Tax season is right around the corner, and if you’re like most Americans, you’re probably starting to pull together the resources you need to assemble your return. That process can be stressful. You want to make sure that your return is accurate and that you’re minimizing your tax obligations.
That can be easier said than done, though. The American tax code can be complicated and hard to understand. Even with tax software, it can be difficult to navigate all the deductions, credits and other factors that go into filing your returns.
Even though the process of filing taxes can be complex, with some careful planning you can take out a lot of the headache involved. Below are a couple of tips that might help you make this tax season stress-free:
Get together all your statements and documents.
You can ease some of the burden and stress by starting the process early. There’s no time like the present, and you might be able to significantly reduce your stress level by simply being ahead of the game. Consider pulling together things like earnings reports from your employer, bank statements, investment account statements, debt documentation and anything else that may have helpful information about your income and expenses.
Your employer, investment account administrators and others should mail you required tax documents within the first few weeks of the year. If they don’t, be sure to contact the administrator of that account or pool of earnings and ask for the needed documentation.
Get help if you need it.
Once you have all your documents together, you may want to decide whether you should seek professional help. You might have an especially complicated tax situation. If you own a small business or recently went through a divorce, it might be in your best interest to find a tax professional.
It might also be that you are simply uncomfortable filing your own return. If that’s the case, you shouldn’t hesitate to seek professional help.
Review your spending.
It’s never a bad idea to look over your spending to see where your money is going. You can learn a great deal by looking at past spending. You can then use that information to inform future buying decisions.
That review process can be especially useful during tax time. Some of your expenses, such as child care, medical care or home improvements, might be tax-deductible. Look back through your spending and identify potential expenditures that may qualify for deductions. A tax professional can help you determine whether the purchases are eligible.
Look for additional deduction opportunities.
Just because the year is over doesn’t mean you can’t still claim deductions from 2016. Some deductions are available all the way up until April 15. For instance, contributions you make in 2017 to a traditional IRA or health savings account (HSA) might be deductible on your 2016 return.
Need help organizing your financial picture as you prepare for tax season? Let’s talk about it. Hal Hammond in Sarasota can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
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