How to get ready for tax season ahead of time
“The hardest thing to understand in the world is the income tax.” -- Albert Einstein
Are you ready for tax season?
That was a trick question. One can never be fully prepared for tax season. I wanted to put together a piece to help you get ready for tax season ahead of time so that you’re not stuck scrambling at the last minute to get everything together. I’ve spent many sleepless nights going through tax documents to confirm that I had everything done, because tax season prep should definitely be a part of your end-of-the-year financial gameplan.
How can you get ready for tax season ahead of time?
Collect your expenses
Are you self-employed? Are you claiming income from freelance work? It’s important to start collecting any expense that you can claim against your income. If you work a traditional 9-to-5 gig, you might not have to worry about this one. All of the self-employed folks reading this need to start gathering those receipts.
Ensure that you have all your documents
Has your employer sent you everything? How about your retirement accounts? What about your investments? Do you have what you need to file your taxes this year? Every company is different when it comes to sending out tax documents. You may want to consult with the human resources department to see if they have your correct address.
Organize everything
The biggest challenge often revolves around getting your documents in one place. Once you’ve ensured that you have all of your documents, the next step is to ensure that everything’s organized in one place. I prefer to use folders to separate my tax documents. I then take the time to organize everything (real estate, employment income, self-employment income, etc.). When you have everything in one place it’s much easier to file your taxes when the time comes.
Look into tax breaks
Every year new tax laws are passed. Check the local news to see if any of these tax breaks apply to your situation. You don’t want to miss out on a tax credit.
Hire a professional
You don’t have to manage your finances on your own. It’s okay to ask for help. I would recommend hiring a tax professional because you want to be sure that you’re doing everything right. The last thing you want is to miss out on a tax credit or to file something incorrectly.
That’s how you can start getting prepared for tax season. You don’t want to be scrambling around the deadline date to gather your documents because taxes are already stressful enough.