To avoid last-minute mistakes, plan ahead for the coming tax season 2019.
You may think that tax season is still far away, but it will be here before you even realize it (like every year). During this stressful time of the year, CPAs, accountants and business owners struggle to file their tax returns on time accurately. Collecting documents, filling forms, sending money to Uncle Sam – all this adds up to a process which they don’t enjoy much.
However, it doesn’t have to be this way. The more you prepare now, the fewer headaches you will accumulate in the coming tax season. The guide below would help you file taxes – the right way.
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Find a good tax preparer
If you need outside help, you can ask for referrals from your friends or colleagues. Before handing over your money to a tax professional, take a close look at their qualifications. Be sure to ask the Preparer Tax Identification Number (PTIN) of the tax advisor which shows that the person is authorized to prepare taxes according to new IRS regulations.
Gather documents needed to file taxes
Without the right form, you can’t file your taxes correctly. The type of forms you need would depend on the nature of a firm you are running. Identifying the proper tax documents required should be the first step to prepare for your taxes.
It’s quite common for forms to trickle in gradually, so designate a spot for documents which would help you keep a track of things you may require. Filing taxes is less painful and easier when things are organized and in place.
Below are some of the common documents you’ll need (Note: This is not a complete list, the IRS provides information on different types of information returns one may require):
- Form W-2: This is a form which your employer provides you. It shows the amount of money made by you in the last year and the amount paid by you toward taxes, Medicare or Social Security.
- 1098: If you tool student loan and made interest payments, your lender would send you this form showing the amount of interest paid last year.
- 1099: This form is for freelancers or people working a side gig. The form states the amount made in the previous year. However, no amount was given for taxes.
- 1095-A: Government will send you this form in case you got your health insurance through the government. It shows that you had suitable coverage for the period.
- 1099-INT: Your bank will send you this form in case you earned interest from savings or dividends during the last year.
- Form W-2Gs: This form is required for certain gambling winnings.
- Expenses and Receipts: If you have switched to advance your career, got a new job, or attended conferences, you have the option to deduct these costs. Make sure you have all the receipts when doing taxes.
- Other income records: If you have worked as a freelance and made less than $600, you will not get form 1099, but you still need to report your income. Keep a separate record of earnings made during the year to simplify the tax process.
- Bank account routing number: To get tax refunds quickly, you can sign up for direct deposit when filing a return. For this, you need your bank account number and routing number.
File early and electronically
Tax season is not as much fun as football season, but you might still have to pay more attention to it. To minimize chances of fraud, last-minute anxiety, and get refund earlier, it is recommended to file an electronic return as soon as you have all the needed information and documents.
Meanwhile, you can also use this tax season to make things easier for the next one. Review all the changes in the current year and ensure that your organizational system is in place for the coming years.