Home Business How to Prepare for Tax Season

How to Prepare for Tax Season

How to Prepare for Tax Season

If you dread every tax season because you feel unprepared and unsure of what lies ahead of you, this is the year that all changes. Use this list to prepare for tax season ahead of time so you have everything you need to get your taxes done efficiently and submitted on-time, without all the headaches.

Make Sure You’re in Good Standing

Sometimes things happen and you aren’t able to file your taxes one year. If that was the case for you last year, you want to make sure you’re caught up before it comes time to file this year. This is important because tax penalties can compound, making it increasingly difficult to get caught up.

If you’re currently behind on taxes or fear you will not be able to pay this year, you should contact a professional to help you deal with IRS tax relief before it gets out of hand.

Figure Out Which Tax Preparation Method You’ll Use

First things first, you need to determine whether you’ll be doing your taxes yourself or if you are going to hire a tax preparer. There are plenty of easy-to-use tax software options available to use if you’d prefer to do them on your own.

However, a word of caution, unless you have a good understanding of all of the potential deductions and credits you qualify for, you may be missing out and paying more in taxes than you need to. Not to mention, you probably aren’t saving much money with the combined cost of filing your state and federal income taxes.

READ  Top 5 Financial CRM Software For Small Businesses

If you are going to do your own taxes, take the time to brush up on updates to tax laws and potential benefits you may qualify for—use resources like outlines of IRS deductions, credits, and more tax topics. You also need to exercise caution to avoid costly tax mistakes—make sure you double-check everything! If you’re going to work with a professional, do you research by reading reviews or get a reference to find someone reputable.

Set Aside Funds for Your Owed Taxes

If you typically owe taxes, there’s a good chance you will owe this year. While paying these taxes might usually be a huge inconvenience, you can plan ahead to minimize the impact on your budget. Start saving a few months ahead of time so you can make sure you have the funds to pay on-time and in full.

What happens if you don’t end up owing? Then you have a good safety net for later.

Gather Necessary Documents

Before it’s time to sit down and do your taxes or coordinate with your tax preparer, start collecting the documents you’ll need. This may include your W2s, 1099s, and proof of healthcare coverage from employers. Depending on the types of deductions or credits you plan to claim, you should also have the receipts ready to provide.

For example, if you’re claiming childcare expenses, you want to have receipts for the year’s childcare services. If you are claiming dependents, you’ll also need to collect all the relevant information for them.

Now when your tax preparer requests all your documentation, you can do a bulk scan in seconds with a scanning app and they’ll have everything they need to get started. Once you’ve filed your taxes, you should hold onto all your documents in case of an audit. Typically, three years should be sufficient.

READ  How Has PR Agencies Played A Significant Role In Corporate Advertising

Make Note of the Deadline

Put the deadline to file and pay your taxes on your monthly planner to ensure that you don’t accidentally miss it. If you file late, you will have to pay penalties. Why pay extra on your taxes when you can simply set a reminder?

The IRS tax deadline is usually April 15th (or the following business day if it falls on a weekday or holiday). However, in certain cases like the COVID-19 pandemic, the tax date may be extended. The automatic extension has moved the 2020 tax deadline to July 15th, 2020. If you need longer, you can get a six-month extension until October 15th, 2020. Most states follow the same deadline for income taxes, but you should always check to be sure, in case your state of residence is the exception.

By following these steps you’ll be ready to take on tax season without a second thought. Set yourself up for success and see how easy it is when you file!

Leave a Reply

Your email address will not be published. Required fields are marked *

Check Also

Smart Home Technology That Will Help Sell Your Next Deal

As a home seller, you want the best value placed on your home so that you sell your house …