When the year comes to an end it’s time to think about your taxes. Although the magic date of April 15th looms a few months down the road you want to think about preparing your taxes before the New Year. Giving to charities and other organizations that allow write offs can lessen your tax burden. Consider making all donations before the New Year to maximize deductions.
Although you have the pressure of facing the holidays on your mind it pays to be prepared; literally. Make a blanket decision to start the tax preparation process well before the New Year. You’ll thank yourself when it’s time to collect your refund check.
Use these tips for preparing your taxes:
Preparation Reigns Supreme
You may have heard accountants and other tax preparing professionals harp on the idea of preparation but it’s for a good reason. Few people ready themselves for the tax season before it’s too late. This results in leaving big money on the table in regards to refunds or in a worst case scenario you may go through the highly unpleasant experience of being audited. If you had prepared yourself early on you likely wouldn’t have made the mistakes that you unfortunately need to suffer through.
Get organized to be prepared. Collect all appropriate forms, receipts and other paperwork to document how much you made during the calendar year and how much you spent on deductions. Having hard copies handy makes it easier to refer to your taxes if you are audited. Put all paperwork in the same format in a centralized place. If you carelessly tossed receipts here and there throughout the year now’s the time to consolidate all tax paperwork. Lessen your anxiety, think more clearly and minimize your tax burden. Get organized.
Check Out Quarterly Payments
This one’s for the crowd who makes estimated quarterly tax payments. When the year is about to wrap up go over your estimated payments versus your year-end numbers. Tabulate payments to compare with the actual amount. The numbers should be very close. Doing this regularly gets you in the habit of seeing what you possibly will receive in a refund or what you may owe to the government. The practice also gives your accountant a heads up too for the upcoming tax preparation season.
Get in Touch with Your Accountant Early
Don’t wait until you’re full swing into tax season to book an accountant. This is a massive mistake since most professionals will be too busy to take on new clients. You don’t want to be hung out to dry when it’s time to file unless you have extensive experience filing your own taxes. Besides, it helps to have an eagle-eyed professional review your taxes to spot any potential problem areas.
Before you enter the new year book an accountant. Ask friends and family members for references to connect with someone you can trust.
Don’t Fear the IRS
Although the IRS is made out to be an all-encompassing monster the government agency simply wants to work with you to collect taxes. If you have made a mistake filing in the past or if you have any questions about your taxes don’t be scared to contact a representative. Although accountants are well-versed in tax laws it never hurts to go directly to the tax source for a pressing question and the practice will help you get over the widely-held fear of the Internal Revenue Service.