How to Get a Jump-Start on Your Taxes
Yep, it’s that time of year again.
As the tax-related documents start rolling in from employers, banks and credit card companies, your palms may already be starting to sweat.
But how about trying something a little different? Instead of waiting until the last of those little pieces of paper show up or the email notifications all come in, why not get a jump-start on your taxes?
There are plenty of ways to jump-start your tax preparation so the April 15 deadline doesn’t loom and put stress on you this year.
Here are some of the best ideas we have for getting organized and ready to file your tax return.
1. Get organized.
Start a list of the tax documents you expect to need this year. As you receive them, check them off the list and organize them by category.
Gather receipts and other supporting documentation early. This is something you can do at the start of the year.
By making sure your paperwork is at least all together in one place, you won’t have to waste time searching for it later.
Gather the forms you will need and have them organized and available for when you do plan to begin preparing your return. Any forms can be downloaded directly from the IRS website.
2. Do your research.
By getting organized early, you’ll have more time to look into recent changes in tax laws.
For example, this year there are changes to thresholds for things ranging from the AMT to capital gains to health care deductions.
Become familiar with the IRS website, where they list recent tax changes and attempt to answer many of the most common questions.
Also, Publication 17 is the IRS Tax Guide for Individuals is a great resource.
There is a wealth of information from sources like major tax preparation companies, CPAs and consumer groups. Just be sure the source you’re using is reputable and double-check it with the IRS.
Getting an early start also gives you time to consider the potential impact of things like IRA contributions to reduce your adjusted gross income, as well as charitable contributions that may lower your taxes.
“There are many valuable tools
online for answering tax questions.”
3. Consider your filing options.
Tax preparation software has become very easy to use and allows you to have more control over your tax filing. It’s also generally less expensive than paying a tax professional.
Whether you choose to do it yourself or pay a tax preparer, you should consider filing electronically for the fastest processing.
Choosing direct deposit for any refund owed is a great way to get your return faster.
Over the past few years, the IRS has given priority to electronically filed forms with the direct deposit option chosen.
4. Plan for next year.
Tax-advantaged investments can save you hundreds or even thousands of dollars in taxes owed. By getting a jump-start on your taxes this year, you will have time to prepare and plan for next year’s taxes.
The time to adjust for tax-advantaged investments is during the current year, so don’t delay.
Each year most of us make a promise to be more organized with our taxes next year. Well, the time to begin organizing is when we have it all in front of us.
Take a lesson from what you’ve learned this year and plan to improve on your organization and record keeping for next year.
Just as none of us will eagerly rush to the dentist for oral surgery, we’re not eager to start preparing for our taxes either.
Consider this: The American Institute of Certified Public Accountants estimates up to 80 percent of legal deductions are missed due to last-minute rushing to get taxes done.
By starting early, you’re far more likely to get all of the deductions you deserve. And that’s real money.
Photo source: multimedia.journalism.berkeley.edu