Are you ready?
As you may know, tax season starts in February and it’s great to be prepared sooner rather than later. Consider contacting tax professionals to get your questions answered, and understand your situation as an individual. Below are some of the points from those in the know that we compiled and want to share this information with you. We as virtual executive assistants can help you prepare and there are some things you can check out and understand for your business. You can always refer to our list of Services we provide to help you out.
Gather Important Documents
Taxes require a great deal of paperwork. Get organized by gathering those documents now. You can create a folder or basket where you store documents until you’re ready to use them. Because many tax documents, including W-2s and 1099s, might come electronically, create a digital folder where you can store those documents or be prepared to print physical copies for your basket. You’ll need receipts to document deductible expenses, though. If the IRS ever audits you, they won’t just take your word for it. You might also need receipts showing charitable donations if you claim them as a deduction.
Start a savings account to pay for your taxes
If you put money away starting as early as December, you can break a tax debt into smaller chunks and have enough to cover it by the April deadline.
Start Preparing Your Return
Want to get a serious head start and reduce the potential headache and stress of tax season? You can begin preparing your return today. If you use tax preparation software, you can enter as much information as you have right now. As you get information, you can quickly add it to your return within the software. By the time you receive your last W-2, you’ll have your taxes done.
While you’re getting ahead of the game, make sure you’re ready to receive a direct deposit of your refund when the time comes.
Research Professional Tax Preparers
Don’t feel like you can handle the job on your own? That’s fine, too. Consider using this extra time to research potential professionals or tax services that can help you file your taxes. If you choose a tax professional, make sure they have a valid Preparer Tax Identification Number, which indicates they’re authorized to file federal tax returns on behalf of others.
Keep Up with IRS Announcements
While you’re taking some time to prepare for the next tax season early, you might also want to give your financials a close look. If you’re not already keeping close tabs on your credit, now is as good a time as any to pull your reports to check them for accuracy.
Catch up on your bookkeeping
Many business owners saw a spike in their income, while some business owners saw a loss. So the first thing you should do as a business owner is making sure that bookkeeping and accounting are completely caught up. You should know exactly how much profit and how much loss you brought in for the year.
Tax projection
You can determine right now, based on the income and expenses you have, what is going to be your tax liability. What is the check that you are going to need to write to the local tax collector and what is the check that you might need to write to the state?
Shield yourself from tax scams and fraud
As tax season approaches, many people start getting phone calls, emails, and text messages from entities claiming to be the IRS. These are scams. People who pretend to be the IRS or the U.S. Treasury, Those organizations are never going to call you on the phone.
Note: U.S. mail is the only way the IRS will correspond with you unless you go into litigation.
Credits to: Forbes; BankRate; and Credit.com for the above tax preparation info.