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[UPDATE: This article was updated January 24, 2018]
Tax season is fast approaching, with everyone’s employer due to send their W-2s by the end of January. Even though we’re still in the middle of the holiday season, it’s never too early to start getting ready to file your taxes.
It’s helpful to be mindful of your taxes throughout the year, which will help you stay organized and avoid scrambling every year when tax season rolls around. Here are 15 ways to get a jump start on your taxes now, or anytime of year:
Rather than having 20 different folders for 20 different accounts, try a three-folder system to organize your tax documents: one for income related documents, one for expenses and deductions, and one for investments.
Since everyone’s financial situation is different, there are many different tax forms that suit these different situations. If you’re unsure which tax form to use, visit the IRS’s website or consult a professional.
If you’re someone who itemizes deductions instead of standard ones, you you already know how important it is to store all of your receipts together in the same place. If you lose any, it could cost you. Sort and store them throughout the year to avoid a last-minute scramble.
Whether you have a home office or just a desk in your bedroom, make sure you have one spot in your home where you store all financial information. W-2s, last year’s tax returns, receipts, and any other paperwork you will need to file your taxes.
Since we often have to reference the previous year’s return when preparing the current one, it’s a good idea to make sure you store them all in the same place, whether it’s a desk drawer, filing cabinet, or even a shoebox under your bed.
Rather than having 20 different folders for 20 different accounts, try a three-folder system to organize your tax documents: one for income related documents, one for expenses and deductions, and one for investments.
It might seem counterintuitive to suggest an extension in a list about being prepared. However, if you file an extension and wait until later in the year, accountants will be less busy and you’ll end up filing in less time. This is also helpful for anyone experiencing any kind of stressful life event, such as those who were involved in any of the hurricanes in Texas, Florida, or Puerto Rico this year.
If you’ve experienced any life changes from the previous year (adding or losing any family members), ask your employer if you can review your W-4. The IRS actually recommends doing this every year.
Are you going to prepare your taxes yourself, or are you going to hire an accountant or tax-preparation service? If you plan to do them on your own, make sure you educate yourself about the deductions you’re entitled to. If you plan to hire someone, check around and make sure they’re reputable.
Unless you fill out the 1040EZ form and mail it in yourself, it’s going to cost you money to file your taxes. Some people are happy to pay this to ensure that they’ve done it correctly. You may also still owe taxes in addition to what you’ve already paid in. If you’ve saved for it, it shouldn’t be a problem.
If you’ve had any major life events this year (bought a house, gotten married, had a child, etc.) you may be entitled to some sizable deductions. It’s a good idea to research all possible deductions to avoid overpaying your taxes.
Depending on what type of work you do and your financial situation, you may need to do itemized deductions, where you get credits for everything you’ve spent, rather than taking the standard deduction as dictated by your filing status. If you need to know more, consult a professional.
Charitable donations are tax deductible, so if you have any monthly or one-off donations, make sure to keep track so that you can deduct these expenses from your taxes.
If you don’t have a scanner, you can use your phone to take photos of receipts and any documents you’d need to file your taxes. If you have photos of all relevant receipts, you may not need to keep them. (Check with your CPA to be sure.) There are also apps that can help you stay organized throughout the year and even help you actually file.
If you have a CPA, or if you’ve made some large investments in the previous year, meeting with a professional in preparation for tax season could help you make sure you have everything in order.
Anytime you prepare for a financial event, such as making a large purchase, taking out a loan, and yes, filing your taxes, you should check your credit. Then you’ll know where you stand or if you should begin work on credit repair.
Write out a schedule for yourself from now until you file, determining what steps you will take in that time period to prepare. Maybe you’ll decide to spend one weekend sorting through documents, designate a day to meet with your accountant, or set aside time for filling out paperwork.
If you’re concerned about your credit, you can check your three credit reports for free once a year. To track your credit more regularly, Credit.com’s free Credit Report Card is an easy-to-understand breakdown of your credit report information that uses letter grades—plus you get two free credit scores updated every 14 days.
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