The tax season is here and if you haven't already, now is the time to get prepared whether you meet with a tax preparer or plan to prepare your taxes yourself. Proper planning can help your tax preparation go smoother and reduce your risk of costly errors. Check out the tips below to prepare to tackle this tax season with confidence.
1. Gather All Your Forms
Beginning in January, you likely started to receive the forms you need to properly complete your tax return. If you are expecting a large return, you will want to make sure to make a list so you don't forget anything that could affect your return. Once you have received your documents, first give them a scan to make sure they are correct and contact the sender if there are any discrepancies. Remember, even a simple misspelling can cause a flag with your tax return so inspect them carefully. Some of the forms you will need to watch out for include:
- W-2s from your job.
- SSA-1099 for Social Security benefits.
- 1099s for additional income, interest, gains and losses.
- 1095-A for government marketplace health coverage.
- 1098s which will report interest and tuition payments.
- W-2Gs for gambling winnings.
- Schedule K-1s for company ownership.
2. Round-Up Your Receipts
If you have your own business or plan on itemizing your deductions, you will need to record expenses so that you can take advantage of any available write-offs. Gather all the receipts for business expenses, medical expenses, and other expenses that can be listed on your Schedule A or Schedule C. Receipts can be physical receipts or bank and credit card statements that show payments for these items. Once gathered, organize them by type, so they are easy to find when you begin filing.
3. Get the Records of All Charitable Contributions
Throughout the year, you may have donated money or gifts-in-kind to a tax-exempt organization that can provide you with a charitable contribution write-off. When donating clothes or items, you were likely given a receipt and most other organizations from churches to fundraisers will provide you with the necessary records of the tax-deductible contributions you have made.
4. Create a List of All Personal Information
While you likely know your Social Security Number by heart, you will want to jot down the Social Security Numbers of any dependents you wish to claim, so they are easily accessible and accurate. Also, make a list of the addresses of any property you own as well as the dates when the property was bought or sold.
5. Determine How You Will Spend Your Refund
If you plan to get a refund this year, you might want to take some time to consider what you plan to do with your return once you receive it. You have the option to apply your payment towards your next year's tax bill if you believe you will owe. This can be a good idea for those who pay estimated taxes throughout the year as it can often put a chunk towards your first installment. You can also choose to send the money directly to a checking or savings account or contribute it to an IRA, health savings account, or education account. If you plan to split the funds between accounts, you will need to complete a Form 8888.
6. Get a Copy of the Previous Year Tax Return
If you are using the same preparer as the previous year, they should have a copy of your tax return. If not, find your old copy and have it ready with your other tax items. Being able to reference your previous return can help you see what you filed last year, so you don't overlook something this year.
Don't let tax preparation leave you feeling overwhelmed. Be prepared and have everything you need to complete your filing, so you can enjoy less stress and a smoother process.