With tax season almost a month behind us, many people are more than happy to avoid any tax related thoughts until next April. If that scenario sounds all too familiar, try following these tips throughout the year to make the preparation for next year’s tax filing stress free.
1. Keep your receipts organized: Even if you allocate one shoebox to hold all of your receipts, you won’t be scrambling to search for them next year. Clearly mark your box 2014 Tax Receipts, and keep it in a place that is easily accessible.
2. Set up a 2014 Tax Folder now: You may not have a need for this right away, but by organizing a file that will hold all of your tax documents that will begin arriving in January (1099’s, W-2’s, etc.), you will be one step ahead of the game.
3. Do you travel extensively for your job? Keep track of the miles you log throughout the year. Include the date, number of miles, and purpose of travel. Keep track of any job related business expenses as well. The same goes for medical expenses. If you are driving to the doctor every week for a checkup, keep track of that distance.
4. Charitable giving: Now is the perfect time to combine your spring cleaning with your tax preparation. Local charitable organizations such as the Salvation Army and Goodwill accept donations year round. Save yourself from the hassle of having to run your items down for donation during the last week of December. Remember to get a receipt for your donations, and keep a detailed summary of what you are donating. This will help you get the credit for what you gave away.
5. IRA Contributions: Ease your IRA contribution sting by starting monthly contributions directly from your checking account. This can be done very easily, and will be much less painful than having to cough up $5,500 (per individual), or $6,500 if you are age 50 or older, come April 15th.
6. Keep a running list of your tax questions: We have all done this before. You are sitting across the desk from your tax professional, knowing that you had 20 things to ask, but now you can only remember 3 of them. Keep a running list that you can add your questions to as they arise, and don’t hesitate to call your tax professional for some midyear tax planning.
7. Be proactive about the April 15th deadline. Although you have up to this date to file, that time of year can be very busy for many tax professionals. Don’t be afraid to initiate communication with your tax advisor weeks or months before the deadline, ensuring adequate time for document retrieval and thorough tax prep.
Remember, following these guidelines may initially seem like a bother; but it will save you time and energy later on, and give you the best possible outcome for your refund or balance due.