help
Depending on the complexity of your tax situation, you may want to alleviate some of the stress and hire a CPA to prepare your taxes next year. In addition to a full-time job, my husband does some independent contract work, and I am a freelance writer. Our taxes are just complicated enough that I don’t want to figure them out on my own.
If you need a tax professional for next year, now is the time to look. Then, when you have questions or concerns throughout the year, you can get professional advice. A CPA is also more likely to help you get your taxes in order and maximize your savings. I feel that the money I spend on a tax professional is money well spent. I am confident that he saves me more than I spend for his fee.
Do you have any tips that keep you organized and stress free during tax season?