Tax time is not something that most people look forward to, unless of course you are expecting a large refund. Tax time is probably one of the most stressful times for many and then comes the time when you have to go hunt for all of your tax documents.
No matter the time of year, taxes are right around the corner and they fly up much quicker than you expect them to. Even though it may seem like it is impossible to be prepared for the season, the tips below will help you get ready no matter what.
Organize All of Your Tax Documents
You should start a collection place for all of your tax documents. This can be a file cabinet or a file organization booklet. To help you stay organized, place all of your tax documents into the folder or drawer as soon as you receive them.
In addition, it is helpful to organize the documents by type. For instance, have a section for your W-2s, a section for 1099s, and so on. This way, you will be able to quickly grab what you need, when you need it.
Know How You Plan to File Your Taxes
It helps to know how you plan to file your taxes before the big day comes. If you wait until the day you are filing, you may file under the wrong type and this can leave money on the table.
Sit down and figure out which way is the best way to file. For instance, should you file head of household, should you file married jointly, or should you file single?
If you do not understand the different filing statuses, you should make sure that you speak with a tax professional first. He or she will be able to look at your income and decide which way would be best for you.
Make Estimated Tax Payments
If you are self-employed, it is important that you are planning for your taxes. You should set aside additional funds and make estimated payments toward your taxes throughout the year; that way you are not hit with a large tax bill at the end of the year.
If you are not self-employed, but you do receive tips or other wages that are not taxed, you should also figure out what your taxes are going to be and make estimated tax payments.
Tax payments are due throughout the year on a quarterly basis; however, you can make a tax payment whenever you feel the timing is right. For example, if you inherit a large sum of money in November, you can pay estimated tax on it in November instead of waiting until January.
Know the Tax Laws, Credits, and Deductions
One way to make tax time easier is to make sure that you are up to date on all of the new tax laws, tax credits, and tax deductions. If you are not aware of new tax laws, you may find that you claim a credit or deduction that you do not actually qualify to receive.
Most times, tax credits and deductions will fluctuate each year in how much you can claim. For example, one year you may be able to claim up to $2,500 if you make below $75,000 per year, but the next year that number may change to $2,500 for under $65,000 per year.
Hire a Professional Tax Accountant to Help You
With all of the changes that go on in the tax world, it helps to have a professional accountant on your side. Your tax professional can help you understand the new laws and how to navigate through them.
In addition, your professional tax accountant will be able to let you know how you should file, when to file, and what documents you need to file your tax return.
Having a knowledgeable person on your side is a great idea and you will be able to turn to them when you need help with your complicated tax forms.
Tax time does not have to be a burden on you and you can make it much easier by being prepared when the due date rolls around. You should start preparing for your taxes early on in the year, so that you can handle any surprises or obstacles that may arise as you do fill out your tax return.
Financial Balance LLC