No matter what holiday you celebrate, the holiday season seems to come and go. Before you know it, it’s tax season. Now you are frantically searching for all the documentation needed in order to file your tax return.
Rather than running around hastily, here are some ways to prepare for the upcoming tax season while still enjoying your free time.
Stay Organized: With the year coming to an end, think about all the events that occurred this year. Did you start a business? Have major surgery? Sell a home? and/or welcomed a child? By answering these questions, it will help you determine how to file your tax return for the upcoming year. Most accounting firms send out a “pre-tax season” questionnaire to help you be organized. Even if you file your own tax return, separating your documents into groups such as personal, rental, and business can help you prepare your return.
Stay Proactive, not Reactive: Whether you are filing an individual or business tax return, focus on getting the items you need to prepare your tax return throughout the year rather than at the beginning of tax season. Own your own business? Have an accountant or bookkeeper reconcile your company’s accounts on a quarterly or monthly basis rather than a yearly basis. If you are an individual filer, separate your income and expenses for each month by creating an excel sheet. By focusing on your financial activities throughout the year, you are less likely to forget an item that you will need when filing your tax return.
Set Goals: Whether you are new to filing a return or have been doing it for over 20 years, creating goals for yourself and/or your firm will help you prepare for the upcoming tax season. Do you know if your employer does not withhold enough taxes on your income? Plan what you believe the taxes will be on that income and make quarterly estimated payments based on the projections.
By preparing for the upcoming tax season using these steps, you can save time and money.