4 Preparations to Make for an Upcoming Tax Season

Taxes are complicated, painstaking, and seemingly omnipresent. Tax season can seem to creep up on you and catch you completely unprepared despite the many w2 or 1099 software options available today. Fortunately, there are ways you can prepare yourself far in advance so you can face tax season with confidence. Regardless of whether you’re a business owner, contract worker, or average employee, there are a few actions you should take to ready yourself for tax season.

Always Organize

Keeping all tax-related documents organized, filed, and stored properly is the most important thing you can do for yourself during the year. If you own a business, keep all tax-deductible expenditures filed alongside all other tax documents. The same goes for people who are contractors. For an employee, it typically is a little easier to keep your tax documents organized, as you likely have only one or two W-2s to keep track of. However, you should still devise a neat, effective storage system until tax season. Be sure you place the file box somewhere that is both easy to remember and access when tax season rolls around.

Be Aware of Extensions

Even the most prepared person can find himself hitting a road block during tax season. If someone forgets to send a critical document to you or you accidentally ruin your W-2 and need another, you may be scrambling to meet the filing deadline. There are many things that can go wrong when tax season strikes. An extension will allow you to handle the problem without being penalized for late filing. You always should know how to file an extension and how the process works in case of an emergency.

Consider Hiring a Specialist

While a tax specialist may not be necessary for a basic employee, people who do contract work or who own businesses have much more complicated taxes and deductions. A tax specialist may cost extra, but the returns and savings she finds for you more than make up for what you paid. Tax specialists also can prevent you from making an illegal mistake due to genuine confusion. If you have more complicated taxes than the average person, hiring a tax specialist definitely is worth your time and money.

Set Aside More Than Necessary

Employees that have W-2s don’t need to worry about setting aside money to pay quarterly taxes. Their tax money automatically is deducted from their paycheck. However, people who are self-employed or who do contract work should file quarterly tax payments. If you miscalculate and find yourself short on tax money, you could be in serious trouble with the IRS, or you could owe quite a hefty sum in April for the previous tax year. It always is good to have a cushion by assuming you will have to pay more than you do. Finding yourself short during tax season can be a very costly mistake.

Doing taxes is a skill few adults enter the workforce understanding, especially if they do not have the benefit of a business or tax class in high school. However, you do not have go through a stressful tax season if you prepare. Depending on your status, there are a few different things you can do to smooth the path in and out of tax season. The most important step is to stay organized and hire a tax specialist if you don’t think you can handle doing your taxes without help.

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