It should come as no surprise that I believe the tax season does not end on April 15th. In fact the time before and afterwards are actually the most important part of the journey. When you properly plan and prepare throughout the year, then the three months of the so called “Tax Season” will be much easier to endure. Check out this small list of practical things you can do this pre-season to save you some time, energy, and possibly money as well.
Documentation is the Key: For Income, Credits, Deductions, and Payments. Make a practice of gathering, reviewing, and safely storing your financial documents on a monthly basis. If you can establish this ongoing habit, you will be on the right course immediately.
Make Adjustments to your W-4: You should review your W-4 on an annual basis. Any changes such as the birth of a child, marital status, death of a loved one, a new job, or you/ a child attending college, may have some impact on your taxes.
Plan for Estimated Taxes: If you have self employment income, rental income, capital gains, or any income where taxes are not withheld for you, then you may actually owe taxes. If you expect to pay more $1000 in taxes, plan to make estimated tax payments in order to avoid any penalties.
Check out IRS.gov: The IRS’s website is one of the best free resources available for taxes. Look here for updates and tips throughout the year.
Seek Professional Help: Many of my clients have come to me after having a bad tax experience. I often remind people that “now that you’re a professional or business owner, it’s probably not a good idea to use the same tax prep service that you used while working the Summer job in college”. If you are not using a licensed/ credentialed professional that is legally obligated to make the most appropriate accounting decisions for you, the truth is, you are taking a huge risk!
Be sure to speak with your trusted advisor before making any changes.