Tax Prep 101: How to Prepare Yourself for Tax Season

Tax season is around the corner. You must be ready to file your taxes to avoid filing late. You must also make sure you avoid mistakes that can lead to an audit. 

Tax preparation is a must. Do you want to learn how to prepare yourself for tax season? Read on to learn everything you must do to file them on time and mistake-free. 

Organize Your Records for Tax Time

Waiting until the last minute to get your records in order isn’t a good idea. You do not want to stress yourself out looking for documents you need to complete your taxes. 

Focus on getting all of the documentation together. The most important documents to have on hand are the W-2s and 1099s. 

You should have all receipts and information you collected throughout the year ready. If you delve into stocks or funds, have relevant cost basis information ready. You must report this information on your taxes. 

Find the Right Tax Forms

Make sure to have all the right tax forms you need to file your taxes. It’s a good idea to go to the IRS website to find them. This way you ensure you get up-to-date forms.  

Itemize Your Tax Deductions

Do you always take the standard deduction? Yes, it may be easier to go this route, but you should consider itemizing. Doing so can help you save a bundle. 

Itemizing tax deductions is a great option if you own a home or if you donate to charities.

Provide Dependent Taxpayer Ids on Your Tax Return 

Do you have children and dependents under your care? If you do, you will need their SSN on your tax return. If you fail to include them, the IRS will not give you dependent credits. 

File and Pay on Time

Once you have everything ready, you should be able to file your taxes on time. What happens if you can’t file them on time? You must file Form 4868 by April 18, 2022 to receive an extension. 

This form will extend your filing deadline until October 15, 2022. It’s important you make a reasonable estimate of your tax liability for 2021 on the form. The extension is an extension to file your taxes later on but not an extension to pay your tax liability. Don’t forget to pay any balance you might have. 

It’s best to file an extension to avoid having to pay a penalty. For filing late, the IRS might impose a penalty of 4.5% per month of the tax owed. 

Tax Preparation Is Important 

Preparing for tax season is a must. With all the changes that have taken place, you need to make sure you have everything in order for your taxes. 

Have all your documents ready. Use the right tax forms and itemize your tax deductions. You’ll want to file on time to avoid a major headache. 

Do you need help preparing your income tax returns? Contact us now to learn how we can help you with your taxes.