It’s that time again — filing taxes is inevitable for all of us. These few tips and tricks can help you make the most of tax season and get you through to April as painlessly as possible.
No one wants to spend their weekend tracking down old receipts, but if you dread tax season every year and find yourself overwhelmed and stressed out, I’m willing to bet that you’re putting it off until the last minute. It’ll never be relaxing, but taxes don’t have to be stressful! A large part of what makes them unpleasant comes from taking on a huge organizational task at the last minute when you’re up against a deadline.
The single biggest piece of advice that I can give you is this: Start now. Today, this weekend. Even if you only do half an hour of prep work, get the ball rolling early and you’ll feel much, much better come April.
Bring in Reinforcements
It’s entirely possible to file by yourself, and the tips here should help make that process manageable. Still, you have to ask yourself two questions: Is my time and relaxation worth more than a tax preparer’s fee? Will I earn back the fee in deductions that I can’t find myself?
Software assistants like TurboTax can be a very helpful option for those who choose to go it alone, but they lack the comfort and confidence of being able to pick up the phone and receive an answer from a real, live person who understands the nuance of your particular financial situation. The greater your assets and wealth, the more complex the process becomes and the more you are likely to benefit from professional help.
If you’re considering working with a professional, pick up the phone now. This is the busiest time of year for tax preparers, and it pays to book your appointment early!
Before you even touch a calculator, spend some time gathering all the information you’ll need. You’ll be surprised how much time you can save by collecting everything beforehand. If you’re not sure, you can use this handy list as a guide to the major documents and records to look for.
Here’s the basic outline of what you’ll need to have in front of you:
- Personal information
- Income information and documents
- Deductions you plan to take and records of deductible personal expenses
- Business information
The only thing better than getting organized now? Organizing as you go, all year round. I recommend keeping a large folder on hand throughout the year where you immediately file away any tax-related document or receipts as you receive them. Even if you hardly remember what’s in the folder, at least it’ll all be in one place next year!
Steal Your Good Ideas from Last Year
For most people, your tax filings from 2016 will look relatively similar to what they should look like in 2017. Looking at your own past filings is a great place to get started. Not only does it make this year’s process look a little more manageable by offering a basic template to work off of, but it can also be a great way to remember all the useful details which can be easily overlooked. For example, look for interest or dividends, capital loss carry-forward, or that obscure deduction that you found last year that applies to you perfectly.
Check, Double Check, Triple Check
When you’ve finally waded through your tax filing, it can be tempting to get it out the door and sent off as quickly as possible. Be careful, though! When there are this many moving parts, it can be very easy to make a little mistake that throws everything off, and any miscalculations in your tax filings will be a much bigger headache down the line if you don’t catch it now. Plus, any mistakes now mean you’ll be waiting way longer that necessary for any refund you might be owed! Check your work, and then walk away, do something else, sleep on it, and check it again. Trust me, it’s worth it.
Plan Ahead for the Fun Part
The best part about doing your taxes? The refund check! If you’re expecting a significant refund in a few months, now is the time to think ahead and decide what you want to do with it. There are many ways to handle a modest windfall, and it’s always smart to lay out your plan now, before you have a wad of cash in your pocket! That way it’ll be much easier to make it last and work for you by pushing you closer to your financial goals. This is also a great time to involve your financial planner in the process.
There are several options for how to receive your refund:
- You can apply part of all of the refund toward your tax bill on the next return.
- You can put your refund directly towards your IRA, health savings account, or education savings account as an extra contribution.
- Finally, of course, you can receive a check or direct deposit straight into your bank account.
If you opt for the cash amount, it’s worth putting a little thought into how that money can best serve you. Perhaps you have some credit card debt to pay down, or a fund that you’re building up to start your own business, or a vacation that you’ve been wishing you could take your family on. Often, you’ll find that you get more satisfaction and enjoyment out of a refund check that goes directly towards a goal rather than a small bump in your general spending budget.
Get A Head Start on Next Year
The last thing you want to do is think about taxes even more, but hear me out. Spending just a few minutes after you’ve filed to think about what the most stressful parts of the process were can really pay off when you realize you can avoid them next year. Identify the areas where you were least prepared and make a small, manageable goal for what you can do this year to get out ahead.
Perhaps that means calling your financial planner and your tax preparer now to schedule appointments next year, or perhaps it means writing up a few labels and designating a drawer in the filing cabinet to collect all your tax-related documents year round. Whatever it is, those few moments will pay off tenfold next season!
Adam Tau is not an accountant or tax planner and information in this post should not be construed as legal advice or a financial recommendation. Please consult a tax professional prior to taking any action.