The dreaded season is nearly upon us. Tax season can be one of the most stressful times for people as they scramble to get all the information and all the papers required for proper tax reporting. It doesn’t have to be all that terrible, however. While nothing will completely alleviate the stress and excessiveness of tax season, there are things you can do to best prepare yourself for tax season.
Having a tax prep list of things to do and have ready before tax season is very important.
This way, you’re making sure you’re ready come January and done with plenty of time before April. It can take away stress, take away uncertainty, and generally make the months after the holidays that much easier with one less thing to worry about financially. Meeting with a tax specialist can help get you started.
Here are some tips of things to prepare for getting yourself ready for this tax season.
Deductions are important, especially for those who do freelance work. You may be paying out of pocket expenses for your job and you can get those back at tax time. You can also deduct certain charitable contributions, some medical bills, and education expenses. This is how you get money back in tax season so even if you’re not sure if it’s deductible, have documentation on it ready anyway.
These may not apply to everyone but they’re not all that different from deduction and can mean you get money back. There are some credits you can get towards taxes if you qualify, such as: Child Tax Credit, retirement savings contribution credits, and education-based credits. Like deductions, credits aren’t a guarantee, but having documentation ready is important.
Seems simple but you may find in the rush to have things ready that you forget some of the obvious things. Identifying information, specifically your social security number, needs to be handy for you and all your dependents. It’s also a good idea, though not necessary, to have last year’s tax documents ready for you to reference and help make the process go a little smoother for you.
What Is the Difference Between a W2 and a 1099 Form?
W2 are tax forms that employers must issue to all full time and part time employees by January 31st for the previous year. 1099 forms, and their various suffixes, are for those who do contract work.
What If I’m Self Employed?
Self-employed individuals do it different. Generally, you’re supposed to pay estimated quarterly taxes on your income but many elect to wait until tax season (the trade here is you pay an interest fee for unreported income but it’s usually low). For this you will use a different form and sometimes may owe more than what you have resulting in the need to take out loans.
Tax season can be scary and stressful but don’t let it scare you. Have your documents ready and get to work with your tax professional.
Tax Avenger is an experienced full-service CPA and Tax Resolution Firm helping clients throughout Michigan. We provide efficient, cost-effective service with exceptional skills and experience to handle all needs. We offer a full complement of services from Business, Individual, Financial and Tax consulting to Accounting services, and so much more. As tax specialists, our expertise and knowledge ensure compliance with government laws while maximizing benefits and minimizing tax liabilities. Call us today and speak with an experienced CPA for a Free Consultation!