Happy New Year! January marks the beginning of the new year and it also marks the beginning of tax season. If you’re like us, you’ll begin optimistically in January saying that you’re going to get an early start, but on April 15th you’ll be scrambling to get the last forms mailed!
We’ve made a New Year’s resolution to have a hassle-free tax season. Here are four preparation steps that can help ensure a less stressful tax-filing process:
Step 1: Plan your filing strategy. If you do your own taxes, now is the time to upgrade your software. If you use an accountant, call him or her now to start the process. We have some great contacts if you are ready to try someone new.
Step 2: Consolidate your financial information. Set up a file to keep all your financial information in a central location. Include W-4 forms, various 1099 forms showing income such as interest, dividends and business profits, and any other key reporting statements. When it’s time to prepare your taxes, you’ll have everything in one secure location.
Step 3: Gather deduction documentation. Gather all documentation regarding expenses and deductions. If you don’t have a good system for tracking deductions, this is a good time to create one! Not only will you benefit this tax season, but you’ll be organized throughout the year and even better prepared for future tax years.
Step 4: Review your tax-advantaged investments. Many tax-deferred investment vehicles allow you to make contributions until April 15th for the 2011 tax year. Reviewing your portfolio now will enable you to take full advantage of various tax-advantaged instruments such as IRAs. Contact your broker or investment company professional to ensure you are maximizing tax-advantaged investments.
Paying taxes is never pleasant, but this year we’re determined to get an early start. We hope these strategies will help you have a hassle-free tax season this year!
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