3 Tips To Properly Prepare Your Taxes
Oh, no. April 15th is approaching. You know what that means. Tax time is upon us.
But it doesn’t have to be a headache. There are three tips I try to follow to ensure that my tax preparation is done right. They might sound simple, and that’s because they are! Break down the complexity of preparing your taxes this year with these tax time best practices:
1. Don’t do your own taxes – hire a professional.
This one is controversial, I know. But here are a few reasons why I choose to hire a professional tax preparer:
- Tax professionals do taxes day in and day out – and I don’t. I understand only a certain amount about the gigantic tax code that our government asks us to follow. If I miss one iota of information while filling out my forms, it could trigger an audit. Hiring a professional helps me ensure that I have the best mind possible thinking through the numbers – and ensures I send the government what I owe.
- Tax software can’t remind you of specific situations where you may be liable to pay a tax. While many programs out there are helpful, they are far from what the human brain can accomplish with adequate training. Tax software cannot always connect all the dots. Certain parts of your tax software might not notify other parts of your tax software about specific exceptions or circumstances.
- If an audit were to occur, I’d have someone on my side. Knowing what to say to the IRS when they come knocking on the door is important. In those types of situations, you’re going to need someone who knows your tax situation inside and out.
Hire a professional. Besides the reasons listed above, they might find you deductions you can claim that more than pays for their services.
2. Have a scheduled brainstorming and gathering session.
One of the biggest problems people have around tax time is the lack of thought they put into properly paying their taxes. Seriously sit down, pull out all your paperwork from the past year, and look it over! Simply handing it to your tax preparer won’t do. Here’s why:
- You’ll think of other documents you left out of your folder for the tax year. In the digital age, a lot of information about investments, bank account interest, and other activities are stored online. While you may get an email alerting you of most of these documents, for some you might not. Looking through your tax documents helps spark your memory and you’ll find many more items to collect before you see your advisor.
- There might be things you have to write down for your preparer. When going through your documents, you might have to clarify certain parts so that your tax preparer can accurately file for you. Jot down anything you think will be important for them to know. What is it that will help them when they are crunching the numbers?
Don’t underestimate the benefits of sitting down and brainstorming your tax responsibilities. It could save you hours of work if you constantly have to run back and forth between your tax preparer’s office and yours.
3. Don’t try to beat the system.
Fraudulently reporting deductions will get you nowhere in the end. Remember that we are lucky to live in the nation we do, and the government should be paid what it is owed. Trying to beat the system will only result in an audit down the road, and cause you greater pains that you can imagine.
Follow the advice of your tax professional to keep you on the straight and narrow. They know what you should claim on your taxes, and will help you with any complex moral issues you encounter.
Did you already file your taxes? How’d it go? Meet us in the comments!
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