Another tax season in the books. If you’re like me, you take a huge sigh of relief when tax season is over. Both deadlines create an enormous amount of stress for tax preparers and taxpayers alike. And when the stress is over, you don’t want to think about taxes for the next several months, until you have to do it all again next year.
It’s a great idea to put your tax worries aside for a few months, but not before you lay the groundwork for a successful tax season to come. Taking a few simple steps at the end of tax season can help you get ahead of the game for next year and reduce your stress come filing time.
Review Your Return
This year’s return will likely mirror next year’s. As such, it can help guide you to the types of deductions that you need to keep track of. So while you have your return fresh in your mind, take the time to review it. You will find what deductions you took and how you might maximize them next year. For example, you might find that you can advantage of increasing your charitable contributions or unreimbursed employee expenses since you have started itemizing. Or for your schedule C business, you can take advantage of more business-related expenses that you didn’t track the previous year. Taking 15 minutes to understand and review your previous return will save you a lot of time, money, and stress in the next year
Learn Your Income Documents
Along with reviewing your return for the types of deductions that you can take, you can also review it to learn what income documents you’ll have to gather for the following year. I always have clients that aren’t sure if they have all of their required information. Part of the problem is that we get so many tax documents that we can easily miss or forget to download them. Paying student loan interest? You’ll see you have a 1098-E. Got some interest from a bank account? Look out for your 1099-INT. You can create a checklist to quickly identify what you need. Once you get the documents, keep them all in one envelope or folder for easy access.
Fix Your Bad Habits
Most of us could be better organized when it comes to our taxes. If fact, you may have lost deductions you were entitled to because you didn’t keep the proper documentation. There’s no time like the present to make this correction, whether it’s keeping a travel log for your car expenses or getting caught up with your estimated tax payments. Or maybe it’s something as simple as contributing more to your IRA. Take the time now to make any corrections that will help you take full advantage of all of your deductions.
The more organized you can get now, the easier tax season will be when January arrives next year. Another bonus tip: you can also use this slower time to meet with your trusted preparer and have him or her help walk you through this process. (Make sure to get in before he or she disappears for a while.) Take advantage of when you have taxes on the brain to get yourself ready for the next season.