Tax season – two simple words many adults fear like the plague.
For some reason, the first four months of the year tend to surface a lot of pent-up financial stress for residents of Evergreen, Colorado. Usually, it’s because people know they have taxes due, or maybe they haven’t been keeping their paychecks and receipts in order. Tax season can absolutely be stressful but, with some careful planning and focused effort, the burden can be lifted. Read below to find out five great ways to make that happen!
1. Stay on Top of Your Financials
It’s become almost a cliche, but the first step to fixing a problem (or future issue) is to prevent it from happening in the first place. Earnings statements like a W2 are going to come at the beginning of the next year, but that isn’t all you need to keep track of!
You should also keep records of any additional income you make, regardless of whether it has been taxed or not. If you make any business related expenses, be sure to keep receipts if you wish to claim them for the year.
Tax is filled with nuance, and it can be hard to tell what actually matters. To be safe, anytime you exchange money, whether it is physical or virtual, you should keep a record of such to show the expense was paid for.
Any amount of money you pay for childcare, medical bills or other taxes can be used to help reduce what you owe. Making sure you have records and proof of all transactions in an organized fashion can make you confident that you have all the tools you need to come out on top.
2. Start Early
Tax season does last for a few months, but there is no reason why you should take that entire time to file them. Whether you file them in February or April makes minimal difference. You’ll still have to pay your taxes either way.
Starting early is a great way to make sure you’re facing taxes head on rather than pushing them off to the side. Putting the idea in your mind can be enough to make you take action.
Especially if you’re inclined towards procrastination, getting the ball rolling is crucial to making sure things go smoothly. You may have four months, but if you start in April you’ve only got two weeks. Plus, the sooner you know the verdict, the sooner you can take care of it and focus on the rest of the year! Or rather, you can start keeping yourself organized for next year’s taxes!
3. Stick to the Facts
A tricky thing about taxes is the fact that, throughout the year, we have the impression that we’ve earned what we’ve been paid. However, there is always the possibility of owing more. This can persuade many people to omit or even outright lie about income they’ve earned.
An easy way to raise a red flag and possibly start an audit is to provide false information to the IRS. With reported income like that shown on a W2 form, it’s very difficult to lie about those numbers because your employer has already reported those figures. It becomes more of a grey area when side jobs and under-the-table pay come into play.
For the sake of clarification, any and all earned income should be reported to the IRS! Unless it is specifically exempt, it needs to be reported.
Be sure you are truthful with the rest of your tax filing as well. You shouldn’t claim dependents if you are unable to prove you have any, and be prepared to defend business expense deductions with valid receipts. Make sure that you are only claiming deductions when you are eligible to do so.
Being as honest as possible is the best way to make sure taxes end with the season. The last thing anyone needs is an audit through all their financials.
4. Enlist a Professional
There are so many special criteria and deductions in tax that most can’t or won’t keep up with them all. There is a reason why accountants are in such high demand during tax season!
Hiring a professional can give you the peace of mind that you’re filing your taxes right. They’ve been specifically trained for it and can give you the best insight on how to pay the lowest amount of tax while obeying the confines of the law. Many people end up over or under paying on their taxes without even intending to do so.
Professionals know how to find any possible deductions to make sure you don’t overpay. If you don’t have the patience or time, let someone do the heavy lifting for you so you won’t spend any longer in anguish! If nothing else, at least consider using software built to help you file your taxes (the technologic version of a professional)!
If you’re looking for a tax accountant in Evergreen, Colorado, get in contact with the Felde Group here!
5. Learn More Each Year
With there being so much to understand and remember, treat tax season as an ongoing process and with it comes a learning curve. You won’t start knowing everything but, as you work at it and make mistakes, you’ll figure out what works and what doesn’t.
As the saying goes, the only two constants in life are death and taxes. Unfortunately, taxes aren’t going away anytime soon, so the only way to handle them is to make yourself better prepared. Be proactive in your own financial well being! Have an engaged interest and genuine desire to improve, and, each year, you’ll find tax season really isn’t so bad after all.
We definitely understand how much unnecessary stress taxes can provide, so we want to help you make sure you can alleviate as much of it as possible. Try to view taxes as an ongoing thing rather than just an event that occurs at the start of every new year.
Be careful to keep record of your financials throughout the year, and start working on your taxes right away. Make sure you only report facts, and consider seeking professional help from a tax accountant if you’re really feeling lost. Keep it up year after year, and eventually you’ll be your own tax pro!