April 15 may seem far away, but the end of the calendar year is actually the perfect time to start preparing for tax season. Taking a little time now will make filing your taxes a much smoother process.
Here’s what you should be doing now to get ready:
1. Know What Information You Will Need
The first step in getting organized is a checklist of the specific documents and information you need. At minimum, you will need a copy of last year’s tax return, the Social Security or Tax ID number and dates of birth of every member of your household, income records, receipts for deductible expenses, and records for any taxes you have paid throughout the year.
Since there are a number of variations much of this information, it can be helpful to refer to a specific checklist, like this one from TurboTax. Print out this checklist and highlight which documents apply to you. Then you can check off each highlighted item as you gather it.
2. Begin Sorting Your Receipts
If you’re like most filers, you probably throw all of your tax-related receipts—including work-related purchases, charitable donations, co-pays, mortgage information, and interest statements—into a single folder or shoebox.
Taking out your papers now and sorting them into neat categories will help you have less to do for tax season and will alert you early if you are missing any information. That will give you plenty of time to get a copy of anything you don’t have.
If you’re not certain of what kinds of information you’ll need in order to file, IRS Publication 552 Recordkeeping for Individuals, offers guidance and advice.
3. Gather Your Paystubs
While you will receive W-2 or 1099 forms from your employer(s), it’s a good idea gather up your income statements or paystubs now. That way you can double check that the information in your W-2 or 1099 forms are correct as soon as they arrive in late January, rather than wait until you’re ready to file. If there is an error, it’s better to catch it with plenty of time to get it fixed.
4. Decide How You Will Prepare Your Taxes
Whether you handle your taxes all by yourself or you have a team of CPAs to prepare your return for you, now is the time to think about how and when you will prepare your taxes. If you consult a professional, call now for an appointment in February, saving you and your CPA some stress. If you are going it alone, consider using a tax prep software like TurboTax. This user-friendly program walks you through your tax filing step-by-step and follows up with a CPA reviewing your return to so you can file with confidence.
Start Now to Stress Less
Tax season doesn’t have to be overwhelming. Start early and break the big chore down into bite-size pieces—and you’ll find tax season is nothing to worry about.
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