Planning for tax season
Planning for tax season is a year round activity. Most people just consider it when they get their W-2 in the mail and then sit down to the annual grind of figuring it all out or handing it all off to their preparer and letting them do the heavy lifting.
Some things to think about during the year to minimize your tax bill and stress level for this year;
Donate clothing and items you no longer use to a charity before Dec 31st.
Pay your January house payment in December. You will be able to use the interest payment in your itemized deductions.
If you”re an employee and are usually paid a year-end bonus, you can often make arrangements with your employer to have the bonus paid in and credited to next year rather than this year.
If you run your own small business and bill your clients, you might be able to defer income simply by not billing until next year.
Keep all receipts and paperwork organized throughout the year. The shoebox method may have worked for Oscar Madison, but chances are it won”t work too well for you. (Actually, if you remember correctly, it didn”t work too well for Oscar, either.)
Organize your receipts by category, along with any other relevant documents including W-2 forms, 1099s, sales journals, bank statements, rent receipts, records showing the purchase and sale of investments, any documents relating to the sale of real estate or lawsuit settlements, and anything else with impact on your finances. If you aren”t sure if a document has tax implications, bring it and ask.
If you haven”t done it in previous years, consider e-filing your taxes. Its safe and secure and much more accurate than the paper method. The IRS is working to get as many people to e-file as possible. They have the following guidelines in place to help you with the e-file system.
How to e-file. It”s as easy as 1-2-3 !
Step 1 – Get all your tax information together! – You”ll save time and won”t have to stop in the middle of preparing your return to find a missing document. Here”s what you”ll need :
? Social Security numbers for yourself, your spouse, and any dependents.
? W-2 forms from all employers are required for yourself and your spouse
? 1099 forms for Dividends, Retirement, or other income, or any 1099 forms with Income Tax Withholding.
? Receipts for expenses for Itemized Deductions (Schedule A).
? Receipts and records for other income or expenses.
? Bank Account numbers (for a fast refund, or to pay electronically ).
? Complete information on what records you need, and how long to keep your records.
Step 2 – Choose the method of e-filing that works for you:
? Tax Professional
? Personal Computer
? Free File
Step 3 – e-file it!
Paid Preparer – If using a Tax Preparer, be sure to take all your information with you, and don”t forget to ask for e-file! Use our locator service to find an Authorized IRS e-file Provider nearest you.
Personal Computer – Online filers, just answer the simple questions in your tax preparation software, and the software will do the rest for you. For faster refunds, or to pay when YOU want to, have your bank account number handy.
Find an option that best fits your needs. It”s easy
