Tax forms: Prepare for tax season in five simple steps
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Like many Americans, I loathe tax season. Collecting documents, filling out forms, sending money to Uncle Sam 鈥 it adds up to a process that I frankly don鈥檛 really enjoy.
Still, it has to be done each year and the time to do so is nearly upon us. Here are a few steps to take well before actually filing our taxes that helps make the filing process that much easier. We do (or have done) each of these things and they鈥檝e all helped greatly.
Securely save each and every tax form that arrives in your mailbox.聽Designate a specific place to put all of those W-2s and 1099s and statements as they arrive and, when they show up, put those forms in that place.
For years, we鈥檝e simply put our tax documents in a single manila envelope and put it in a secure place with our other important documents. When a new tax document comes in, I just simply stick it in that folder.
Figure out how you鈥檙e going to prepare your taxes.聽Are you going to use software and do it yourself? Are you going to do it manually? Are you going to use a preparer?
If you choose to do it yourself, it鈥檚 probably time to start gathering materials. Our family uses TurboTax for our taxes, so we go ahead and download it early so that we have it ready to go when we鈥檙e ready to file.
Contribute to your Roth or Traditional IRA.聽If you鈥檝e been thinking about opening or contributing to a Traditional or a Roth IRA, you can contribute and have those contributions count for the previous year up until April 15 of the following year.
So, if you鈥檙e still on the fence, your window of opportunity has not yet closed. You can make those contributions as long as you do it before you file.
Think (and talk) about changes in your filing status.聽Did you get married (or divorced) in the past year? Did you have a child? Did one of your child spread their wings and set out on their own this year? These things will all affect your taxes.
Not only that, many of these changes affect what happens on the tax forms of others, so it鈥檚 worthwhile to talk to the people involved and make sure that you鈥檙e not claiming dependents that you shouldn鈥檛 be. In the case of divorce, there鈥檚 some chance that tax season will alert you to additional financial steps that you need to take, such as changing names on accounts.
Be ready for an extension if necessary.聽Sometimes, taxes end up being more complex than you expect. Two years ago, I had issues receiving tax documents from a company that had paid me and the issue lagged past April 15.
Thankfully, if you鈥檙e facing these kinds of issues, it鈥檚 very easy to receive a six month extension on your filing. Just fill out聽聽and submit it. You have to make a payment equal to your estimate of what you will owe, but this allows you to not incur any penalties while you鈥檙e tracking down final details.
Tax season is enough of a headache. Little steps like these can really help to take the edge off.
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