Tax season is upon us. We have put an end to another great year and now it’s time to account for it. The deadline for filing the previous year’s taxes is on or around April 15th of the current year. The deadline may differ if April 15th is on a weekend or a holiday.
By the end of January, you should have all of your tax documents assembled. You should have received your federal (w2’s, 1099’s, etc.), state, and local tax documents. If not, contact the institution from which you have yet to receive your tax information. As soon as you have your documents in hand, you should be ready to prepare your taxes.
Here are 3 things to help prepare you for a less stressful tax season:
- How will you prepare your taxes?
Decide how you plan to prepare your taxes for filing. Do you plan to prepare them yourself or do you plan to hire a professional tax preparer? If your tax situation is simple, meaning you simply work and take care of your household, you may be able to prepare them yourself by using an online tax preparation software to help guide you through the process. The online systems are updated with the recent tax codes and will check your return for obvious errors.
If your tax position is a little more complicated, I highly recommend hiring a professional tax preparer. This professional should be an accountant, certified public accountant (CPA), or a company who specializes in tax preparation, such as H&R Block or Jackson Hewitt. A professional tax preparer can be helpful in eliminating the stress of preparing taxes when your lifestyle exceeds standard deductions. If you are an employee, an entrepreneur, or an employee and entrepreneur, a tax preparer can determine how to help you maximize your tax benefits. If you decide to use a professional tax preparer, you should contact them immediately to schedule a meeting. They will help you to determine all of the documentation needed to prepare your taxes. This is a busy time for professional tax preparers, so now is the time to set up an appointment.
- Organize your tax documents
Despite how you decide to prepare your taxes, organizing your documentation is essential to a less stressful process. You should have compile all of your tax documents, which include w2’s, 1099s, etc., receipts to support religious and/or charitable donations, and business expenses. Don’t forget your statements for any payments made towards your mortgage interest, student loan(s), property taxes, real estate taxes, profession licenses, etc.
If you decide to prepare online, the software will prompt you with questions to help you determine which documents you need. If you get to a point in the online preparation where you do not have those documents, simply save your return, get the documentation, then continue your preparation. You will not lose the information that you input into online software.
If you choose a professional tax preparer, they can help you work through the list of documents that are needed to prepare your taxes to maximize your benefit and be beneficial to the lifestyle that you live.
- File a tax extension, if needed.
If you find yourself getting close to the tax filing deadline and you need more time to gather and organize your information, file for a tax extension. Filing for an extension reducing additional fees and penalties associated with not filing your taxes timely.
Don’t stress over it! It is better to be accurate when preparing your taxes and have the proper documentation to support the information that you’re including on your tax forms. The deadline for an extension is the same as if you were actually filing your taxes. Discuss this option with your professional tax preparer to determine if filing an extension is right for you.
Don’t procrastinate, make the decision today on how you’re going to move forward with your tax preparation. You can use these three steps to set yourself up for preparing this year’s taxes and to be better organized for future years. The tax preparation process does not have to be stressful. By filing your taxes early, you can minimize the stress of competing with the April 15th deadline. The better organized you are, the less stressful the process will be.
This is Deletra Hudson, your Financial Educator and I’m here to help you Discover the Millionaire Inside of you.