While the deadline to submit taxes is a little more than two months away – April 18 to be exact, this subject should be among the list of important things to prepare for right now.
Procrastinating on your taxes –whether as an individual or a small business owner – is not recommended. This requires your attention as it is time to act.
Gather documents, contact tax preparer
Here are some of the steps to take during tax season:
- Assemble the necessary tax-related forms: Start by putting together a checklist of forms. There may be a number of them. That list should include W-2 forms from all the jobs you held during the year; 1099-DIV forms that report investment dividends; 1099-INT forms that report interest income; 1099-NEC forms if you were an independent contractor; 1099-G forms if you received unemployment compensation during the year; 1099-B forms for capital gains on investments; 1098 forms for mortgage interest; and 5498 forms that report contributions to IRAs. Remember, do not file your income tax until you have assembled all the correct forms.
- Contact a tax preparer right away if not preparing your own taxes: If you have a dependable tax preparer whom you have relied on for years, stick with that person. Otherwise, you may have to scramble to find the right preparer. Seek referrals from professional colleagues and trustworthy friends. Line up an appointment as soon as you can. If you wait until March, you may be out of luck because by then some tax preparers may no longer be taking new clients.
- Pursue steps geared toward lowering your tax bill: This includes making traditional IRA contributions through the April 18 tax-filing deadline. Another way to gain a deduction is by making contributions to a Health Savings Account if enrolled in such an eligible health insurance plan.
- As a small business owner …: Itemize your business expenses. Doing so may help you secure the most benefits from your expenses. Also, calculate the projected payroll taxes.
These are just some of the important tasks that require your attention during tax season.
Plan ahead and prepare
Do not be caught unprepared at tax season. Planning ahead and seeking professional advice whether from an accountant or an attorney are critical steps to take.