What You Should be Doing to Prepare for Tax Season
I’ll be honest, my biggest pet peeve is a client that waits until December to have 365 days worth of information, operations and data updated — and them wanting it in a weeks time. While a rushed job can be done, we here at AP Elite would recommend that you begin getting ready now for the coming tax season. There are some foundational steps that you can take to begin.
Procrastination is never the answer, get started today!
1. Organize your financial records:
Notate all tax forms that you should be receiving this year. This includes things like your W-2 or 1099 forms, documentation of charitable donations, healthcare credit forms, interest statements and records of contributions to retirement accounts. You want to make note of this so that you know when you are ready to actually file taxes. You should have ALL of your expected forms before you file taxes.
2. Understand the changes in tax laws:
Tax laws change every year, so it's crucial to keep up-to-date with these changes to avoid any surprises when filing your tax return. The IRS gives updates every week on changes happening such as new filing deadlines and new corporate alternative minimum tax. If you hire a professional to assist you, they will likely be abreast of IRS updates so this is something you won’t necessarily have to worry about. You can find updates at IRS News Updates.
3. Update your bookkeeping:
If you are a business owner, make sure you are bringing your bookkeeping up to speed to prepare to fill out your Schedule C Forms. You can provide your bookkeeping to your CPA or Tax Professional to assist you further. Having updated bookkeeping will assist with tax strategy and finding last minute deductions if needed.
4. Decide if you'll need professional help:
Depending on the complexity of your financial situation, you might want to consider hiring a tax professional. They can help you navigate the tax laws and find deductions you might not be aware of. Even if you do not hire a professional, it could still help to consult with a professional and ask whatever lingering questions that you may have. BOOK A CONSULTATION
5. Consider your filing options:
There are several ways to file your taxes, including doing it yourself with paper forms, using tax software, or hiring a professional. There are also several elections to choose from; are you single, married-filing separately, claiming dependents, or electing to file as an S-Corp? These are things that need to be decided now so that you or your professional can strategize most accurately.
6. Start Early:
This is the most important piece of advice that I want to reiterate. Start early. The earlier you start, the less stressful it will be when the deadline approaches. You'll have more time to gather your paperwork, resolve any issues that might arise and research any concerns that you may have. Procrastination is NOT your friend during tax season.
Remember, preparing for tax season is a year-round task, so it's never too early to start planning for next year.