Don't Let Tax Time Get You Down

With tax time right around the corner, it’s time to start preparing. Although doing taxes isn’t exactly a fun activity, the reward that comes along with it is more than worth the effort. However, when it comes to taxes, you need to be as accurate as possible.

One little error can cause a reduction in the amount you receive back. So, to make sure you get every cent that’s owed to you, you’ll need to prepare ahead of time. Here’s how to prepare yourself for the tax season.

Prepare Your Paperwork

Regardless of how you're filing, you need to get your documents in order. This should include all W2s, 1099s and any other identifiable forms of payment you have received over the last year. Keep in mind that if you were paid in cash for services rendered, you need to claim that as well.

If you plan on claiming charitable contributions, you also need to have those receipts on hand. Any medical bills, clothing for employment purposes as well as dining receipts you have, which were specifically related to your job, also need to be accounted for.

If you're a business owner, you also need to give access to any accounting software you use for filing. Even if you're an entrepreneur, anyone filing your taxes needs to see where your money is being spent and how much is coming in. If you need payroll advice, a qualified tax preparer can also help you during your appointment.

Choose A Tax Preparer

If you're not brave enough to file on your own, which many of us aren't, you need to choose a tax preparer. You can also use friends and family for referrals, or you can go to one of many local tax offices, which are open during tax season. Most importantly, only file your taxes with a company or preparer you feel comfortable with.

Never simply choose one out of desperation. The person you choose needs to understand your specific tax situation, be able to maximize your deductions and make educated decisions in your best interest.

Plan Ahead

In addition to having all necessary documents, you should also plan ahead. Schedule an appointment and prepare everything in advance. There's nothing worse than sitting down at your appointment only to find that you forgot vital tax documents.

It's also a good idea to file earlier than later. Tax filing deadlines roll around fast, so missing the cut-off time can cost you. If you know you won't be ready by April 15th, ask for an extension.

Know Important Personal Information

If you don't know your or your dependent's social security number, make sure you write it down. This is particularly important if you plan on filing for child income tax credit. Without appropriate information, you can't claim anyone as a dependent. Note, you should also bring a physical copy of the social security cards, just to be on the safe side.

Bring Last Year's Taxes

To simplify the process, bring a copy of last year's return. Doing so not only speeds up this year's filing, but can also prevent any errors while filing. Having last year's return to use a guide when accounting for investments and charitable donations.

The Takeaway

Whether you file on your own or enlist the help of a professional, a little preparation can go a long way. Take the time to gather your documents and set aside time specifically for your taxes. Trying to multitask while filing your taxes is never a good idea. In fact, it can be downright costly.