It is the start of the new year and before we know it, tax season will creep up on us. If you are like me, you think that you have plenty of time to pull all of the documents that you will need to file your taxes online or with your CPA. The thought of putting together all of the information you will need can be overwhelming and stressful. Here are 5 tips to help you alleviate the stress and get you ahead of the game so you can get your tax refund or deal with your tax liability before April 15th.
1. Start a file folder entitled Income Tax 2017 and the minute you get documentation such as a W-2, 1098 or 1099, file it in this folder. Employers that you have worked for must provide this information to you by January 31st. If you realize that you did not get this paperwork, contact your Employer.
2. Keep a physical paper trail. Although online documents are fine, if you get audited down the road, you will need a hard copy of your file. If your computer dies, you have lost all of the documentation.
3. Keep physical receipts. In case of an audit, the IRS wants to see physical receipts supporting your documentation.
4. Tax planner- if your CPA firm sends you a tax planner each year; use it to track your current expenses and income. This saves you a lot of time trying to remember how you file each year, i.e. head of household, etc. and also gives you a record of your expenses from the previous year.
5. If you file your own taxes through tax software programs, make sure you keep up to date on current tax rules. They change each year and if you are not up-to-date, it could cost you money.
Lastly, the tax season can be a stressful time. Do your tax preparation little by little. Don’t wait until the last minute and try to document a year of expenses and income at one sitting. This can be stressful and cause you to make mistakes. Spread out the preparation and you will feel certain that you have captured all of the data you need to get you the best outcome. Good luck and happy filing!