Whether you’re a seasoned tax filer or a newbie looking to avoid the dreaded audit, preparing for tax season doesn’t have to be a stressful situation. Follow these five essential steps, and you can tackle tax season with the utmost confidence!
Gather Your Documents
Start by having all your financial documents close at hand. Search for W-2s, 1099s, and any relevant receipts. Hopefully, these are kept safe in a box or folder; anything that helps you stay organized. If you aren’t sure what you’re looking for, create a checklist for all the documents you need. This could include:
- Income statements
- Mortgage interest statements
- Receipts for deductible expenses
- Charitable donations
This isn’t an exhaustive list, but it’s a good place to start! You could even consider going digital and scanning your documents to store in a cloud service. This isn’t necessary to properly file your taxes, but could be extremely useful if you ever need to reference these again and are prone to losing these important documents.
Understand Your Deductions
Before you start, familiarize yourself with the deductions you may qualify for. Common deductions include mortgage interest, student loan interest, medical expenses, and charitable contributions. If you’re self-employed, you may also be eligible for deductions related to your home office, equipment, and travel expenses. Just remember to only deduct things that make sense for your situation; if it’s not a business expense, don’t pretend it is!
You may also want to consider whether you should take the standard deduction or itemize your deductions. The standard deduction is easier, but if your itemized deductions exceed it, you could save even more.
Choose the Right Filing Method
Time to pick the filing method! You have a few options: go with tax software, hire a professional, or use a combination of both. If you’re comfortable with numbers and have a straightforward tax situation, tax software like TurboTax or H&R Block can be a great option.
They guide you through the process and help you find deductions you might have missed. However, if your tax situation is more complex, it’s probably worth investing in some tax help.
Double-Check Everything
Once you’ve completed your tax return, it’s time for the most crucial step: double-checking your work. This is the part where you channel your inner detective and scrutinize every line, number, and deduction. Look for common mistakes like incorrect Social Security numbers, misspelled names, and math errors.
If you’re using tax software, it will usually catch most of these for you, but it’s always a good idea to review everything manually. This is much less of an issue if you’re working with a professional, which is an excellent option if you have unique tax situations or just want to optimize your return.
File Early
Finally, once you’ve double-checked everything and feel confident in your return, it’s time to file! Don’t wait until the last minute—procrastination is never good with finances, but it’s especially problematic during tax season. Filing early can prevent the stress that deadlines create during tax season and give you peace of mind. But most importantly, if you’re getting a refund, you’ll get it sooner!
