What should you be doing right now to get your taxes ready? Organizing your receipts and other documents helps to make recording them easy. Get ahead of the game now. If you file quarterly, you may be in good shape already. If not, you still have plenty of time; but don’t put it off. CPAs get extremely busy come March and April, as do the helplines for DIY tax software. Get organized to file your taxes before crunch time.
Take these easy steps:
- List who owes you a W2 or 1099
- Gather tax forms and tax notices all in the same place
- List out your accounts, separating business and personal finances
- Organize your receipts
- Business owners should list out who they owe forms to. Employers must send out W2s and 1099s so that they are received by Jan 31st
- Realize you may know more details than anyone about your finances. It is up to you to gather together all those loose ends so that your CPA knows about them too.
Good Reasons to File Early
Know What You Get, Know What You Owe
Some good reasons exist to file early. The best, surely, is to receive your refund sooner. However, when you know you will owe the IRS, filing early also helps. Regardless of when you file, the monies are due in April. By filing early, you nail down the amount you will owe, erasing any mystery. Knowing that amount goes a long way toward preparing to pay it. You will have trouble saving for an unknown amount.
Avoid the Rush
When you file ahead of time, you also avoid that last minute rush. Your CPA will have more and more taxpayers to handle the closer April comes. Taking your taxes in early may mean faster service. Only one third of Americans file their taxes in the first 30 days of the period. One additional benefit to filing early is you can kiss tax anxiety goodbye just that much faster.
Identity theft carries risks at any time of the year, but more so at tax time. Dozens of data breaches occurred in 2018. The Marriott breach alone affected 500 million people. Identity thieves, namely those with your social security number, can file taxes in your name. Filing early helps to flag and block those fraudulent refund thefts.
Tax Law Changes for the 2018 Tax Year
Numerous tax changes passed into law just before 2018 started. Understanding them and how they affect you might take a bit of research. However, your CPA will be aware of those changes and can help you prepare your taxes accordingly. The Motley Fool recommends (and we agree) watching for these potential changes:
- A shift in tax brackets
- Higher standard deductions which replace the eliminated personal exemption
- A rebalance of how families figure credits and deductions
- A refiguring of deductions for medical expenses, mortgages, and charitable contributions.
Those are not the only changes. As with most new tax laws, the details can be extensive. With a good understanding of your personal finances, your CPA can help to create a filing that benefits you against the new tax laws.
Organizing to File Your Taxes
Getting organized for tax filing is really what personal tax preparation is about. Once you have the essential data compiled, you are ready to go. That is not to say that taxes will ever be easier to understand or fun to do. Perhaps one of the most important items to prepare is finding the right CPA. CPAs don’t just file your taxes, they know taxes well and understand the changes that have taken place. Get your taxes done right, and get them done early. You will be glad you did.
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