2015 is winding down and tax season will be here before you know it. Want to free yourself from the stress of last year’s tax day? Start organizing your paperwork now to get a jump on tax season. Your tax return prep will be painless by keeping these tips in mind:
Organize All of Your Records.
You’ll need to refer to last year’s return, so make sure you have a copy of that tax return handy. If you used DIY tax prep software, print out a copy of last year’s return and put in a safe place. Place it in a file, along with all documentation for income, expenses, and deductions:
*Paystubs: You’ll be comparing the year-end figure on your paystub with the information on your W2. Hang on to your current paystubs in the meantime.
*Receipts for deductions: If you’re going to itemize deductions, save all of the related receipts ( e.g., child/dependent care, homeowner’s deductions, medical/dental expenses).
*Receipts for business-related expenses: meals, mileage, supplies, payroll, office equipment, insurance, home office expenses.
*Award letters for unemployment and disability insurance
*Documentation verifying amount of child support you’ll be receiving or paying
*Bank statements verifying interest income and mortgage payments
*1098 and 1099 forms
*Social security income verification
Tuck everything away in a folder, adding to it as you receive receipts other needed documents. Use a productivity app or spreadsheet program to document income and expenses. When tax day rolls around, you can transfer the totals from the app or spreadsheet onto your tax return.
Remember you’ll need to report all of your income: base wages, tips, side-gig income, gambling winnings, and so on. Careful record-keeping of your income will prevent tax day errors later on.
Of course, everyone’s tax scenario is different, so if you have questions regarding your specific tax needs, it’s best to talk with a qualified tax advisor well in advance of tax season to make sure you’re on the right track.
With 2015 winding down and the busy holiday season just weeks away, it’s easy to set aside tax matters for another day. However, tax season will be here before you know it, so advance preparation is the key to avoiding a stressful tax day experience. Plan ahead, organize your documents, and tax day will go much more smoothly.