I don’t know about you but this year feels like the longest year ever. However, I realized the other day just how quickly tax season is approaching.
During tax season I meet all types of personalities and I really love that about my job. No one has the same situation and every person’s financial circumstances are unique. One thing that I notice each year is that the people who believe they might owe end up filing in April and the ones who think they will receive a refund want to book with me the first week of January. In my opinion, it would be smarter to prepare taxes regardless if you owe or not at the beginning of the year just so you have more time to save money if you do owe. Here are 4 ways to prepare for filing your taxes so you have a better chance of getting them prepared sooner rather than later.
#1 Get Organized
It is in your best interest to get organized and stay that way all year long so you don’t have to take the time to prepare your documents each tax season in a rush. If all of your documents are scattered throughout your house you will most likely put off getting them prepared. Instead of procrastinating, start by getting organized TODAY. Get all of your receipts together, tally up your mileage, and put everything in a folder specifically for documents you may need for taxes.
#2 Decide Where You Want to File
You have so many options. Do you want to use a free option like TurboTax? Do you think you need a CPA this year? If you started a side hustle over this pandemic you might want to seek the guidance of a professional. Maybe nothing has changed and you don’t have any new streams of income, filing through TurboTax could definitely save you time and money. If you choose to file through TurboTax you will need to make sure you aren’t missing anything before you do so. Nothing is worse than receiving a letter from the IRS stating you missed something and need to file an amendment.
#3 Set Up a Reminder
After you have gotten everything organized and you have decided where you are going to get your taxes prepared you need to set up a reminder for when you want to file. If you are doing them yourself, I would schedule a few hours depending on the complexity of your situation and knock it out. You will also need to make sure you order any online software you need in order to file.
Don’t Wait!
If you are going with a CPA or Certified Tax Preparer, put a reminder on your phone or calendar to set up your tax appointment. I have a “Tax Appointment Checklist” that I send to my clients right after they book with me so they feel more prepared for their appointment when they come in. Make sure you know exactly what you need to bring so you’re not scrambling around last minute.
#4 Plan Out Your Refund (or Repayment)
If you are receiving a refund, you should be really specific as to where this money is going to go. Most people who are receiving a tax refund blow it and make it rain when they should be putting it towards their goals. This is a great opportunity to pay towards your debt as well.
Don’t Wait!
If you end up owing, hopefully you had them prepared well before April 15th so you have time to gather the funds if you haven’t been saving for this instance. If you waited until April 14th and you owe, I would recommend filing an Installment Agreement with Federal to buy yourself some time and set up a payment arrangement until you can pay in full. There are interest and penalties if you go that route. Bottom line, file sooner rather than later and you won’t be stressing over it.
Filing for taxes can be a breeze if you prepare early enough. Follow the tips above to ensure smooth sailing this upcoming tax season.
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