Preparing for taxes definitely seems daunting to most, particularly anyone who is an independent contractor, a business owner, and anyone with multiple sources of income. Something to note though is that most accountants will only be able to file deductions based on what you know about or provide them, so even if you decide to not file on your own it's a good idea to familiarize yourself with all your options. This is your hard earned money and any tax breaks you can get are worth that time!
Here are a few tips that I think will help greatly that We teach to our clients.
1) Turbotax is FREE up until filing. Spend some time going through each section, in particular DEDUCTIONS to familiarize yourself with what kinds of items you can and cannot count.
2) Download mint.com or expensify and upload each of your bank accounts, credit cards, debit cards. You will be able to see your expenses all in one place and also categorize them as well. Yes, you do need receipts; but expensify is actually able to create them for you if your account is supported by their software.
3) Most banks will provide an end-of-year summary that does a pretty nice breakdown of your expenses for you. Look for it!
4) Make sure you have an ONLINE account for all loans, brokerage accounts, mortgages, etc. You will be able to find your tax statements there and don't need to worry about waiting for them in the mail.
5) Remember that there is a difference between reducing your taxable income (via traditional retirement accounts, education savings plans, HSA/FSA medical accounts, public transit through your employer) and getting deductions (mortgage interest, charity donations, business expenses etc).
6) In the process of preparing for 2015, truly think about what you could do better and how you could be more organized for 2016. Being prepared and doing this due diligence will end up saving you money next year.
"Few of us ever test our powers of deduction, except when filling out an income tax form.''
— Laurence J. Peter, author
If you need any help with some tax preparation and budgeting for this year, feel free to e-mail us at info@finerfinance101.com to set up an appointment. We will also be able to refer you to a great accountant as well if needed!