It is NEVER too early to Start Your Taxes!

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It seems nearly cruel that just as we are wrapping up the end of the year and we’ve managed to survive the holiday season, it is time to jump into taxes. The rule of thumb is the longer you put off preparing all of your paperwork the longer it will take. By breaking up the task into quick actionable steps you can prepare for tax season without the usual last minute stress.

  1. 1st Week of January – create file system for current years receipts

Start the New Year off right! Create a physical file system to keep your receipts and other information organized throughout the year. You can even schedule an hour or so per month to scan and file receipts that you will need for the following year!

  1. 2nd Week of January – gather receipts, invoices and charitable donation receipts from previous year.

This is a great time to start organizing the heaps of receipts and properly categorizing them. Separate personal from business expenses and start to make notes about items you are missing that you need to locate. Scan these documents into your computer and place in a special file. Physically file the receipts with notes in well-labeled file folders in the event you need them in the future. Estimated time – 2-5 hours.

  1. 1st Week of February – gather W2s, 1099s and other supplemental income forms.

By the end of January, you should have the vast majority of income documents you need to file your taxes. If you have not received one or more by the end of the 1st week of February, it is time to make a call and find out where they are. As with the step above, take the time to scan them into your computer and put in the same master file. Estimated time – 1-2 hours.

  1. 2nd Week of February – schedule appointment with accountant

Before things get all crazy with your professional tax preparer or accountant get on their calendar to meet about your taxes. Since you have already gathered together all of the forms, receipts and other necessary pieces you can meet with them anytime. Your accountant will appreciate the organization and may request the scanned copies. If this is a new relationship with an accountant be sure to get a quote on services and be clear with your expectations. Estimated time – 1 hour.

  1. 4th Week of February – provide additional information as requested by accountant.

Your accountant may need additional paperwork or information from you to complete your taxes. Be sure to provide all necessary information, in a timely manner. Estimated time – 1-6 hours depending on the additional information requested.

  1. When taxes are complete, meet and review.

As soon as your accountant notifies you that your taxes are complete, review them promptly and sign. If you owe taxes, be sure to provide your accountant with a check for taxes due. Estimated time – 1 hour.

  1. Early June – schedule tax strategy session with accountant.

This strategy session can help you minimize the following year’s tax burden. Perhaps changing tax codes will alter your investment strategy, stimulate additional charitable giving or encourage capital expenditures for your business or even home remodeling. Check-in with your accountant and ask for the best tips to minimize your taxes for the following year.

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