7 Essential Tax Season Preparation Tips

7 Essential Tax Season Preparation Tips
Tax season is upon us and it’s time to get ready for the annual ritual. It can be stressful time if you’ve got a lot of financial documents to pore over and analyze. However, you can reduce some of that stress with just a little bit of preparation.

Here are 7 essential tax season preparation tips.

1. Get Organized

The dreaded “due date” for taxes is April 15. Long before that date arrives, you should get your financial documents together and have them organized. That way, when it comes time to fill out your tax forms, everything you need will be at your fingertips.

2. Review Your W-4 Withholding

If you’re looking forward to receiving a big, fat tax refund from the IRS shortly after you file your taxes, then maybe it’s time to review your W-4 withholding.

Why? Because if you’re getting a refund, then you’re essentially loaning the government money interest-free for a year. That’s no way to manage your money.

Talk to your employer about increasing your withholding allowances so that you aren’t giving money to the federal government without getting anything in return.

3. Sell off Losers

At the very end of the tax year, you can sell off some stocks that are losers and take the capital loss. That loss might be tax deductible, giving you a break in the amount of taxes that you’ll owe for the year.

4. Find Your Charitable Contribution Receipts for the Year

Remember, charitable contributions are also tax deductions. It’s possible that you made some contributions throughout the year that you’ve since forgotten about. Go through your documents and think about the donations you’ve made so that you can be certain that you get the full benefit of the tax code.

5. Think About Changes in Your Filing Status

Did you get married during the past year? Did you or your spouse give birth to a child? If so, then you have a change in filing status for the coming tax year.

Keep in mind that some changes in filing status will reduce your tax bite. Unfortunately, others might increase it. It’s important to be truthful here even if it means paying more taxes.

6. Prepare for an Extension

It may be that you’ve received income from multiple sources. Sadly, not all of those sources will submit tax documents to you on time. Be ready to file for an extension with Form 4868 if you think that you can’t meet the April 15 deadline.

7. Locate Your Form 1040 to File Online

Filing online is an easy and convenient way to pay your taxes without the hassle of mailing a bunch of papers to the IRS. If you want to take advantage of online filing, you’ll likely need your Form 1040 from the previous tax year. You need to provide your adjusted gross income from that document before you’ll be allowed to file online.

Tax season is a burden to many people. However, with the right preparation, it doesn’t have to be so difficult.

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