"Things To Do Today To Get Ready For The Tax Time Frenzy
The gifts have been unwrapped. The guests have left. The kids are finally in bed, and the dishes have been done and are put away. You sit on the couch in a state of contented bliss, and wonder, “What now?”
Then it hits you: its tax time!
Oh, no! You dread the thought of having to deal with all the paperwork and wading through the rules and regulations that come with filling out a tax return. What do you need to do getting ready for this so it doesn’t turn into a stress filled experience with you staying up until midnight every night for the week before April 15th?
Make Your CPA Love You
The first thing you probably want to do is pick up an organizer from a local office supply store, with at least five pockets to organize your paperwork. Why should this be the first thing you get? Preparers charge about $100 an hour to prepare a return, if not more. Do you really want to pay them that much to organize your receipts?
The organizer will make it easier to sort the documents by their category to make it easier to prepare return. You will want to put the documents into the folders based on the following categories:
1. Income received
2. Statements from banks and brokers
3. Statements from government
4. Receipts for expenses
5. Receipts for donations
By organizing your documents and receipts this way, it will make it easier for the preparer to complete the return in less time, usually resulting in a smaller bill
Get Your Records in Order
Now that you have your organizer set up, you now have to go through your paperwork. Yeah, I know, it’s a royal pain. Best thing to do is put on some good music and start looking for the following:
1. Records of income. You want to look for your W-2s, any statements from banks, brokers, renters, and customers. If you run your own business, you want to make sure that you have all the 1099-MISC that were sent to you. Not every customer will send you one, but check their total against your records, and be able to explain the difference. If you integrated your accounts with GoDaddy Online Bookkeeping, this should be a snap.
2. Any Information about expenses that may help reduce your taxes. This would include receipts from childcare providers (including provider’s tax identification number), mortgage interest statements, donations to your church, costs incurred in seeking a college degree or taking courses to acquire or improve job skills, receipts for medical care. Additionally, you will want to want make sure you have proof of payment of medical insurance premiums covering your children.
3. You will want to find any correspondence from government entities. This would include any receipts of sales taxes paid, as well as receipts for property tax payments. Additionally, you may have received a 1099-G, which shows how much was received in unemployment insurance benefits.
4. Any documentation of any amounts contributed to an IRA.
5. Lastly, look through your bank statement for items that may be income, or for amounts spent that may be deductions. Find the paperwork related to these transactions, and show them to your accountant to find out they are deductible.
By making sure you have all this information, you should have not only the amounts to include on your return, but the documentation of those items in case there are any questions down the road.
Next, you want to review your financial results for your business to make sure it is complete, so it is easier to complete your business’s tax return. The best thing to do is make sure you reconcile your bank account, which will point out any items you missed which need to be included in your financial records.
Make an Appointment with your Tax Preparer
Lastly, if you don’t prepare your own return, make an appointment with your CPA. We tend to get busier as April 15th gets closer, so by getting to us early, we will have more time to analyze your situation, put together a return, and do so some tax planning for the coming year.
While you meeting with your CPA, keep in mind that they may ask you some strange questions. Yes, we have to ask these questions, it’s how we make sure your return is complete and accurate. Your tax preparer is not the enemy. Our job is to reduce your tax bill, and we want to help. The more complete the return, the less trouble you will have with the IRS.
Preparing your tax return can be a bit of a hassle. However, if you start early, you will be able to make sure your information is complete and there are no issues with your return."