Tax time: it’s one of the most stressful periods of the year. There’s a lot of information to keep track of when filing your taxes, especially if you’ve had major life events like changing jobs or having a child.
Between the various documents you need to file and the occasional updates to how taxes are calculated, it can be a tricky process. Even the savviest financial experts need some tax help from time to time.
If you run your own business, taxes become even more complicated!
Luckily, there are some steps you can take to make filing your taxes easier. Read on to learn seven tips for filing your taxes that will make the process smoother.
1. Keep Records Throughout the Year
The first step to simplifying your tax filing starts long before tax season. If you want to make filing your taxes easier, you need to keep detailed records of your income and expenditures throughout the year.
Accurate records mean accurate filing, which is important for several reasons. The most important is that an inaccurate tax filing could get you into serious trouble if it looks like you’re not paying your share.
Improperly filed taxes can also result in having to file an amended tax return, essentially starting the process all over again!
Inaccurate reporting can also cost you money. You might miss out on major tax deductions, leaving you with a smaller refund than you deserve.
Detailed records will also help you deal with an audit, should you have to deal with one.
2. Don’t Mix Business and Personal Expenses
This tax filing tip is particularly important if you run your own business: keep your personal and business expenses separated. Allowing them to mix looks very suspicious when filing your taxes.
Even if you don’t own your own business, this is an important tip to keep in mind. Many people need to pick things up for work sometimes, such as teachers buying their own classroom supplies.
Always set aside your work expenses so you know how to classify them when tax season rolls around.
You might also be surprised at what counts as a work expense, especially if you work from home! That’s why it pays to get help filing your taxes: a professional can help you figure these things out.
3. Understand Your Filing Status
Before you can begin working on your taxes, you need to understand your filing status. There are several factors that inform your filing status, such as age, marital status, and more.
First of all, are you married? If so, are you and your spouse filing jointly or separately? Do you have dependents, such as children? Are you considered the head of your household?
If you’re widowed but have dependents, you may qualify for a different filing status.
Your age is also a factor, though it’s not relevant unless you’re 65 or older. If you’re married and filing jointly, your spouse’s age is also relevant.
You also need to know which tax bracket you’re in, which is determined by your annual income. Your tax bracket determines what percentage of your income is owed.
4. Have Your Information Ready
When you sit down to file your taxes, you should already have all of your relevant information on hand. Get all of your documents together and organized so that you can refer to them throughout the process.
You’re going to need your social security number, as well as the social security number of your spouse (if you’re filing jointly) and any dependents you have.
You’ll also need your W-2 from all employers you had during the tax year, as well as any 1099 forms for income received during the tax year.
You should also gather anything that can help you with deductions, such as receipts for charitable donations, business or education expenses, contributions to retirement accounts, and so forth.
5. Hire the Right Help
This is one of the key tax filing tips that people often ignore: hire tax relief help that you can rely on. If you’re dealing with a complex situation like back taxes or wage garnishment, don’t try to figure it all out yourself.
Tax consultants can help you find the right solution to your issues, whether you’re having trouble with personal or business taxes. They can cut through the confusion that surrounds more nuanced tax situations.
Hiring professionals is helpful regardless of your tax filing process; many people opt to use tax software instead of seeking professional help. Those people often miss out on deductions that could get them a bigger refund.
6. File Early
You have several months to file your taxes each year, which makes it tempting to put the filing process off as long as possible. Procrastinating doesn’t do you any favors, though–it puts you under more pressure.
If you start your taxes early, you have plenty of time to gather everything you need and give a thorough examination of your finances. You have time to double-check your work and ensure there are no errors before submitting it.
If you leave your taxes until the last minute, you might realize too late that you’ve misplaced a W-2 or that an important 1099 got lost in the mail. Then you’ll have to file for an extension, meaning more paperwork and more stress.
7. Keep Your Tax Records for Next Year
Once you’ve finished and submitted your taxes, make sure to keep a copy of them in your records. It will be helpful to look at them next year as you start the process again.
You’ll also need to review them if there’s an error of some kind that forces you to file an amended return. By reviewing the copy you submitted, you can determine what went wrong and how to fix it.
Get the Tax Help You Need
Filing your taxes might seem confusing, but with the proper tax help, you can get things squared away in no time. Keeping accurate records and understanding your filing status will keep you prepared for next year.
Taking care of your taxes is an important financial duty, but it’s only one aspect of handling your income. Visit our finance blog for tips on investments, budgeting, and more!