Hello everyone, the holiday season is so busy and fun, but as soon it ends, it's that time again, time for taxes! In this blog post I will give a few tips that will help you be ready for tax season 2018. If you have already been organizing and tax planning all year- good for you! But if you haven't I recommend you read over these small 5 tips so you can be prepared for this upcoming tax season. Grab a warm drink, get your notebook and take notes. I hope you find this helpful!
1. Review Your Prior Year Tax Return
If you’re like some people, you get your taxes done then never look at them again. Unfortunately, this isn’t a good practice for many reasons. One big reason is I have reviewed prior year tax returns with new clients and they had no idea that certain things were included on their return, what credits, deductions, etc. Furthermore, some of those things were unfortunately fraudulent. Unfortunately not everyone understands how to read Tax Returns, so I recommend you always review with an accountant to make sure that the way you have been filing is correct. Another reason to review your prior year return is to refresh your memory. You can go over what credits and deductions you claimed so you know what to reasonably expect this year. You may have bought a home, or sold one, or maybe changed careers- there are many life events that can change your upcoming filing season. If you’re using a new accountant, they usually ask to bring previous year taxes (I always do). Reviewing taxes with my client together is a great way for them to become more educated on taxes and tax law, and know what to expect going forward.
2. Get Organized
Many wait for the last-minute to gather all their necessary documentation needed to file your taxes. Not having your documentation together before you go to file taxes can delay the completion of your return. Not having all of your documentation will also effect you if you’re ever asked to evidence information put on your return (such as an audit), you have to be able to provide the support OR you could be subject to fines and penalties. Common documents to start putting together are:
- Personal Information (Legal ID, Social Security Number, Banking Routing and Checking Number- also all of this for your dependents, and spouse if filing Married)
- Income Information (W2, 1099s, business income, etc)
- Tax Payment Record (if you have paid taxes throughout the year)
- Expenses for allowable Itemized Deductions (medical, dental, student loan interest, mortgage interest, property taxes etc.)
- Business Expenses (must have documented expenses, Profit and Loss statements, bank statements, if you do not have a book-keeper or accountant for your business, review all of your expenses prior to filing your taxes)
I highly recommend to get a folder and put all of your information together before your appointment with your accountant so you can maximize your time with him/her.
3. Determine If You’ll Need An Extension
Some may have a more complicated tax situation than others. You may want to discuss with your accountant to decide whether or not you have to file an extension. Common reasons include:
Issues with garnishment (such as government debts, child support, student loans, etc)
Incomplete documentation to file taxes (for example missing W2s or 1099s, or businesses that do not have their Profit and Loss ready)
Unexpected events (For example, Medical Issues, Death in family, etc)
Active military service
Like stated earlier, you should discuss with your tax preparer whether or not you’ll need more time to accurately file your taxes. Be aware that if you are a business owner, you will need to extend your personal extension as well as your business.
4. Set Aside Money Now
Reality is that we aren’t all lucky to receive a refund during tax time. So if you normally owe a tax liability at the end of the year, the chances that you will owe again is highly likely. Taxpayers tend to be unprepared when time to pay their tax due. The IRS expects your tax due to be paid by tax day (April 18th). Even if you file an extension for your return, you are still expected to pay. If you are unable to pay, you can apply for an online payment agreement and in some cases you can settle the debt. Don’t wait until the last-minute and if you’re unsure how to proceed with getting set up to pay, have your accountant help you with this.
5. Make Appointment With Your Tax Preparer
Tax laws are changing constantly, and due to this, or lack of attention to detail, not having the time, etc. it may be in your best interest to hire an experienced tax professional. I have been preparing personal and business taxes for many years and all my clients walk away with not only a complete and accurate return but also the education needed. It’s not enough to get your taxes done but then have no clue what was done! You need to understand your tax situation and the different things that you have to do during the year that will be to your benefit.
Tax season can get very busy so you will want to book with your accountant as soon as possible. If you would like to get a free consult with me click here to contact me and make an appointment today!
Thank you guys for stopping by and reading my tax tips! Good look prepping for tax season. Don't hesitate contacting me for any questions or concerns!