As we head into the 4th quarter of the year, the 2016 tax season will be here before you know it. There are things you can do this fall to make your IRS filings next year a smoother process.
- Identify potential major changes in your filing status from 2015. Are you expecting a baby before Dec. 31st? Are you planning a fall wedding, or did you divorce earlier in the year? Clarifying your tax filing status now, will make it easier to estimate your tax bill and that can still leave time to put extra money away into tax-favorable accounts, or to save a little more at each paycheck to be ready for a potentially larger tax bill than anticipated.
- We have mentioned this previously in other blogs, and want to continue the importance of organizing your tax documents and financial records! Waiting until the last minute can cause immense stress when you are backed against a deadline. Start organizing items now. Pull together charitable donation receipts. Start adding up your medical expenses for the year. If you need to go to doctors to ask for account statements, leaving yourself plenty of time to get it in will undoubtedly ease the annoyance of waiting a month to receive the document. Digitizing your records and scanning everything in early will make it easier to get the information to your CPA at the touch of a button when January arrives, while you sit back and enjoy the new year!
- Go ahead and start researching your tax deductions and credits. While a licensed CPA is trained to maximize your deductions, having some knowledge of what you may qualify for is helpful to know what information and records need to be 20communicated. Whether you started school, started or ended a business, acquired a rental property or bought your first home, knowing what deductions you may be entitled ahead of time is important. Certain home renovations may also allow a Federal tax credit. Having your ducks in a row can save time from back and forth with your CPA when it comes to necessary documentation.
The bottom line is that your 2017 self will thank your 2016 self for spending this fall preparing for tax season. Having months to prepare spreadsheets and documentation is less stressful when it is done over time. Make a spreadsheet of everything you need to do, and assign yourself tasks to complete between now and the end of the year to start the new year organized and ready to go!