It may be an accountant’s favorite time of year, but for the rest of us, tax season can be a major headache. Tax time is here again, and if that fills you with a sense of dread and anxiety, you’re not alone. For many Americans, tax season can be a stressful time.
The tax code is often complex, and the maze of deductions, credits and other factors can get complicated. Tax software may be helpful for some. However, it can be more difficult to navigate if you have a complicated financial situation. You might be concerned about filing an accurate return.
Fortunately, though, preparing your taxes doesn’t have to be a painful experience. With some preparedness and organization, filing your taxes can be a simple and fairly straightforward process.
Below are a few steps you can take to help eliminate your stress this tax season:
Collect the paperwork.
Often, the most difficult part of any major task is knowing where to start, but taking that first step can alleviate much of the stress. Step one is to gather all the information, the pertinent statements and documents you need to do your taxes. This may include earnings reports, bank and investment account statements, debt documentation and other relevant paperwork.
These documents should be provided to you early in the year, but in some cases, items may slip through the cracks. You might consider making a list of all the documentation you think may be related to your taxes. If you haven’t received the information you need, you can call your account administrator and request them.
Determine whether you need help from a tax professional.
Once you review the documentation you’ve gathered, you’ll then be in a position to decide if you should do your taxes yourself or consult a tax professional. There could be a variety of reasons why working with a tax professional may be in your best interest, particularly if you have a complicated financial situation. Such instances might include owning your business, having complex investments or having recently gone through a divorce.
You may also just feel uncomfortable doing your taxes yourself and may prefer to seek assistance. Regardless of the reason, don’t hesitate to get help from a tax professional if you feel you need to.
Review your spending records.
It’s good practice, in general, to review your spending on a regular basis, but it can be especially helpful at tax time. Take a look at your records and identify expenditures that may be tax-deductible. These might include costs related to child care, medical care, home improvements, business expenses and more.
The tax code can be difficult to navigate, however. There may be a significant number of qualifications or restrictions on whether a certain expense may be considered deductible. If you are uncertain as to whether particular expenses may qualify, you can always consult a tax professional who can help you identify what’s deductible and what’s not.
Maximize deduction opportunities.
You may also want to explore additional deduction opportunities and take advantage of all your potential options. Although 2016 is over, you may still be able to take deductions for the year.
Some deductions are available up until April 15. For instance, you may still be able to make tax-deductible contributions to a traditional IRA or health savings account (HSA). A financial professional or tax professional can help you further identify these types of opportunities.
Need help organizing your financial picture as you prepare for tax season? Let’s talk about it. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
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