Tips To Reduce The Stresses Of Tax Preparation
Planning Ahead Reduces the Stress When Filing Your Taxes
April 15 of every year is a day a lot of people do not look forward to, simply because it is the deadline for filing income taxes. However, this day does not have to be ominous or overburdening. It is possible to reduce your stress and improve your financial future simply by getting a head start on your income tax preparation.
Here are some tax strategies worth considering:
- Gather Records Early. Take the extra time to round up all of your documentation together ahead of time so that you have everything you need to get started when you are ready for filing. Gather your tax returns from prior years as well, these past returns will provide valuable insight as to where you might be able to save money on your current tax return in comparison to previous years.
- Determine how you will complete your return. You may prepare and file your own tax return, or hire a tax professional to walk you through the entire process. Begin your search for a professional tax preparer as early as you can, if you end up waiting until the last minute to start your search, you may find that the tax preparer you chose is just swamped with other people’s tax returns, leaving less time for the preparer to research your upcoming requests.
- If you plan to file your taxes yourself, you can prepare ahead of time by researching and educating yourself on current tax law changes, tax credits, and tax deductions.
- Look to the government website resources for help. For instance, check the The Internal Revenue Service website, as well as your state and county taxing authority websites for valuable information regarding tax question you may have. Phone numbers will also be on their websites if you have questions. These resources are free, so use them to your advantage to get some assistance when preparing and doing your research to file your tax return.
- Estimate ahead of time. It is best to calculate your taxes beforehand, so you will know what to expect if you owe or are due a refund. The IRS offers withholding calculators and other estimating tools to help you determine what your tax amounts will likely be prior to the actual filing. This calculation estimation will help reduce any anxiety that might have come at the last minute, and give you time to plan, especially if you’ll end up owing money when the time comes for you to file the tax return.
- Make any last minute tax-deductible purchases. If it looks like you’re going to owe money on your tax return before the end of December, and you had some business items that you had been thinking of purchasing, it may be in your best interest to go ahead and now make those formerly planned purchases that can give you an extra tax deduction. If you are self-employed, remember to purchase only necessary items for your business.
- Contribute to retirement funds. Now would be a great time to Invest as much money as possible into your tax-advantaged retirement fund. This will reduce your income even further, leaving you less of a tax liability.
- Donate. Make all cash or item donations before December 31st to insure that you will receive your tax deduction for the year. Do not forget to get a receipt!
- File as early as possible if you are expecting a refund. The quicker you file, the sooner you will receive your tax refund. You can file in January as soon as you have your documents together.
- Electronically file your return. There are many benefits to e-filing, or electronically filing, your tax return. For example, most Electronic filing software will automatically calculate tax credits and deductions based on the information that you give. One big benefit is that if you are due a refund, it is much quicker than mailing in a paper return.
The Bottom Line
The best way to get the most benefit out of your income taxes is simply to get an early start. With proper planning, research, and preparation, you can maximize your deductions and simplify the filing process without stressing yourself out along the way.