3 Easy Ways to Prep Year-Round for Tax Season
It seems like we just finished tax season, and yet it’s right around the corner again. Though it’s never been my favorite time of year, I’ve learned some techniques that have helped me prepare well in advance for the big day. If tax season comes around and you find yourself scrambling to prepare, it may be time to simplify your life a little bit. Believe it or not, filing your taxes can become practically stress-free when you follow these three easy steps for year-round tax prepping.
1. Keep Your Receipts in One Place
Are you the type of person who stuffs your tax-deductible receipts in your wallet, purse, or “catch-all” drawer in your kitchen? If so, you’re contributing to your own headaches when tax season rolls around. Though it may seem like a pain to organize your receipts in one place, it’s well worth the effort. Think about it: you can spend a few minutes each day tucking your medical, business and other tax-deductible receipts into a designated folder or you can spend hours looking for all those little pieces of paper when tax season rolls around. It seems like a no-brainer to me.
You can collect all your receipts in an envelope, folder or binder. Just use something you’re not likely to lose and use it religiously. You’ll be grateful you did when it’s time to file taxes and you don’t have to search your house in a panic for misplaced financial documentation.
2. Review Finances Monthly With Your Spouse
It’s hard to plan for tax season and figure out what tax bracket you’re in if you aren’t keeping track of your finances. Each month, make a “date night” with your spouse to check in on your finances and tax preparations. This is especially important if your income fluctuates at all each month and you aren’t sure what you’re going to make for the year.
By reviewing your finances monthly, you can come up with a monthly income average that will help you anticipate your annual earnings and tax bracket. That way you can figure out if you’re likely to owe this tax season, and approximately how much. If you’re self-employed, you should be reviewing your finances regularly anyway. You’re responsible for paying all your taxes at the end of the year, so you need to make sure you’re putting enough money away that tax season won’t come as a shock to you.
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3. Talk With a Financial Advisor
I’ll be the first to admit that I don’t particularly like keeping track of my finances or filing taxes. I don’t have a background in accounting, so I get a little nervous that I’ll make mistakes. For that reason, I like to check in with my financial advisor at least a couple of times each year to make sure I’m adequately planning for tax season. Sometimes I learn about tax deductions I didn’t know I qualified for before. Consulting with a financial advisor before Uncle Sam holds his hand out is a great way to make sure tax season comes and goes without ruffling your feathers.