Tax season is coming along, and as millions are hastily plowing through drawers and folders, looking for their correct paperwork, millions must also be thinking how can I make this easier next year? A little preparation and know-how goes a long way. There are solid steps you can take to make sure that next year’s tax season is as hassle-free as possible.
You may have found yourself under the gun this year, but don’t make the same mistake again. Make next year’s tax process as smooth as a $5,000 refund check; KG Meyer can help, starting with the following tips.
Keep your tax documents organized
This may sound like a no-brainer, but you’d be surprised at just how much this needs to be reiterated. Many people believe that they don’t have that many tax documents, and so they don’t really need to be too careful about where and how they store everything. Then, when tax season rolls around, they realize this isn’t the case and now they’re scrambling. This is no good.
You don’t have to create a complicated filing system. Simply get a manilla envelope, write “Tax Stuff” in big, bold letters, and stick every single tax document you receive throughout the year in said envelope – your student loan info, your W-2s, and yes, your receipts. If you’re planning on deducting a lot in April, hanging on to important receipts is a must.
If you really want to go for the gusto with your organization, try using an accordion file to collect important tax papers throughout the year. You can label the individual pockets for things like expenses, repairs, daycare, etc. Every time you get a bill or a form of paperwork that you need for your taxes, you can file it right away. U.S.News notes saving everything to the cloud is a help, too, so long as you follow proper password and follow other security protocols.
Talk to a professional year-round
Don’t just wait until tax season strikes before speaking to your money people. If you have an accountant, make regular appointments with them throughout the year. Meet with a tax preparer before tax season rolls around and ask them what you need to do in the next few months to make things easier. If you need W-2 software, 1099 software, e-filing software or any other kind of software, make sure you look into your options well in advance.
Prepare for how life changes will affect your filing
It’s important that you begin to sort out how your big life changes will affect your taxes before you sit down to file in the spring. A marriage or divorce, having a child, changing jobs, a new home, and so forth mean big changes in your filing situation. The Simple Dollar explains that sometimes these situations affect other people’s taxes, too. For example, if you divorced last year, you should check with your ex and make sure your dependent situation lines up with what you’re both telling the IRS.
Let technology help you
It’s 2021. There’s no reason your record keeping has to be limited to a pencil and a ledger. Make use of apps and software that help you track expenses throughout the year. By the time tax season rolls around, you’ll be thankful that you have an easy-to-access digital record of everything you can deduct. There are expense tracking apps like Wally and Clarity Money that make this convenient and simple, so just plug one into your phone so you can track expenses on the fly.
If you’re running a small business, you’re always looking for ways to score deductions on your taxable income so that you can save when tax season rolls around. One way to earn startup deductions is by forming an LLC and registering your company in your state. Structuring your business as an LLC will also grant your limited liability and lots of flexibility with your business.
It’s also easy to get started with an online formation service. They can walk you through everything, starting with securing your EIN. Additionally, working with an accountant who specializes in helping small business owners can be a boon for you when it’s time to file.
If you’re scrambling to be ready for April, it’s not too late to get your ducks in a row. Connect with KG Meyer for more information on preparing your taxes, and for ensuring that you make the most of every one of your hard-earned dollars.
This has been a guest post by Gloria Martinez. You can learn more about Gloria and her writings at https://www.womenled.org.
