.png "Wealth Conservatory Logo (1)")
.png?width=440&height=102&name=Wealth%20Conservatory%20Logo%20(1).png)
Does the ritual of gathering documents and navigating the complex maze of tax laws stress you out every year? You’re not alone. If you want to avoid tax season anxiety, careful planning is the best way to do so. This blog outlines multiple tips and strategies to help you streamline your process, confidently tackle tax season, and achieve peace of mind.
Get Organized
The key to a smooth tax season starts with organization. Keeping good records throughout the year can make preparing your return more manageable and ensure you don't overlook any deductions or credits. So, make it a habit to save copies of all relevant documents, including receipts, invoices, and bank statements, and store them in a secure location. Consider using digital tools, such as accounting software or cloud storage solutions, to keep your records neat and easily accessible.
Regardless of how organized you are this tax season your first step should be to gather all relevant documents so you can have them on hand. If your financial situation has changed significantly in the past 12 months, you’re going to want last year’s information close by. The further in advance you can prepare your documents, the easier this process will become. A good resource you could create for yourself is a checklist of what you typically need, including W-2 forms, 1099s, receipts for deductible expenses, and so on. Then you can refer to it each time you go to prepare a tax return.
Explore Available Resources
You don’t need to be rolling in the dough to get tax assistance. The IRS offers free guided tax preparation services for individuals earning $79,000 or less per year. Additionally, the IRS provides interactive tools and directories to help taxpayers find licensed professionals or free tax help programs like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE). You must earn less than $64,000 a year, have disabilities, or lack English-speaking skills to qualify for VITA, and you must be 60 or older to qualify for TCE. If you are in any of these groups, take advantage of the resources available to you and get help without breaking the bank.
Protect Yourself
Tax season is prime time for scams, so it's essential to stay vigilant. The IRS does not contact taxpayers via phone, text, email, or social media, so be wary of any unsolicited communication claiming to be from the IRS. If something seems suspicious, don't hesitate to ask questions, and verify the legitimacy of the source. If you are working with a tax preparer, be sure to vet them as well, especially if they are not fiduciaries. One example of a red flag is if a preparer says you will get a refund that is significantly larger than what you’ve received in previous years or what you expected this year. That may be your sign to step in and check their work, or their credentials.
Additionally, consider implementing cybersecurity best practices, such as keeping your software up to date and using strong, unique passwords for your accounts. You may also want to use secure methods to transmit sensitive documents, such as encrypted email or legitimate file-sharing services. For an extra layer of safety, you can create a PIN with the IRS to guard against identity theft. Once you have done so, the IRS will require the PIN to file your tax return. This helps guard against unauthorized access to your personal information.
File on Time or Request an Extension
If you find yourself running out of time to submit your tax return, consider requesting an extension. However, it's crucial to understand that an extension grants you additional time to file your taxes, not to pay them. Paying an estimated amount before the deadline can help you avoid penalties and interest charges – keep in mind that failing to file or pay taxes on time can result in both. The moral of the story is that it's essential to address any outstanding tax obligations as soon as possible.
Avoid Common Mistakes
Making mistakes on your tax return can lead to unnecessary stress and potential penalties. Double-checking your Social Security card, searching for electronic tax statements, and reporting all income sources accurately are crucial steps. You should also review your return for simple mistakes like misspelled names or missing signatures before submitting. It may be worth hiring a tax professional since they are experts at catching errors.
If you’re doing it on your own, you could try tax preparation software. Filing electronically is a good way to eliminate many common errors. Plus, this method is safer, and if you opt for direct deposit, it’s faster as well.
It may also calm your nerves to remember that the IRS is generally understanding and willing to work with taxpayers to resolve issues. The word “audit” often makes people fret, but it simply means that the IRS will ask you for more documentation. This is another great reason to stay organized. If you have kept accurate records and you haven’t done anything purposefully wrong, then you don’t need to worry.
Tax season doesn't have to be a source of anxiety. By following these expert tips and leveraging available resources, you can easily navigate the process. Remember, preparation and attention to detail are key to achieving stress-free success during tax season. Whether you're preparing your taxes last minute or planning for the coming year, these strategies will help you stay on track and avoid common pitfalls. With the right approach, you can confidently handle tax season and emerge financially empowered.
