Easy Ways To Get Ready For Tax Season Now
Time flies, and before you know it you’re flying into a panic because it’s tax season and you’re ill-prepared, to say the least. You grab the shoe box of receipts, the envelopes stuffed full with notations and calculations, and rack your brain trying to remember where you put this, that, and the other.
But believe it or not, tax season doesn’t have to be so, well, taxing. Preparing early can help you get a handle on the information you need and organize it in such a way that everything you need is right at your fingertips.
1. Organize Receipts
You know they’re there somewhere. The receipts that track your charitable giving, mortgage payments, work-related expenses, medical expenses, and more. Separate your receipts and start organizing them into categories before the tax filing deadline looms, and you’ll be a step ahead.
2. Make A List Of Information You’ll Need
Take a look at the specific tax information you’ll need to file, and give yourself enough time to gather all of the items well in advance of Tax Day. Remember to include a copy of last year’s tax return, every household member’s Social Security or Tax ID number, income records for every household member, deductible expenses receipts, and records for any taxes paid during the year.
3. Review Your W4
The W4 form determines how much tax withholding is taken from each of your paychecks. If you find that you receive a large refund this year, consider adjusting your withholding allowances now to ensure that more of your earnings will come home with you in 2020. If you owe money because you didn’t have enough withheld, now is a good time to adjust your W4 to help ensure you won’t have the same problem in the coming year.
4. Gather Pay Stubs
Get a rough idea of your income by gathering pay stubs together, even though you’ll most likely receive either a W2 or 1099 from your employer. By taking a look at paystubs, you’ll be able to identify any potential mistakes on your W2 or 1099. It’s better to catch a mistake early on rather than waiting until you need to request a corrected from while the IRS deadline is closing in.
5. Send Money To Your Retirement Fund
If you have access to a tax-deferred retirement account like a 401(k) or an IRA, take a look at how much money you set aside this past year and try to increase that number. As of 2019, workers under 50 years old can save up to $19,000 in a 401(k) and up to $6,000 in an IRA. And remember: Every dollar deposited into these kinds of accounts reduces the amount of income on which you’ll be taxed.