There are many factors that can devalue your return during tax filing. A bit of preparation each month can saves hours of work later on. This can also net you extra money on your return, which is always a good thing.
There are several ways to prepare for your taxes a little at a time. Here we will discuss a few methods that will save you time when taxes roll around, or save you money if you are paying an accountant by the hour to prepare your taxes for you.
Save Your Receipts
Whether you are a business owner or simply buy supplies for your job out of your own income, you need to remember to save and file your receipts for any purchases made in relation to your work. While most think of this when purchasing a new printer, laptop, or copier, they often forget the smaller purchases. Other possible deductible purchases include:
• Boxes of pens, pencils, highlighters, and other minor office supplies
• Reams of paper and ink cartridges for printers and copy machines
• Fuel used in travelling to purchase supplies
There is nothing more frustrating and time consuming than a large box of random papers being dropped on your desk at tax time. Save your accountant time and yourself money by properly filing these papers, receipts, and pay stubs for easier access during tax form preparation. By doing this you will make a good impression as well as learn how to systematically reduce the stress that tax filing brings.
Communication is Key
During the year, if you have any doubts as to whether an activity will be important to your taxes, do your research and communicate with your tax professional. This simple act can also protect you from possible auditing as your tax preparer will be able to notify you if an activity is going to bring up red flags later.
It is also important to communicate with your accountantabout any changes in your life or business. Common events that can affect your tax filing include:
• Marriage, divorce, and separation
• Custody changes
• Insurance rate changes
• Vehicle maintenance related to work
In the event that an audit takes place, you will need your records for several years prior to the year of audit. In order to avoid excess stress and hassle, keep all tax records filed in an easily accessible place for at least ten years, more if you prefer. The space taken by one four-drawer filing cabinet can save you from a very nasty auditing experience.
Some regularly saved records include:
• Previous tax records
• Purchase/Sale records for livestock in farm related industries
• Banking records for all bank accounts
• Receipts or proof-of-purchase for all vehicles
• Maintenance records for all vehicles
• Year-end paystubs for at least five years
By following these simple steps you will take a large bite out of the stress, time, and expense of tax preparation, as well as keeping secure and reliable resources handy in case of audit. This system will also allow you more broad range of possibilities where your deductions are concerned, offering you a larger return at the end of each fiscal year.
Author’s Bio: Val Anne is an in-house writer from Franklin Debt Relief, a company specializing in programs for people with high credit card debt.