Five Ways to Prepare for the Looming Tax Season
The merry season of tax is approaching which means everyone needs to start collecting documents, fill out long forms and get ready to pay all their dues to the government.
Nobody likes the extra work that has to be put in to doing all your taxes, but unfortunately, it must be done properly because the IRS is always breathing down your neck.
A lot of people face difficulties with this task which is why it is better to be prepared than to sit at the last minute with one hand on your calculator and the other on your head, contemplating about why you had not done this before.
Here are five tips to help you prepare for the looming tax season:
The very first thing you need to do is get organized. You don’t have to create a lot of folders and files for this. Get one folder where you are going to store all those W-2 and 1099 statements. Trying to find individual forms and papers at the time of doing your taxes can be extremely difficult.
It is better to designate a specific folder or manila envelope for this purpose and access it when you need any tax related calculations.
Stay updated on tax law changes
This year, since the government has changed, you must expect a lot of changes being made to tax laws. Research and keep asking people who are more experienced in taxes on how to stay updated on the laws regarding taxes.
If any tax change catches you by surprise, you will definitely face a lot more work and frustration regarding your taxes. You need to make sure how much returns you would be expecting to receive them properly.
Be sure about your Traditional or Roth IRA
If you have opened up a tradition or Roth IRA and have been making contributions to it, be sure to include that in the deductibles. You can even open up an account right now.
Changes in filing status
Changes in your life such as getting married, having kids, getting divorced or your children moving out, has an effect on how you are supposed to file for your taxes.
Not only that, other members of your family also have to alter their forms when filing so it is better to talk to the people involved and do your research before you decide to file like you did before the major change.
Be prepared to get an extension if necessary
Tax season is difficult and requires a lot of collection of data and analysis which is why there may be a case where a person is not able to pay taxes on time.
In this case the person can fill form 4846 to apply for an extension. The extension allows for a 6 month period to sort out taxes but the person applying will have to pay and estimate of how much they owe in those six months.
It will ultimately save them from any late penalty fees.