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The weather will start to get warmer soon, and that can only mean one thing: Tax Day is fast approaching! Are you one those people who waits to the very last minute to file your taxes? If so, you're not alone. About 20% of Americans wait until after April 8 to do all their tax preparation; in 2015, an additional six million people completed their tax return at least a month after the April filing deadline, too. It doesn't have to be that way.
You don't have to wait to the last minute; you can file your taxes on time this year in an organized manner. Doing so may help to save you some money you'd otherwise pay out in taxes, or you may even get a refund. However, you need to get moving right now. Here are five super simple tips you can use to get ready for tax season.
1. Get organized
Is your tax paperwork scattered all over the place? No worries; now is the time to get all your tax information in order. Gather up all the paperwork that you'll need when filing your taxes – W2s, 1099s, expense receipts, charity donation records, retirement account info – and organize it in a way that makes it easy for you (or that tax professional we're going to recommend you find in Step 2) to review. Take note of any tax documents you'll need that are missing; you still have enough time to request or generate replacements for all of them. Getting organized early will pay off later on when it comes time to file.
2. Get help
When it comes to tax season, you should never go it alone. Seek out the help and advice of a trusted tax professional. Tax preparation is complicated, and the rules often change considerably from year to year. A certified public accountant or other tax expert can assist you in navigating the dynamic tax codes, and help you make the best decisions when it comes to your tax return. Additionally, if the IRS ultimately rejects your return, or has problems with it, your tax professional can help you address those issues. Over time, if you develop a good relationship with your tax preparation professionals, they may even offer advice to optimize your tax position well before April rolls around each year.
3. Plan to itemize
Unless your income and activities are such that taking the standard deduction is your only option, you should always plan to itemize on your tax return. Doing so can help to minimize your taxable income and ultimately save you money. You can itemize many financial and personal activities; these range from mortgage interest and property taxes on your home to your retirement contributions and charitable donations. Your tax professional can look at your personal situation and determine the best opportunities for you to itemize on this year's tax return. Your stellar recordkeeping from Step 1 will make that review much easier for everyone involved, too!
4. Spring cleaning
Spring is a great time to de-clutter your house. Get rid of things that you never use and don't want any more. Consider using that urge to spruce up your home to find some great tax-saving opportunities as well. Instead of just tossing unwanted items in the trash, you can donate them. Doing so will help people in need; it also can enable you to collect a charitable donation slip, which you can use as a tax deduction if you itemize your tax return. While most people think of clothing or furniture when it comes to donations, there are other things you can provide to non-profits that are tax deductible as well. Benevolent organizations such as the Salvation Army readily accept electronic goods, for example; you can even donate your car to charity.
5. Max out your retirement contributions
Retirement saving accounts help prepare you for a future after work; however, they can also help you right now when it comes to filing your tax return. Your annual retirement savings are one of your best tax deductions, so make sure you max out your contributions this year. If your employer matches contributions in your 401(k) account, that's even better! If you're self-employed, or your employer doesn't offer a retirement plan, make sure you establish a retirement savings account of your own; even a traditional IRA will allow you to save several thousand dollars each year in a tax-deferred account.
No one likes to prepare for tax season, but that doesn't mean tax preparation has to be a horror show. Follow these simple tips and keep your stress levels low and you'll be ready well before April 17 rolls around; you may even save a little extra money this year, too.