Tax season is upon us again. If you associate tax time with hassle and frustration, you are not alone. Millions of Americans take a DIY approach to their tax returns and often experience a heightened level of stress and anxiety.
Fortunately, there are a few simple steps you can take that will alleviate much of the stress that often comes with tax season. A little organization and preparedness can go a long way. Check out the tips below to get your financial picture ready to file your return.
Gather all statements and documents.
The first step in the filing process is to gather all necessary documentation. You will need to refer to these forms throughout the process, so it’s helpful to have them readily accessible.
The documents you need will depend on your specific situation. Commonly used forms include earnings reports from an employer, investment account information, bank statements and debt documentation. You also may need receipts for deductible expenses like child care, medical costs and more.
You should receive all this documentation early in the year. However, it is possible for things to get lost in the shuffle. Make a list of the accounts that may be relevant. If you don’t receive a statement or other document, you may want to contact the account administrator and ask them to resend the information.
Decide whether you need help from a tax professional.
After you receive all your documents, you may want to review your situation objectively and determine whether you need assistance from a tax professional. Some tax issues can be very complex, and it’s not always easy to identify all possible deductions and credits.
Tax preparation software has made it easier to prepare your own return. However, some situations may be too complex even for software to handle. For example, business owners often face complicated tax issues. If you were married or divorced in the past year, you could face a number of complex challenges. If you don’t feel comfortable filing your taxes yourself, don’t hesitate to contact a professional.
Review your spending.
It’s always helpful to review your spending. You can use the review to see where your money goes and whether you’re staying within budget. A spending review is especially helpful at tax time, though, because you may have made purchases that are eligible for tax deductions.
For example, you may be able to make deductions related to child care, medical costs, business expenses and even home improvement. All these deductions have eligibility rules, though, so you may want to consult with a tax professional before including them in your return.
Explore additional deduction opportunities.
Looking for additional deductions on your 2016 return? Just because the year is over doesn’t mean you can’t still take advantage of deductions. In fact, some deductions can be utilized all the way up to April 15. For instance, contributions to a traditional IRA, health savings account (HSA) or even a 529 plan can usually be deducted against the prior year’s return if you made the contribution before April 15. A tax professional can help you determine whether you’re eligible.
Need help organizing your financial picture as you prepare for tax season? Let’s talk about it. Contact us at Sprouse Financial Group. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
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