Tax season is upon us. For many people, gathering all documents, ensuring proper forms are used, and getting them filed on time can be a stressful process. Let’s look at some tips on how be properly prepared in order to reduce anxiety and avoid potential problems.
Get Organized
This may seem obvious but the first thing to do when organizing for tax season is to designate an accessible place for compiling and filing your relevant documents and receipts. This may be a shelf, folder, or file box. The purpose is to ensure all pertinent documents are collected so you can access them when you need them. Even if you plan to scan them when filing, it’s essential to ensure they are all in one place. Another idea to help in preparation is to look at your taxes from last year to identify what may be needed.
Grouping them by category is the next step in the process. Use paper clips, folders, or other filing system to separate documents into categories like income/wages, mortgage interest, property taxes paid, bank statements, IRA contributions, student loan interest paid, and deductions and donations.
The final step in getting organized is to make certain you’re using the proper forms. Form 1040 is good if you are self-employed or need to itemize several deductions. For more simpler tax situations, Form 1040EZ will suit.
Get Started Early
Waiting until the last minute can create added stress and potential problems. The most important of which could be that you fail to file your taxes on time leading to costly penalties and other issues. Even if you plan to use a tax preparer, you’ll need to allow them ample time as this is typically their busiest time of the year. Preparing taxes in a hurry and not taking the time to double check all information can bring about math errors or submitting incorrect data. Again, being organized and getting an early start may help avoid delays, inaccuracies and penalties while making the whole experience better.
The Filing Process
Whether preparing on your own or using a tax professional, you have choices when it comes time filing taxes with the IRS: printing and mailing hard copies or filing electronically (e-filing). Choosing to e-file saves you postage and long lines at the post office. It may also be the preferred method if you are expecting a refund as it’s estimated that taxpayers who file online receive their refunds in less than three weeks. Either way, be sure to keep a copy of your taxes for your records and future reference.
Final Tip
Make next year’s tax preparation a breeze by setting up your organization station and start putting away the necessary documents that you’ll need next filing season. Create a checklist based on this year’s items while it’s fresh in your mind. It will make the process smoother while ensuring you don’t misplace important documents or miss out on any deductions. And if you have everything at your fingertips, you may have the option of filing early, which is wise if you expect a refund.