Tax season is just around the corner. Before the end of January, taxpayers across the country should receive their tax forms for filing their taxes.
If you want to get a jumpstart on the tax season, this article will discuss what you can do to prepare, so when you go to report your taxes, the process will be smooth and fast.
Gather and Total Your Receipts
Part of filing your taxes requires you to report any deductions; this includes charitable donations, medical bills not covered by insurance, and business expenses. You want to gather and keep track of these expenses because they will lower your taxable income amount.
Take some time by gathering these receipts and totaling them up. Consider writing and keeping your totals somewhere safe so you can pull them out for later use. Doing this beforehand will save you time in the future when tax season officially arrives.
Alongside keeping track of your total deductions, you also want to figure out how much you made and lost on investments. If, for example, you sold a house and made money off of it, then you need to pay taxes for that. If you gained or lost money on another investment you sold or exchanged, say cryptocurrency, you want to record that too.
Keeping a record of these things and totaling their amounts will save you time figuring out how much you made, lost, or what contributions you made.
If you’ve hired a certified and professional tax preparer to do your taxes for you, collecting your receipts will make their job easier.
Gather Tax Documents from the Previous Year
Another useful tip: collect tax forms you have already filled out from the previous year. The reason for this is it can serve as a guide for how you filed your taxes last time. It’ll also help your tax preparer if you’ve hired one to do your taxes for you.
The Internal Revenue Service (IRS) even adds that these documents can tell you whether you are eligible for deductions or tax credit.
Generally, you want to hang on to these documents for about three years in case you get audited by the IRS and need to file an amended return. It will make fixing errors easier.
Choose a Tax Software
Using tax software, such as TurboTax or TaxAct, can help speed up the process of filing your taxes.
Since it’s relatively inexpensive, this could be a great choice if you don’t mind paying money to use software to help automate your tax report. In some cases, these programs will allow you to file for free if you’re only reporting a simple tax return.
If you plan on using tax software, then it will help to select one and review it. Learn what you can about it. This way, you’re ready to go when it’s time to start working on your taxes.
The same applies to cryptocurrency investors. Knowing what crypto tax software you will be using, such as TaxBit, will give you an advantage and help you be ready when it’s time to start your taxes.
Both tax software and crypto tax software are there to assist you as you file your taxes. They will walk you through a step-by-step process and minimize mistakes. Overall, the automated process will significantly reduce the complexity of tax reporting.
Hire a Tax Professional
Another option is to hire and speak to an accountant. You may want to do this if you’re looking to avoid using technology or your financial activities are complex (selling property, self-employed, etc.). Compared to using tax software or crypto tax software, it’s more expensive. However, it may be worth choosing if you believe your taxes will be complicated and you need help getting started. Having a professional can lead to a more seamless process.
Regardless of the complexity, though, a certified accountant can tell you precisely what you need to get a headstart on your taxes. Likewise, they will be the best person to turn to if you have any questions.
Similarly, like the tax software or crypto tax software, a tax accountant will make reporting your taxes easy by walking you through the process.
There’s No Right or Wrong Way
By preparing and planning early, reporting your taxes will be quick and worry-free when it’s time to file. Not only that, but you’ll give yourself time to resolve any problems you may encounter along the way.
In the end, the route you take is up to you. It may be more advantageous for you to use tax software or crypto tax software than to hire a professional to file your taxes. Or, it could be the other way around.
Maybe it’ll be easier for you to do it by hand and file your taxes yourself when the time comes. There isn’t a right or wrong way to approach this. It comes down to convenience and what will give you the best peace of mind.