Now that Tax Day has come and gone, it’s time to start preparing for next year. For most of us, tax season often comes around quickly and can be difficult to prepare for in a short period of time for those who aren’t well organized. Many struggle to get the required forms in quickly or may forget certain write-offs that can be included. To avoid the frustrations of filing your taxes and enjoy a smoother stress-free process, there are a few steps to take that will prove to benefit you next year. As long as you start ahead of time, you’ll be prepared for the next Tax Day!
Create a System
Whether you prefer to rely on computer software or smartphone apps to stay organized with your taxes, you’ll need to create a system that allows you to manage all of the details with ease. Make it a point to learn a new accounting system early on in the tax year or start a new file for receipts to keep for your write-offs. Staying updated and having a system in place will make it easier to avoid scrambling at the last minute.
You can also scan all of the important documents or receipts onto a computer or hard drive to avoid losing the paperwork when it’s time to file or in the case that you’re audited.
Review the Withholdings
Research how much your employer is withholding to ensure that it’s the correct amount and to avoid paying too much throughout the year. This will also allow you to estimate how much you may be paying or getting back in the new year.
If you own a small business of your own, work with an accountant to prepare ahead of time how much you will owe for the new year. Having an estimate can help you plan accordingly.
Pay Taxes Quarterly
Instead of waiting for April to arrive to pay your taxes, opt for paying your taxes quarterly to avoid being overwhelmed. This will make it easy to stay updated throughout the year and prevent common mistakes that can be made. Use the worksheet in Form 1040-ES and mail your estimated tax payments or pay it by using the Electronic Federal Tax Payment System.
Paying taxes quarterly is ideal if part of your income is not withheld and sent to the IRS by an employer, specifically for those who are self-employed. Paying quarterly can also make budgeting easier with smaller payments that are made instead of a larger chunk of money.
Manage Your Donations
You can write off any donations that you give to a qualified charity by obtaining a note from the group that documents a donation of anything over $250. Proper documentation is required to provide proof to the IRS of the donation, whether you traveled to volunteer or gave away old belongings. If you’re driving to volunteer, you can deduct 14 cents per mile that you traveled. It’s important to manage your donations consistently to make it easier to calculate what you can have written off when filing in the coming year. It’ll feel even better to give back!
Here’s to hoping that this coming tax year is a little easier for you with these tips. Planning and preparing ahead of time is sure to make next year’s Tax Day less stressful!