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Prepare Now For Tax Season

Prepare Now For Tax Season

Tax season can be intimidating, especially for business owners and those managing large numbers of properties. However, there are easy things you can do now to prepare, making the whole season easier.

Develop a filing system that works for you

Everything is easier if you know where to look for all of the items that you need. Your system can be either a paper filing system on your desk or a digital filing system on your computer. Use whatever system works the best for you. Make specific files for specific tax categories, such as papers related to healthcare, dependents, or automobile purchases, whether the files are paper or electronic files. You can even create a folder in your e-mail for e-mail receipts. The important thing is to immediately file receipts and other papers that you will need when you receive them, so that you have them for immediate use when tax season begins.

Maintain an ongoing list of your income sources if you have multiple sources of income

Make a regular habit of always adding income to an organized spreadsheet watching your totals as they automatically add up. Include categories for the sources of your various income types. If you do this throughout the year, tax season will be easy because you will already know your income for that year.

Strategize for last-minute contributions

Technically, you have until December 31 to make strategic contributions that will lower your tax burden. For example, any contributions you make to an IRA up until December 31 will be taken away from your taxable income. This is a great way to not only help your tax burden, but put extra money away for retirement. The same goes for charitable contributions. Significant contributions to a reputable organization with 501(c)(3) status can also be deducted from your final taxable income. Even if you do these things at the last-minute, they will still be counted for the calendar year.

Hire the right professionals for the job

Don’t wait until the last minute to hire the right tax professionals to assist with your taxes. Hiring a professional can significantly help you save money, but not unless the organization is qualified and has a good reputation. If you were satisfied with the professional you used in the previous year, get in touch to make sure they will still be available. If you are hiring someone new, do your research to ensure they have the correct credentials.