Tax season: there’s no way to avoid it. However, there are definitely ways to make your next tax season better and more efficient. It takes a little bit of time and patience but with the right supplies and information, you’ll be able to successfully prepare your taxes without tearing out your hair or gnashing your teeth from stress.
Below, we’ve outlined some easy ways to prepare for an upcoming tax season:
Choose a tax preparer
Don’t just hire anybody to prepare your taxes. It’s critical that you take the time to actually research who is going to be preparing your taxes for you. This will save you from panicking later and Googling things like “IRS Statute of Limitations” or “what to do if you messed up your tax return”.
Always cross-reference anybody you hire – in fact, the IRS has a list of tax preparers available on their site. You don’t want play games with the IRS, so it’s best to keep everything above board and choose someone you know is professional rather than relying on an advisor who is a “friend of a friend who could use a favor”.
Schedule an appointment
Don’t procrastinate! Set an appointment long before April comes around. Why? Because imagine all the other people who also waited to do their taxes – yeah. Set an alarm on your phone, use a reminder app, or write down the appointment on a Post-It note — or simply do all three so you won’t forget to go to your tax appointment.
Gather all of your important documents
You’re going to need quite a few forms depending on your specific circumstances.
Here’s just a few you might need to use:
- Form W-2, if you have a traditional employer
- 1099s which can be 1099-C for cancelled debts, 1099-D for dividends, 1099-INT for interest and finally, for independent contractor compensation, 1099-MISC
- Form 1095-A: pertains to health insurance coverage
- 1098 forms like 1098 for mortgage interest, 1098-E for student loan interest, and 1098-T for tuition payments
- Form W-2Gs for gambling winnings
- Schedule K-1s for ownership funds, S corporations, partnerships, trusts, and LLCs.
There also might be other forms involved in your specific tax situation or you might have a combination of the above. Confirm with your own tax advisor to figure out which forms you should have at the time of tax preparation.
If you itemize your deductions, be sure to keep all of your receipts.
Note: Keep a copy of all the documents. They will come in handy should you ever be audited by the IRS and it’s good to have hard copies of all of this financial information on hand for your own peace-of-mind. Ideally, lock this information in a secure area or safe.
Get your charity donation proof
When you donate in excess of $250, you’ll need proof from the charity that you donated without anything in return. You can usually contact the non-profit directly for this information.
Figure out what you’re going to do with your tax refund
Did you know that you can use your tax refund to pay for your next tax bill? You can also get your refund direct deposited in a checking or savings account. Another option is to pay into your retirement account or health savings account.
Or, you could do something completely wild (depending on the amount you get from your refund) and use it to fund a trip, treat yourself to a new bike, or take your family out for a nice dinner. Deciding how you want to spend your tax refund is definitely the most rewarding part of the entire experience, so you might as well have fun with it!
Doing your taxes isn’t fun – we get it. It’s definitely not shopping or going out to eat with your friends, but it’s still a reality you’ll have to face once a year. If you procrastinate or simply avoid doing your taxes, it doesn’t mean your tax responsibilities will disappear. It just means the IRS will stack fines upon fines until you actually do your taxes. To avoid this result, make sure you prepare in advance for tax season.
By picking a reputable tax preparer, gathering and organizing all of your tax information, and sending in your taxes in a timely manner, you’ll be on your way to getting your refund in no time at all. And then, it’s just a matter of deciding how you’re going to spend that extra cash!