Each year you probably lose much sleep due to anxieties associated with one frightening event. What is this event? Tax preparation. Yes, taxes aren’t a topic that excites anyone. Just about everyone has some fear of the tax filing process. One reason people don’t like taxes are because it is such an uncertain process – you never know whether you will get a refund, owe the government, or get audited. Another reason people don’t like doing tax returns is that they are never prepared to file them.
Using a CPA to prepare your taxes will take away the uncertainty. It will give you peace of mind and alleviate stress, ensuring you are receiving your entitled benefits and minimizing tax liabilities. In the meantime, think about how to prepare.
It is tedious to have to track down every tax-related document that you need to file your taxes. The unfortunate thing about not being organized is that you could be paying more than your share of taxes and missing out on deductions and credits that can save you money and even get you some money back.
However, if you get a head start on your tax preparation before the deadline approaches, this can save you much time and minimize your anxiety from waiting to the last minute to file. So, how exactly do you prepare to deal with this time-consuming, stressful event so that you won’t keep losing sleep year after year?
Things to do for Tax Preparation
This suggestion may sound like a broken record, but getting organized now can save you a headache later. Sure, this is easier said than done, but it is true. The list below is not an exhaustive list of things you will need because everyone’s tax situation is different. However, these checklists below will help you gather or review the majority of things you need to for the tax filing process to make your life easier during this very stressful time.
Checklist for Individuals
- Gather w2s, 1099s, or unemployment documents
- Gather documents related to your dependents including social security numbers, birth certificates, childcare info, and other relevant info
- Make sure employers have the most recent address, and any other additional information is updated
- Start saving money in case you owe on taxes
- Finalize contributions for IRAs, HSAs, or 401 (k)
- Review the latest tax changes
- Gather investment or mortgage payment info
- Obtain info related to student loan interest
- Compile receipts for charitable donations
- Include info for additional winnings such as lottery winnings or other prizes
- Review tax rules related to Covid-19
Checklist for Small Business Owners
- Credit card statements and receipts
- Business records such as income statement and balance sheet
- A list of business expenses
- Gather all payroll documents
- Have a copy of last year’s tax return on hand
- Have information related to business mileage
- Gather travel information
- Determine charitable contributions for the year
- Find an out alternative for paying a tax liability
- Get an extension if you anticipate that you will need one
Benefits of Using a CPA
One more thing to keep in mind in the tax preparation process is using a CPA. If organization isn’t your thing, then soliciting the help of someone who can keep you organized is your best bet. A CPA will gladly do this, for a fee, of course. A CPA is a certified public accountant who does bookkeeping services for individuals and businesses. They are aware of the essential documents that you need to retain to file your taxes, and working with them throughout the year will keep the tax filing process smooth. Below are some of the advantages of working with a CPA.
- CPAs can help you prepare your taxes
- They can explain things such as new changes with the tax codes and tax credits or tax deductions for which you qualify
- CPAs can represent you before the IRS and they can assist with audits
- They can explain special circumstances related to marriage, divorce, retirement, college savings and the like
- CPAs can help with back taxes
Taxes are not an easy task to tackle by their very nature. However, you can minimize the stress that waiting until the deadline causes by preparing in advance. As you await essential documents to arrive in the mail starting in January of the new year, you can start compiling other necessary forms that you already have so that they are ready to give to your tax preparer or your CPA. The more organized you become with your tax preparation process, the less anxiety you will have when it’s time to file.
For more information about things you need to file your taxes, click this link for individuals and this link for business.
Tax Avenger Canton MI is a CPA and Tax Firm dedicated to providing exceptional service to our clients. If you are filing individually, starting a business or your business needs tax and accounting services, we can help. Now with our remote filing services, it couldn’t be any easier to file your taxes while you stay safe at home.
Our services include business accounting and payroll services, individual and business tax preparation, tax problem resolutions and more! Call today and speak with a CPA to learn more about how we can help. Free Consultations.