Important Steps to Take to Prepare Yourself for Tax Season
Source: https://pixabay.com/photos/tax-forms-income-business-468440/
With tax season approaching, it’s a great choice to begin planning how you will deal with your tax return. Many individuals dread this period because of the plethora of financial reports involved. However, it shouldn’t always be this way. Preparing your tax returns can be a stress-free and simple procedure. In this article, we’ll be going through essential steps to help prepare you for the tax season.
Decide Your Tax Preparer
If you do not have a professional tax specialist, a great way of finding one is by asking friends and financial advisors for referrals. Ensure that the individual you hire is a professional and authorized to prepare your federal tax returns. Be sure to also ask how much they will charge in fees. This, however, is determined by the complexity of your tax return. Expert tax accountants like Pherrus Financial can be a great option for individuals residing in Australia.
Prepare Your Documents
After meeting with your chosen tax preparer, it’s now time to get all your financial records together. Get all your necessary tax documents from your employer, as well as from brokerage firms, banks, and other institutions which you did business with. The more organized your documents are, the quicker it will take your tax preparer to file your tax returns, which will make their services more affordable.
Gather Your Receipts
The receipts you will need to file your tax returns depend heavily on whether you claim the standard deduction or itemize the deductions. However, you will want to select whichever option produces the better write-off. To know for certain, add your itemized deductions and weigh up the outcome with the standard deduction.
Prepare Your Personal Information
Everyone knows their Social Security number; however, the Social Security numbers of every dependent you’ve claimed is also important. You have to list these out alongside any other valuable information your tax preparer will likely need. If you have a rental property, for instance, jot down the addresses. If you’ve sold or purchased a property in the previous year, write down the dates of these transactions, as well as every other crucial financial information your tax preparer would need.
Decide Whether You’ll Request an Extension
If you need more time to finalize your preparations, you can decide to request an extension for filing your taxes. However, you will still need to estimate your tax returns and pay up the estimated amount before the deadline to prevent interest and penalties.
Get a Copy of the Previous Year’s Tax Return
If you keep your tax preparer from the previous year, then they will possibly have all your previous tax information. However, if you hired a new preparer, the tax return information of the previous year could act as a reminder to you and your preparer of certain items which shouldn’t be overlooked. For example, last year’s tax return will indicate which mutual funds, banks, and financial institutions gave you 1099s. Using this list, you can ensure you received 1099 forms from them again.
Whether you handle your taxes yourself or hire others to deal with the task, ensuring that these records are organized in advance will make the process as convenient as possible, and even save you a lot of money.
