Tax Preparation Checklist: Everything You Need to Get Ready for Tax Season
With the end of the year, the holidays, and resolutions come another annual facet of life - tax returns. while some people dread the work (or the outcome) of filing their taxes, it can be like a second Christmas for others.
Regardless, it's something we're all legally required to do. Are you ready for tax season this year? Check out our quick tax preparation checklist to see if you've taken care of everything you need!
Your Tax Preparation Checklist
1. Choose the Right Tax Preparer
Depending on how complicated your taxes are, you may want to hire a professional tax preparer. This will mean things like working out How to Calculate FICA are left to the professionals. If you already have an accountant handling your businesses or personal finances, they would likely be your best choice. They'll already be familiar with your income, expenses, donations, etc.
You also have the choice of going to a commercial tax service or doing them yourself. However, be advised that CPAs and other tax professionals will often be able to file your taxes more accurately, find deductions, and prevent audits.
Business taxes can be especially complicated, as there are so many more facets and legalities of how they're prepared.
2. Find Last Year's Tax Return
Using your tax records from the previous year can help you ensure you have all your bases covered for this year. You can remind yourself what documents you need, what deductions you had, and so on.
This can help you and/or your tax preparer save time. Much of the information required to fill out tax forms are unchanging. Using the previous year's tax return as a reference can save everyone involved significant time and hassle.
3. Collect All Your Income Documents
The documents you need for your tax preparation checklist depends on the type of work you do. For example:
- If you're employed, your employer is obligated to send you a W2 form by January 31st
- If you work as a freelancer or independent contractor, you'll need a 1099-misc
- If you're self-employed, you may file a Schedule C or a Schedule SE, based on your circumstances
These are just a few of the potential documents you may need. You may also need to generate your paystubs, in which case, you should check out PayStubs.net.
We recommend filing your tax return as soon as possible. This will give you time to track down any documents you've left out, make corrections, etc.
4. Figure Out Your Deductions
Next, make a list of your deductions. The average tax return in 2018 was nearly $3,000. While your return will vary based on your unique finances, you want to make sure the IRS accounts for all your deductions.
5. Renew Expiring Tax ID Numbers
Most Americans use their social security numbers to file their taxes each year. However, for those who don't have social security numbers, they're issued individual taxpayer identification numbers.
However, unlike social security numbers, ITINs expire. You can renew your ITIN by filing a W7 form. However, you should start the process as soon as possible, as it can take nearly three months to go through.
6. File for an Extension if Necessary
Finally, if you know you won't be able to get your tax return filed on time, file for an extension. The IRS grants an extra six months to anyone who files for a tax return extension, which should give you more than enough time.
however, just because your taxes aren't filed, it doesn't mean you won't' owe them. Make sure you're setting aside extra money, should you owe taxes once your return is filed.
Looking for More Tips?
We know how stressful tax season can be, even with a tax preparation checklist. Just remember to ask for help if you need it and make sure you're not getting on the IRS's naughty list. And for more great tips and advice, be sure to check out the rest of our articles!
