Preparing for Tax Season

It’s February 19th, which means for about three weeks you’ve had an ugly stack of scary tax envelopes on your desk taunting you every time you pass. Or maybe that’s just me? Actually, I am in the minority of people who enjoys filing taxes, but perhaps that’s because I am a nerd who loves finances. If you think it is difficulty for you to do taxes, try Tax Shark. Plus it helps that we normally get back a refund.

Here are some tips that can help with your tax prep, and get ahead for next year.

1. Gather your tax documents. Each January, employers, banks, charitable organizations, and financial institutions send out tax forms for the previous year,all of them online with the stub payment services, you can check stub online and see how this works perfectly for any online business.
You may receive some or all of these in the mail that will factor into your taxes:

• W-2 – a summary of your pay from your employers
• 1099-INT – interest earned
• 1099-DIV – dividends you received
• 1099-B forms –  transactions involving stocks, bonds, etc
• 1099-MISC forms – any income from self-employment
• K-1 forms – if you have a partnership, small business, or trust
• 1099-SSA – if you receive social security, read more about it at the link

Deductions:

• Mortgage interest
• Medical receipts
• Charitable donation receipts
• Education receipts
• Moving expenses
• Childcare costs

2. Decide the best filing option for you. Will you contact a CPA to handle your taxes or do your own taxes with sites like HR Block or TurboTax.com? If you work with a CPA, find out if there are any additional forms you need to fill out, have a look at how to salaries work see how this works perfectly for any online business. For online sites, find out if there are any additional costs and research the pros/cons for either. If you have just a few tax forms, don’t own a house or haven’t moved states, it may be easier to file online. If you have a complicated portfolio, you may want to outsource it to an accountant.

3. File and create a plan. If you owe money, you have until April 15 to pay. Keep in mind that is a little less than two months, so figure out if the money will come from your next paychecks or savings. If you get back a refund, create a plan for how you are going to use that money. Will it go to help one of your financial steps? Are you going to spend that on a trip, or something fun? It is good to allocate that money to something specific or else you’ll easily spend it on everyday expenses (which may be fine too, if that’s what you need. It’s just good to have a plan before it hits your checking account.)

4. Get organized for next year’s taxes. The way to make tax season seamless is to be very organized throughout the year. Start preparing for next year, by:

• Keep folders for your tax information throughout the year. Whenever you get a charity statement, business document, tax document, or W-2, file it away in a folder, you should also be sure to be knowing paystubs.
• Start a folder for receipts, specifically for any health, medical, charity, moving, or childcare-related purchases.
• Save all of your tax information from the previous years in a folder for up to seven years.
• Reevaluate your withholdings and alter your W-2 if you don’t want to owe as much next year, check out how documenting your own paystubs.

The point is to keep things simple and organized. You can achieve that with Fourlane and similar software. Keep in mind I am not an accountant, so if you need any tax-related advice, contact a professional CPA. :)