Tax Time Preparation Tips

13 January 2022

It’s time again to think about your annual income tax return. Now is the time to organize your documents as they are available. Create an electronic basket to store them and then print copies for a physical file. This includes receipts for deductible expenses and contributions. It may also be helpful to create a spreadsheet that will automatically total so that you have a good idea whether or not you can itemize.

Some of the documents include:

  • W-2
  • 1099
  • Expenses
  • Medical
  • Educational
  • Child care
  • Alimony
  • Mortgage interest
  • Investment income and gains

If you donated items to a charity be sure you have a receipt from that organization.

If you prepare your own taxes, get the program and start filling in the information that you can. As more data is received, you can just plug that in and be ahead of the game. If you take your taxes to a preparation company or person, keeping like items together will certainly be appreciated.

You will need the names and social security numbers of any dependents. If someone else may claim them as a dependent, it is a good idea to have a conversation about which parent will claim the child or other dependent person.

Plan the Finances
If you anticipate owing taxes, start putting something away each couple of weeks to make the burden a bit easier. If you think you will have a refund, make plans about how you want to deal with it. While it is going to be tempting to spend it on a nice vacation, it might be better to pay down some of the principle on your mortgage or to invest it in some way.

Double Check Personal Info with Employer
The past two years have seen a lot of changes in the workplace in terms of processes and personnel. That is why it is a good idea to double check information on file with them. This includes your personal information including address, especially if you have moved. This also includes beneficiaries on any insurance they provide as well as accurate information on persons to notify in case of an emergency.

Long-Term Planning
This is a good time to make an appointment with a financial planner. They can help with consultation and strategies to help you achieve your goals. Some of these can be debt reduction, saving for a major purchase like a home, investment counseling, starting your own business, saving for children’s or grandchildren’s education, and much more.

Retirement planning becomes more important as time passes. Understanding at what age you will be able to quit work and still have enough funds to see you through the rest of your life takes planning.

If you have a Will, it might be a good time to review it. Situations change: births, deaths, marriage, separation, special needs. If you don’t currently have a Will or it is out of date for some reason, you should consult with an attorney so that your assets are distributed as you want.

None of this is pleasant, but you will feel better when it is done. If you need with your taxes, visit our list of accountants in the area.

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