We’ve all heard the clichés: “Nothing is certain except death and taxes” and “Don’t mess with the IRS.” While they’re meant to be humorous, they can make tax season feel intimidating, especially if you’re not a tax professional. However, tax season doesn’t have to be stressful or confusing. With the right information and a little organization, you can approach filing your taxes with confidence. While this article can’t provide personalized tax advice, it can give you a better idea of how to prepare for tax season to make the actual paperwork and filing as pain-free as possible.
Document, Document, Document!
Possibly the biggest tip we give you is to gather and keep track of your necessary documents as early as possible! This can include:
- W-2’s received from traditional employment,
- 1040’s or other forms from self-employment work, such as small business operations or contracting if applicable,
- 1099-R forms for any qualified distributions from retirement plans, annuities, etc. if applicable,
- any receipts needed for tax deductions, and,
- any other form you know in advance you’ll need (Some common misc. forms that may be needed include: a profit-and-loss form, a certificate of marriage or divorce, student loan statements, etc).
In addition, as you go through your forms you can double-check that all names, Social Security numbers, and addresses are correct and up to date to prevent processing issues.
Remember Important Dates!
The filing date for your taxes is April 15th. However, that may not be the only date you need to remember; If you file an extension, you should mark down the date your filing has been extended to. In addition, even if you get an extension for filing, that may not affect any payments due April 15th. Make sure to be clear on what’s included in the extension and what isn’t, and be careful not to miss any payment dates so that you don’t end up facing penalties or interest!
Don’t ‘Withhold’ Attention!
If you made any contributions to an IRA (Individual Retirement Account) or HSA (Health Savings Account), those contributions may reduce taxable income and boost the amount of money you get to keep.
Pre-tax season can also be a good time to review your pay stubs to see how much taxes are being withheld each pay period. If too little tax is being taken out, you’ll want to know in advance since you’ll have to pay the difference out of pocket. However, some people purposefully decide to withhold the maximum amount of taxes so that they receive a larger tax refund at the end of the year. This can be a good option for those who struggle to save money throughout the year, since it’s automatic and out-of-sight, out-of-mind.
If you find yourself unhappy with your tax withholding in either direction, now is a great time to review and readjust your tax strategy for the next year. It gives you the most time to watch the changes take effect and grow the results you want.
All things considered, tax season doesn’t have to be overwhelming; Even taking small steps to be prepared can make a big impact on how your filing goes. If you have a complicated tax situation or just need a little extra help understanding the paperwork, meeting with a CPA (Certified Professional Accountant) can help ensure you’re filing complete and accurate taxes.
A CERTIFIED FINANCIAL PLANNER ® can show you how today’s tax decisions fit into your bigger financial picture. They can help you identify opportunities to reduce your tax burden, strengthen your savings, and align your strategies with your long-term goals.
If you’re ready to review your accounts, or to explore what a personalized financial plan could look like, reach out to AZTEC Financial Group at our office phone number: 603-343-4515. Our office assistant (Me!) will be happy to get you on Eric’s schedule.