Five Simple Steps to Start Preparing for Tax Season

Like many Americans, I loathe tax season. Collecting documents, filling out forms, sending money to Uncle Sam – it adds up to a process that I frankly don’t really enjoy.

Still, it has to be done each year and the time to do so is nearly upon us. Here are a few steps to take well before actually filing our taxes that helps make the filing process that much easier. We do (or have done) each of these things and they’ve all helped greatly.

Tax Preparation Tips

Securely save each and every tax form that arrives in your mailbox. Designate a specific place to put all of those W-2s and 1099s and statements as they arrive and, when they show up, put those forms in that place.

For years, we’ve simply put our tax documents in a single manila envelope and put it in a secure place with our other important documents. When a new tax document comes in, I just simply stick it in that folder.

Figure out how you’re going to prepare your taxes. Are you going to use software and do it yourself? Are you going to do it manually? Are you going to use a preparer?

If you choose to do it yourself, it’s probably time to start gathering materials. Our family uses TurboTax for our taxes, so we go ahead and download it early so that we have it ready to go when we’re ready to file.

Contribute to your Roth or Traditional IRA. If you’ve been thinking about opening or contributing to a Traditional or a Roth IRA, you can contribute and have those contributions count for the previous year up until April 15 of the following year.

So, if you’re still on the fence, your window of opportunity has not yet closed. You can make those contributions as long as you do it before you file.

Think (and talk) about changes in your filing status. Did you get married (or divorced) in the past year? Did you have a child? Did one of your child spread their wings and set out on their own this year? These things will all affect your taxes.

Not only that, many of these changes affect what happens on the tax forms of others, so it’s worthwhile to talk to the people involved and make sure that you’re not claiming dependents that you shouldn’t be. In the case of divorce, there’s some chance that tax season will alert you to additional financial steps that you need to take, such as changing names on accounts.

Be ready for an extension if necessary. Sometimes, taxes end up being more complex than you expect. Two years ago, I had issues receiving tax documents from a company that had paid me and the issue lagged past April 15.

Thankfully, if you’re facing these kinds of issues, it’s very easy to receive a six month extension on your filing. Just fill out Form 4868 and submit it. You have to make a payment equal to your estimate of what you will owe, but this allows you to not incur any penalties while you’re tracking down final details.

Tax season is enough of a headache. Little steps like these can really help to take the edge off.

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