There’s nothing quite like paying income taxes.
The anticipation is almost like waiting for Christmas…
Well, okay, not QUITE like that.
Few people look forward to paying taxes, but there are some things you can do to make it easier. These tips will both reduce the stress of preparation and hopefully allow you to reduce what you owe.
Get it together
The biggest and most daunting step of getting ready for tax time is gathering all the paperwork. Depending on your situation, there can be a lot of documents you need to pull together. Here’s a list of the major pieces you need to get together to prepare for a painless tax season.
- Self-employment expense records (receipts and business credit card statement)
- Mileage records for business (self-employed)
- State and local taxes paid
- Sales tax paid on vehicle
- Statement of retirement contributions
- Property tax and real estate records
- Charitable donation receipts
- Medical expense records
- Rental home expenses
- Investment related expense records
- Student loan interest statements
- Insurance premium receipts
- Childcare expense records
- Records of scholarships or fellowships
- Qualifying educational expense records
- Out-of-pocket classroom expenses for teachers
Make next year even easier
Once you have all your documents in one place, you can make next year even easier. Consider creating a file based on the paperwork you just collected. Now use that file to keep receipts and documents as they come in for next year, and you’ll cut out a big step from your 2020 tax season.
For example, keep a folder of documents for charitable donations and place any receipts there as you donate. Bank, mortgage, or interest statements can go into the appropriate folders each month, so you don’t have to track them down to prepare for tax time.
Whether you do your own taxes or hand them off to a tax professional, you’ll save yourself a ton of time collecting all the documents needed to prepare your tax return.
IRA donations up until tax deadline
Before those taxes get filed, make sure you maximize your tax savings. Even though 2019 is over, you may still be able to increase your deduction before the tax deadline. Qualifying contributions to an IRA account can be made right up to the April 15th deadline. For most, the limit for qualifying contributions is $6000, going up to $7000 if you’re over 50.
Work with a tax professional
One of the best ways to take the sting out of tax time is to work with a pro. A tax expert will remove the guesswork so you know it’s getting done right the first time. They’ll also help you get the most out of your taxes, by finding every possible deduction, even those you’ve never heard of before.
Follow these simple steps and you’ll be on your way to a painless tax season. Your tax preparer will love you for delivering a complete file of needed documents. And you’ll love the outcome when you have the paperwork to support every deduction you deserve.
If you have questions about How to Prep for a Painless Tax Season , contact me for a consultation. I’m an Illinois licensed, Registered Certified Public Accountant with over 25 years of experience. I’m dedicated to providing outstanding tax and accounting services to individuals and small businesses in the Chicago area.
Disclaimer: Any accounting, business or tax advice contained in this article, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. If desired, I would be pleased to perform the requisite research and provide you with a detailed written analysis. Such an engagement may be the subject of a separate engagement letter that would define the scope and limits of the desired consultation services.