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  • Writer's pictureAntonise De Wet

What to do to make the next tax-season less stressful?

“By failing to prepare, you are preparing to fail.” ― Benjamin Franklin

Here are some steps that you can do to prepare for the next tax season:

1) Spend some time gathering your paperwork, local tax forms, and bank statements in one easily accessible location for the ensuing tax preparation. While gathering your tax records for the following year may seem premature, doing so at the end of the current tax year will ensure that you have everything you need to file your taxes without difficulty. Making all of your preparations now will ensure that you don't forget anything. Make a file just for the tax year and place everything inside of it. You will be ready to file your US tax return when the time comes early next year.

2) Choose your tax filing method.

You have a choice between using one of the many software programs available to file your taxes on your own or hiring a professional.

If you have gone through a significant life change, such as getting married, getting divorced, or becoming a parent, you ought to think about getting an accountant's assistance.

If you've just bought a house, you might also want to think about getting an accountant's assistance. You must ensure that you have all of your bases covered because your tax burden drastically changes once you become a homeowner. Additionally, accountants can assist you in utilizing credits and deductions like the mortgage tax credit.

Finally, if you're self-employed or run your own business, you should work with an accountant. If you run a business, your tax obligations will be different. A professional can help you avoid mistakes and determine how much money you'll likely owe in taxes.

3) Instead of waiting until the following tax season to benefit, expedite your deductions.

You can claim a number of deductions for your financial outlays. One of these is the interest on your mortgage. You may also write off the interest paid on your mortgage if you make a payment overdue before the year is out. Keep in mind that foreign mortgages also function.

4)Amass your income documentation

If you don't have access to crucial financial information, you can't file your taxes. Make sure your employers and other financial institutions with accounts in your name provide you with the necessary documentation.

One of the most crucial pieces of information you'll need is your W2. You ought to have gotten a W2 from each employer you worked for in the previous year if you had more than one.

If you're a freelancer, you must arrange your Form 1099 records in addition to gathering any potential business expenses.

5) Make contributions to a retirement plan.

By making contributions to your retirement account now, you can delay paying taxes until you begin receiving distributions while also investing in your future.

By adding more money to your retirement savings plan, you can lower your taxable income while saving money for your retirement. You are eligible to take a dollar-for-dollar reduction in your taxable income whether you contribute to a traditional IRA or a 401(k).

6) You can sell some losing stocks and take losses on your capital gains to reduce your overall gains for the year.

Sadly, if you are an investor, there is a good chance that you have stocks that have lost value since you bought them. If so, you can sell off your depreciated investments to realize your losses and deduct them from your taxable income. You can only deduct $3K from your taxable income in any given year if your losses end up being greater than your gains. Any additional losses are carried over to the following tax year.

7) Start examining deductions and credits.

You can claim a variety of tax credits and deductions from the IRS. Reviewing these will give you an idea of which ones can lead to cost savings.

You might be eligible to claim the Earned Income Tax Credit, which lowers the amount of tax you owe, if your income is regarded as low to moderate, for instance.

You must carefully review all credits and deductions because some have requirements. If you're claiming the Home Office deduction, you might need to complete additional forms, like Form 8829.

If you need help for the next year. Well, help has arrived.

Yours waiting,

Paavan Kotini

Kotini & Kotini

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