Tax season can be a confusing time for filers. Countless forms, obtuse language and a looming deadline makes what should be a straight forward process into a stressful, headache inducing chore. If you find yourself constantly fretting during this time of the year, here are 5 easy tips to prepare your books for tax season.
As the saying goes,“The Devil is in the details.” Paying attention to detail and being meticulous when filing a tax return is often the difference between a healthy return and a dreaded IRS audit. For those who choose to file their own taxes, the best way to approach such an undertaking is to take a few moments to become organized. Find any necessary forms or information that will help you in the days ahead. Categorize them by date and type. Write down any questions you may have, so that you can speak with a qualified individual and ensure that you get back every penny you deserve.
Find Your Receipts
When it comes to receiving the largest tax refund possible, deductions are a tremendous help in reducing taxable income. And while it may be tempting to list any and all expenses throughout the year as deductibles, there may come a time when the IRS asks for verifiable proof. This is why it is always so important to maintain a collection of receipts. Meals purchased while entertaining clients, computer purchases and even travel receipts all may count as deductibles. Organize your receipts into categories, and you’ll be better prepared for tax day.
Determine Income Sources
For most, income is defined as the money received through one’s employer. And while that may be true in the broadest sense, the IRS will want to know the source of all incoming monies. This includes salary from any jobs, banks and investments such as IRAs and mutual funds. Much of this information is located in the W-2 form, which is normally mailed by the employer once tax season approaches.
Make Contributions to Your Traditional or Roth IRA
One of the great aspects of contributing to a traditional or Roth IRA is that the maximum investment can be made up until April 15 and still count for the previous calendar year. That means that even if you procrastinate, you can still have your investment included in your tax filings. If opening an IRA for the first time, be sure to research which is best, as each has different tax requirements.
File an Extension
Sometimes, despite the best laid plans, turning in your taxes on time may not be feasible. Thankfully, the IRS is more than willing to provide filers with an extension. Simply complete form 4868 and mail it in. Be aware that while the extension grants more time to file a return, any taxes owed are still due by April 18.