It’s the beginning of a new year. Resolutions and goals for this year are in full gear. If successfully managing your taxes was on your list, now is the perfect time to learn some useful tips. Because tax season may be stressful for you or your business, understanding your finances, having a plan, and knowing what to expect this year will greatly benefit you. Like many other endeavors in life, preparation is the key to success.
Tips for Tax Preparation
You may wonder why you should start preparation now since tax season isn’t until April. While this is true, it will take time to gather your information such as 1099’s and W-2s and other statements or receipts to use for tax deductions. If you wait until tax season then you may miss some important information that you need. Whether you or an accountant is helping you prepare, learning these tips will ensure that you will gather all the correct documents to file an accurate tax return on time.
Gather Your Bank Statements
If you have your bank statements available then you will be able to determine if a large sum of money deposited into your account was a gift rather than income. This is important to distinguish since it shouldn’t be taxed.
Gather your 1099s and W-2s
When you receive these documents, generally at the end of January, read over them and ensure that they are correct. For your W-2 you will want to check that the withholding amount is correct. You also want to check that the amount you earned is the correct gross amount. This way if there are any errors you can contact your employer’s human resources to correct the issue in time. For your 1099, you want to look over and make sure that it matches your records.
Collect Work, Charitable Donations Receipts
If you wish to receive a tax reduction on work related items that you were not reimbursed for, then you will need to show proof with the receipts. This is especially significant if you are self-employed since the business related items you purchase could be deductible. Charitable donations can also qualify for deductions.
Provide Social Security for New Family Members
If you have a child or adopt and give their social security number, you can receive a $1,000 tax credit for a child under the age of 17. This is given to families who make under a certain income.
Helpful Tax Preparation Tips for 2019
- Make deposits to your retirement fund
- Find the right tax forms
- Organize your records tax returns
- Estimate your tax deductions
- Include home office in your tax deductions
- Give the IDs of dependent taxpayer on tax return
- Set some money aside
- Find out for any new credits or deductions you qualify for
- File on time
- Seek professional advice if needed
Because taxes may be overwhelming or confusing, speaking with a professional will help you determine the best solution. Learning these tips and being proactive is an advantage. By preparing in time, you can ensure that all your finances and documents are in order for an efficient and accurate tax return.