How to Make Your Next Tax Season Easier
How to Make Your Next Tax Season Easier
Spring is upon us and another tax season has nearly come and gone. You survived another frantic year of gathering documents, searching for receipts, and hurriedly finding a tax preparer. While it may be tempting to not think about filing another tax return until next tax season, the best plan of action is to begin planning and preparing now to make next year’s filing easier. Here are a few tips to help you stay on top of things throughout the year and make filing next year’s tax return a breeze:
Save Receipts and Other Documents
Scrambling during tax season to find your receipts and other tax documents is stressful and overwhelming. More than that, it could be costing you hundreds or even thousands of dollars in deductions and credits if you are unable to locate the supporting documentation. You will not be able to deduct or take a credit for items you are unable to substantiate. If you do try to take the credit or deduction without proper documentation, you may face penalties if you are ever audited.
Organize Tax-Related Receipts and Documents
Now that you have a plan in place for saving your tax receipts and documents, make sure you have a way to keep them organized. Start the year off right by putting all tax related documentation in a file folder. Each time you get a receipt or document to be used for your tax filing, place it into the folder. Consider keeping a master list of all items in your folder. For example, this document could contain a listing of all charitable donations made throughout the year. The document would list the organization, the date, the amount donated, and where the supporting documentation is located so that it can easily be retrieved. You will thank yourself later when you go to gather your tax documents next year and everything you need is conveniently located in one place. Instead of spending hours preparing documents for your tax professional, you can simply grab your folder and go.
Plan to Maximize Deduction and Credits
Plan ahead throughout the year to maximize the deduction and credits you can claim. This will help you reduce your tax liability. For example, you may consider sending the kids to a childcare program for which you will receive a tax deduction instead of paying the neighbor’s teenager to babysit during the summer. Likewise, if you are considering installing new windows for the home, make sure the windows meet the requirements to qualify for the energy credit. Perform some research to find out how you can maximize your deductions and credits. This can greatly reduce your tax liability.
Find a Tax Preparer
This year, don’t rush at the last minute to find a qualified professional to complete your tax return. Do your homework to find the right tax preparer before the next tax season begins. This will help you avoid a last-minute rush to find someone available to complete your return. Further, researching ahead of time will allow you to make an informed decision to select the right preparer for your needs. Take your time to learn what services your preparer provides and what a reasonable price is for this service. By planning ahead, you will be able to find a professional that meets your needs at an appropriate price.
Stay Abreast of Tax Law Changes
While you don’t need to be a tax law expert, it is beneficial for you to stay aware of tax law changes that may impact you. Aspects of the tax law may change during the year that could have a direct impact on your filing. It is not uncommon for rules to change for deductions, credits, limitations, and other tax requirements. Staying informed on issues relevant to you will help you achieve the greatest level of deductions and credits available to you to minimize your tax liability.
Tax season does not have to be stressful. Nor does it need to be a major drain of your time and resources. With a little bit of planning, research, and attention, filing your taxes can be a painless experience!