How to Get Ready to Prepare Your Taxes

by Miranda Marquit · 0 comments

It’s time to think about getting ready to prepare your taxes. Filing as early as possible makes sense for a couple of reasons:

  1. The earlier you file, the sooner you’ll get your refund
  2. Filing early means you reduce the chances of being a victim of tax refund fraud

Being organized is key to getting your taxes filed early on. Here’s how you can be ready to go as quickly as possible:

Know What Paperwork to Expect

Various organizations are supposed to send out paperwork by the end of January, meaning that you should have what you need by the first or second week in February. Know what you’re expecting. Some common forms to expect include your W-2 from your employer, a statement of interest from your mortgage lender, and student loan interest statements.

Think about what other paperwork you might receive, depending on your situation. This includes information about side income or dividend and interest income and statements related to your retirement account.

Don’t forget about paperwork you might need to request. If you want to apply for a dependent care credit, you will need tax ID information from your care provider. When you have a business, it usually makes sense to prepare a Profit & Loss document. Make a list of paperwork involved and then set up a folder to keep it all. Check off each item as you receive it.

Begin Organizing Receipts

There are a number of deductions and credits that require receipts. If you donate to charity, you need a receipt that shares the appropriate information. For business owners, keeping receipts of expenses is also important. Now is the time to round up your receipts and get organized. Sort out receipts by category, making sure to keep business, medical, donations, and other categories separate from each other. This will make it easier to verify your costs and claims as you prepare your taxes (or if you bring your taxes to a professional).

Review the Year for Additional Information

Don’t forget to review your year for things you might have missed. Whether it’s mileage for your car or whether it’s the fact that you’re eligible for a health care tax credit, you might have missed something. If you use financial software to help you track your spending, generate a report that can help you identify spending categories. This is a good way to review where your money went, and find items that you might have missed for tax purposes.

This is also a good time to see if you can make last-minute moves for a deduction. You can make a last-year contribution to a Traditional IRA or Health Savings Account even if it’s already past December 31. It might make sense to do so.

Make Your Appointment

If you prepare your own taxes, now is the time to buy your tax prep software, or upgrade your current suite to the new year. If you have someone else prepare your taxes, call to make an appointment. Make your appointment for the beginning to middle of February, and you’ll be ahead of the game.

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