New Year’s is an exciting time because we all feel a sense of starting fresh. However, the beginning of the year also signals the beginning of tax season. You should have a goal of gathering all the paperwork you need to file your taxes by the end of January.
If you expect a refund, filing quickly will help you receive it sooner. However, you also don’t want to rush and make mistakes. Here are some steps to get your finances in order, so you’re ready to file your taxes.
Gather Everyone’s Income and Identifying Information
Whether you’re single and filing by yourself, have a spouse and are filing jointly and/or have children and filing head of household, you’ll need everybody’s tax information, such as W-2s.
You’ll also need to get your paperwork together for anyone you’re claiming as a dependent, including birth dates and social security numbers. If you pay for schooling and plan to claim a deduction for that, you’ll need those papers as well.
Don’t forget to get information about other sources of income, such as Social Security, alimony, rental properties, and more.
Collect Receipts for Tax Deductions
Did you have expenses that you’ll be using as a tax deduction, or did you donate to charity last year? If so, you’ll want to gather proof of how much those expenses were so you can write them off at tax time.
If you run a business and have expenses related to your company, you’ll want to find your receipts or account statements. For example, your car insurance company can send you a summary of what you paid if you use your car for business.
At the same time, consider finding a way to make your regular bills cheaper. For example, you can shop and compare car insurance rates to get a cheaper price. Freeway Insurance can give you several options and quotes for free.
You’ll also need to collect information for the IRS’ various credits, from the Earned Income Tax Credit to tax reductions for owning a home or paying off education expenses. Don’t overlook any detail that can reduce your taxes.
Keeping your receipts and tax deductions in order can be a lot easier if you use a filing system to keep track of everything. That way, it’s all in one place when it’s time to file.
Decide How You Want to File
You can file your taxes yourself or use a tax software program. You can also work directly with an accountant who can review everything and ensure that your taxes are 100% correct. A tax preparation firm can send you a questionnaire each year that will help ensure you have everything ready to go.
Of course, it costs far less to do it yourself, but it can also take several hours of your time. However, an accountant can be very expensive. Many people prefer the middle option and pay a small fee to a tax preparation software company. This program will walk you through the steps to file your taxes.
Are You Ready For Tax Season?
Getting your finances in order so you can file taxes quickly and efficiently saves you a lot of time and headaches. Start now so that you don’t have any stress or time pressure.
When it comes time to file your taxes, you’ll be glad you have everything in order well in advance!