If you’re like a lot of people, you just struggled through your federal income tax return, barely submitting it before the deadline, and enduring a lot of stress and anxiety along the way. Or maybe you even had to file for an extension, and you’re still working on gathering everything you need! Either way, filing your tax return is no picnic at the park.
But what if the process could be a lot easier? Take these steps throughout the year, and next spring you’ll be in much better shape to file your taxes quickly and easily (or, at least, quicker and more easily than before).
Create a system for receipts. If you plan to itemize charitable donations, business expenses, energy-friendly upgrades, and so on, create a filing system for your receipts. Keep everything in one place, and you won’t have to hunt for proof of your purchases later.
Use one card for tax-deductible purchases. Go one step further and just use a single debit or credit card for the above expenses. Now your account statements, which can be accessed online, provide all the proof you need. Next April, all you have to do is log into your online bank account to access a record of expenses.
Perform a monthly checkup. If your income tends to vary from one month to the next, set aside a few minutes at the end of the month to review your tax status. Estimate your annual income based off of that month’s income only, and pay the appropriate income tax. Otherwise you could end up owing a chunk of change next spring.
While you’re at it, take a look at valuable tax deductions, too. If you stash money in a tax-advantaged retirement account or college savings plan, use your monthly planning period to take a look at your budget. Free up any extra cash that you can, so that you can max out on contributions to those tax-advantaged accounts. Reaping the maximum deduction can help lower your overall tax burden.
Schedule an appointment with a financial planner. Don’t wait until you’re worried about your taxes, retirement plan, or some other aspect of your financial life. Schedule an appointment with us now, and we can help you identify important savings or tax-friendly opportunities throughout the year.