Start your tax preparation on April 14th? That doesn’t make you early to the game.
When it comes time to start your tax preparation, how early is too early? While you probably know doing your taxes right before the April 15th deadline is not the smartest idea, you may not know how soon you should start. There is a misconception that you must wait until a specific day to even think about your taxes. Here’s why it’s best to pull out your records before everyone else.
Reduce the Risk of Lost Paperwork When You Start Your Tax Preparation Early
As soon as January rolls around, you’ll begin receiving critical tax documents in the mail. No, you shouldn’t cram everything into that abyss you call a desk drawer. Instead, you should go ahead and pass them to your tax planner. If you don’t, you may find yourself frantically trying to locate that 1099 before the clock strikes midnight on the due date.
Entering all of your pertinent records as you receive them reduces the risk of losing something important. To follow this advice, you must work on your taxes all year long. Trust us. You’ll find yourself dealing with fewer headaches when April rolls around.
Maximize Your Deductions
Rushing through your taxes at the last minute is a surefire way to overlook something that could save you money. While Uncle Sam doesn’t mind if you drain your pocketbook, you want to reduce your tax burden as much as possible. In order to maximize your deductions, you need to start on your taxes earlier rather than later.
Keep a clear record of all your expenses—that old shoebox isn’t cutting it. With so much technology at your fingertips, it’s simple to maintain a spreadsheet. Scanning a digital copy of your receipts is also wise. If you organize your tax records throughout the year, you’ll be less likely to forget a major deduction.
Eliminate Underpayment Penalties
The government has a funny way of finding penalties on tax returns. One of the most common is the underpayment penalty. You may be subject to this fine if you owe the IRS at the end of the year. What’s the best way to prevent this from happening? You guessed it—work on your taxes throughout the year.
Many people, including the self-employed, should consider making quarterly payments to Uncle Sam. Your tax planner can help you determine how much you should pay each period. If you stay up-to-date with quarterly payments, you won’t have to worry about an underpayment penalty. Additionally, you’ll owe quite a bit less on April 15th.
Work with a Tax Professional All Year Long
Many big-box tax preparation services begin advertising as the federal deadline looms near. However, this is not early enough for those who want to reduce their tax burden. Instead, it’s better to form a relationship with a tax professional who can assist you throughout the year. Working with the same preparer ensures they understand your unique situation. They will help you file every correctly and work to save you money.
Don’t trust your taxes with just anyone. Look for someone with the experience necessary to handle your needs. Incompass Tax, Estate & Business Solutions knows how to keep you organized before tax season hits. With three decades of experience, we’ve seen it all. Our experts are available year-round to help you make sense of your taxes. Connect with us online to begin your tax preparation before the deadline rush.