It’s That Time of Year Again…. Here are 6 Steps To Prepare You For Tax Season!

Posted on January 10, 2016

1. Determine How You Will File.

There are many different ways one can choose to file taxes. Are you able to do it yourself? If so, then decide if you want to do it manually or by using a website online. If not, there are many locations available that one can file their taxes on time. It is best to decide this ahead of time before you start organizing your documents and begin filing.

2. Review Any Significant Changes from the Past Year.

In just one year, various changes can occur. Anything from getting married, moving into a new home or purchasing an automobile can make a difference when filing for your tax return. By chance you get married, you would have to change from filing as an individual to filing with a spouse. If you have a child, you would now have to claim your child on your return. Life events play a large role when preparing for taxes so keep track as you go, and review them before you start!

3. Collect and Organize All Receipts.

Throughout the year, there are various items and expenses people have that can be filed on their income taxes. It is important when donating to charities or paying for business expenses that the receipts are saved to be then used as a record of payment. Many are unaware of potential deductions, therefore it is crucial to save receipts throughout the year to maximize your tax return.

4. Determine Your Sources of Income.

When tax season is approaching, figure out exactly what you should be expecting back instead of relying on forms mailed to your home. In many cases people can lose track of information from banks or mutual funds and it can end up being too late to include them in your tax filing. Create a list of income sources to better organize your files.

5. Have a Plan for Your Tax Return Funds.

When receiving a large sum of money at one time, it is very easy to spend it quickly and inefficiently. When you have a general idea of how much money you are getting back for a return, decide exactly where it is going. No matter if it is paying a credit card bill, paying your insurance for the year or planning a vacation, decide where it is going to make the best use of your return.

6. Check Out Overlooked Tax Deductions.

When it comes to filing for taxes, there are various items and expenses that can be deducted but are often over looked. Some of these include childcare costs, costs of caring for a parent, medical expenses, energy efficient home improvements, and charity contributions. Throughout the year hold on to receipts and documents because they could help you maximize your return.

 

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