Tax Season Is Right Around the Corner — Start Preparing Now!
With tax season on the horizon, now is the time to begin preparing to file your returns, especially if you haven’t filed in recent years or have a history of tax liabilities.
Regardless of your situation, every year there are certain steps you can take to lighten your load, reduce your stress, and keep your bank account healthy. Follow these five tips to make this a simple and successful tax season.
#1: Gather Your Receipts
Even if you think they might be inconsequential or irrelevant, gather all receipts from the past year so you can take advantage of potential deductions. Donations to a charity, medical expenses, and business costs can add up quickly, so be sure to review your receipts before you decide whether you should itemize your deductions.
#2: Identify Your Sources of Income
Every year, the tax forms and documents come rolling in during January and February. It’s easy to get overwhelmed if you’re not prepared, but you can avoid surprises by keeping track of what to expect well before it all arrives in the mail.
Make a comprehensive list of all your sources of income (employers, mutual funds, etc.) as well as how much income you generated during the previous tax year. This way, you won’t be caught off-guard when a W-2 or earnings report shows up at the last minute.
#3: Contribute to Your IRA
If you have an IRA, you can contribute the maximum amount allowable right up to the tax filing deadline and still have it count toward your previous year’s taxes. This year, the deadline to file your taxes is April 17.
If you don’t currently have an IRA, consider opening one, contributing prior to the deadline, and counting those contributions toward your 2017 taxes.
#4: Adjust Your Withholdings
In most cases, we recommend minimizing your tax withholdings so you can make the best use of your money throughout the year. However, as tax season approaches, you might want to reconsider this depending on how you have been using the “extra” funds you get from cutting down on your withholdings (especially with savings account interest rates so low — putting the extra funds in a savings account just doesn’t yield a meaningful return in 2018).
Many people who minimize their withholdings never invest that money during the year. If that’s true in your case, it might be wise to maximize your withholdings instead and get a bigger refund this year.
#5: Plan for Next Year
Once the smoke clears and the dust settles, most of us resolve to get organized and be more prepared for next year’s taxes. Unfortunately, as with post-holiday resolutions, the follow-through often leaves something to be desired.
This year, take a proactive approach to planning for next year’s tax returns. Keep all receipts, understand which (if any) deductions you should itemize, and maintain a spreadsheet of gains and losses throughout the year.
If nothing else, stop throwing all your important tax-related mail in an overstuffed drawer; instead, create a designated file to hold your pertinent documents. And if you’re looking for help with extenuating circumstances, such as back taxes or missed filing years, contact the tax representation professionals at S.H. Block immediately.
Worried About Your Tax Status? S.H. Block Tax Services Is Here to Help!
Every tax scenario is unique, but with our level of experience and past success at S.H. Block Tax Services, we’re confident we can help you resolve any tax issues and file an accurate and cost-effective return this year. To learn more about us, our services, and how we can help you, please contact us by completing this brief form or calling (410) 793-1231.
The content provided here is for informational purposes only and should not be construed as legal advice on any subject. Please read our full disclaimer here.