When tax season comes around in the United States many taxpayers find themselves stressed, anxious, nervous, and in many other emotional states. However, if you have prepared in advance you will find that you will be able to conduct your life as normal. So here are a few helpful tips to help you survive tax season.
Step 1 – Prepare Throughout the Year
The main reason why taxpayers in the United States have such a hard time when tax season rolls in is that they have to go through mountains of forms and documents that are not organized in any manner. They have to work late trying to get everything organized so they are able to file their taxes by the deadline. This makes things even worse because you will be tired and disorientated, which increases the chances of making an error.
Like the majority of other things that we do in life, it is important to plan when it comes to your taxes. At the start of a new tax year, you should already have a system in place as to how you are going to organize your finances. This way when tax time comes everything is easy to find, read, and record. I would suggest using Bookkeeping software such as QuickBooks, so you can keep track of financial records as they occur. It keeps all your financial records easily accessible.
Step 2 – Set a Routine
Even after you have purchased bookkeeping software, it is important that you have a routine in place. If you do not have a routine, the bookkeeping software is not going to do you any good. You have to be disciplined and make sure that your finances are updated daily. You can usually make adjustments in less than thirty minutes. These thirty minutes spent daily updating finances will keep you from having to panic as tax season draws in. If this is something that you feel cannot be done by you, consider hiring someone to do your bookkeeping for you. However, if you do take that route keep in mind that you will have to check in on them from time to time to make sure that they are doing things the way that they need to be done. In the event that you are audited for an error, you will be the one held responsible, not your bookkeeper.
Step 3 – Know the Tax Laws
Tax laws in the United States change yearly. It is important to make sure that you are up to date with the latest laws so you can get the maximum amount of money back or decrease the amount of money that you have to pay. To stay up to date with the current tax legislation you can always go to the IRS website.
Step 4 – Take Advantage of Tax Deductions & Credits
Many Americans end up getting the short end of the stick during tax season because they do not take advantage of tax deductions and credits. Tax deductions and credits allow you to lower your taxable income. There are literally hundreds of tax deductions and credits for you to take advantage of. When filing your own taxes I recommend that you use credible tax filing software, such as Turbo Tax, because by answering a few simply questions it will show you all of the tax credits and deductions that you are eligible for.
Step 5 – Double Check Your Return Before Filing
To lower your risk of being audited you want to double, or even triple check, your tax return before submitting it to the IRS. Make sure that you have attached all documents needed for verification, make sure the return contains no errors, and if possible do not write your return by hand. Once you have done this you are ready to submit your return to the IRS for review.
Step 6 – Always File by the Deadline
Even if you do not have the money to pay the IRS, it is still important for you to file your return by the deadline. Once you have filed your return the IRS will be willing to work out something with you so you can pay your taxes. However, if you do not file your taxes you will incur a penalty. While it is true you will be penalized for paying your taxes late, it is better to have one penalty than multiple ones.
Tax season is nothing for you to panic about as long as you take a few simple steps. Prepare throughout the year, establish a routine, know the tax laws, take advantage of tax credits/deductions, double check your return for accuracy before filing, and always file by the deadline. If you follow these tips, you will be ahead of majority of US taxpayers and you will survive tax season. It may never be fun, but filing tax returns can be a relatively quick and painless experience.