5 Steps to Getting Organized For The New Tax Year
No one likes it, but every American has to go through it:. Tax Season.
The thought of sitting down with your bookkeeper or CPA is enough to make you want to curl up in a ball, but unfortunately everyone has to face it. Receipts, deductions, and 1099’s are no fun, but even worse is not being prepared for tax season. The time to get organized is not when they’re due, but in the beginning of the year.
Even though we’re a month and a half into 2016, it’s still not too late to put together a plan to make your tax season go more smoothly this year & make next year’s visit to your CPA an easier experience. Here are 5 tips on getting organized for filing taxes next year:
Social Security Number: …make sure your Social Security number is in there, as well as your spouse’s if you file jointly. Don’t forget the ID numbers of your dependents. And don’t forget the tax identification number of the person or business that takes care of the children while you’re at work. You’ll need it if you file for the child care credit.
W2: …every employee should get Form W-2 from his or her boss showing how much was earned, how much was taxable and just what taxes were withheld. If you have more than one job, you should get a Form W-2 from each employer.
If you’re an independent contractor, the company you worked for should send you Form 1099-MISC showing your gross earnings.
Earnings: Are you saving money for your child’s college, a new house or retirement? Good for you — and the taxman. Interest earned on most savings accounts is taxable.
You should get statements from each of the account holders, as well as official tax forms. Copies of the forms also go to the IRS.
Volunteering & Deductions: Are you dropping off clothes and household items at a local collection center? Get a receipt for those. And make sure that the articles were in good shape. The IRS can deny deductions for anything that it deems of “minimal monetary value.” In tax speak, that means you can’t donate trash and then write it off.
Organized Information: Now that you know what data you’ll need to file your taxes and the info that can help reduce that bill, you’ve taken a big filing first step.
Now you’ll be able to find the tax documents you need and keep track of all the tax-related statements you’ll receive. And you’ll immediately realize if you’re missing anything or if something needs to be corrected.
Even better, by getting organized early, you give yourself plenty of time to complete filing taxes properly, saving you time, anxiety, and in many instances, money.