It’s not exactly as highly anticipated as the holidays, beach-weather days or spring, but tax season still rolls around each year and often takes taxpayers by surprise.
With a little preparation, however, you don’t have to be stressed about tax season. Get tips for getting ready for April 15 here.
5 Tips to Help You Prepare for Tax Season
1. Seek outside help ASAP
If you’re new to filing a tax return, your tax return is exceptionally complicated or you don’t feel secure in taking on the task yourself, it’s best to seek assistance from a tax prep professional who is certified with a Preparer Tax Identification Number (PTIN), according to Investopedia.com writer Barbara E. Weltman.
She suggests asking friends or trusted colleagues for referrals and advises against hiring a tax preparer who feels entitled to a part of your refund. Be sure to ask about his or her rates, too.
And don’t believe a tax preparer who guarantees you a certain refund; it’s impossible to know in advance exactly the refund you’ll receive. Look elsewhere if that’s what you hear from your tax professional.
2. Get your data and deduction ducks in a row
Your tax return will require personal and family stats that are impossible to rattle off by memory alone. Writer Kay Bell, who reports on NerdWallet.com, recommends retrieving both your federal and state returns from last year as well as Social Security numbers for everyone pertinent to this year’s return, including your dependents.
The proper receipts will be your best friend if you plan to itemize personal deductions on your tax return.
“Look for receipts for medical costs not covered by insurance or reimbursed by any other health plan (e.g., a flexible spending account or health savings account), property taxes, and job-related and investment-related expenses,” advises Weltman.
If you’ve donated to charity and you want to claim those contributions as write-offs, you’ll need proper records for your return.
3. Include proof of your work ethic
If you are employed by someone else, be on the lookout for your W-2, which is a document you need to accurately file your tax return. Depending on how your company handles sensitive documents, it might pop up in your inbox or be delivered by the postman.
“This is the key form, and you need one from each employer you worked for during the past year. Your W-2 shows how much money you made, how much income tax was withheld, Social Security and Medicare taxes paid, and any benefit contributions — retirement plans, medical accounts, and child care reimbursement plans,” reports Bell on Bankrate.com.
Bell notes that if you worked as a contractor, received money via PayPal or earned funds through investments, you’ll need to fill out a 1099 form that applies specifically to each situation.
4. Refresh your knowledge bank
According to Weltman, changes to tax laws can directly impact your return, so it’s important to investigate new rules or instructions for claiming deductions or claiming credits.
5. Don’t forget about your home and education
If you have a mortgage, are paying on a student loan or are responsible for tuition payments, you’ll need to assemble those numbers to accurately fill out the specific 1098 forms, reports Weltman.
Filing a tax return requires a lot of documents, a high level of organization and possibly a professional accountant’s help. By starting your prep early, your tax season can be smooth sailing – and you’ll eliminate that mid-April scramble.
Meet with a financial advisor from Minster Bank today to secure your financial future for the new tax year and beyond. We can help you see a plan for your future – no matter where you are now.