Like clockwork, springtime brings Americans all over the country out of their homes and into the offices of their accountants. Tax season is here, and it’s time to get ready.
Definition of Tax Season
Tax season is the time period between January 1 and April 15 of each year when individual taxpayers traditionally prepare financial statements and reports for the previous year. In the United States, individuals must file their annual tax return by April 15 of the year following the reportable earnings.
Hopefully, this annual event does not come as a surprise and you are ready for it. If not here are some of the best ways to prepare for tax season.
Find the Right Accountant
Managing finances is no small undertaking. It’s important to choose the right financial expert to best help you with your needs.
The right credentials can make the difference between a good accountant and a great one. Some of these include, but are not limited to:
- A degree in accounting and/or business. You want the person in charge of preparing your taxes to understand what they are doing and to be confident in their abilities. Entrepreneur Don Gayhardt graduated with a B.B.A. in accounting and went on to become the CEO of a finance company. These kinds of prerequisites really do make a difference.
- A certified public accountant, or CPA license. What this means is that they are issued a state license by the board of accountancy. This is one of the most important qualifications in looking for a tax preparer because it is highly respected in the field. An accountant who has gone the extra mile to achieve this goal not only shows their education level, but it shows that they are willing to go above and beyond.
If you would like to search for accountants in your area who with a CPA you can check the IRS directory.
Keep Documentation Tidy
It’s easy to forget about the importance of good paper organization in the hustle and bustle of the rest of the year.
Avoid any last-minute panic by developing good organizational habits with your documentation before the season even begins.
- Invest in file folders. Develop a system of sorting documents into their appropriate “homes” as you get mail and paperwork so that they are ready to go on-demand. Have a folder specifically for taxes and make sure that all related documents go inside of it as you receive them.
- Save receipts on home improvement purchases. This can be anything from new carpet, garage doors or energy-efficient changes like windows. Your accountant can help you turn those improvements into a larger return.
- Label everything you bring to your preparer, even if it is as simple as putting a sticky note on your W2 to indicate who it belongs to. You will thank yourself later on for having the foresight and your accountant will like you better too. This is especially helpful in ensuring that everything you need for filing is checked off your list.
- Don’t forget about the Goodwill runs that you have made throughout the year. Save your charitable donation records and be sure to fill them out entirely. Paper clip or staple them all together and place them in the folder with the rest of your documents.
Life is stressful enough, but your taxes do not have to be an added source of stress. Take steps to prepare for this time of year ahead of time to make the process smoother. Check out the tax laws and how to apply for the federal tax ID numbers.
READ: Accounting vs Auditing