Tips to Prepare for Your Taxes

Tips to Prepare for Your Taxes

It’s tax season time. Before you know it, you will be receiving W2s or 1099s. That may be your sign to grab the shoe box and get it to your accountant. Or if you are like myself that is just the final touch to the ultra-organized masterpiece, I will hand my accountant. Don’t worry if you are in the shoe box style or cramming to organize a year’s worth of information, you are in the majority.

While I am not an accountant, I have had decades of bookkeeping experience. I won’t be providing financial advice today. However, I will be proving some tips to make this whole process easier.

I understand bookkeeping seems extremely overwhelming to most people. For starters, most people were not taught about money. Even some that were taught, perhaps learned from someone who really doesn’t know about money either. If you fall in that category, please know it doesn’t have to be that way.

Understanding money could change your entire world. It can provide you with less stress, allow you to make educated decisions personally and professional daily and could lead you into much more financial success. If you didn’t learn or feel overwhelmed, we have created two courses Making Money Work for You & Your Career (for employees) and Making Money Work for You & Your Business (for owners, independent contractors, and solo technicians). These courses start at the very basics of money, so you won’t feel lost and the course will educate you through so many areas of the financial world. If you haven’t already learned about money or are confused (which it is just that a skill you just haven’t been taught properly) this is a great opportunity to change that and at your own pace.

 Let’s get into the tips I have for you to simplify your tax preparation. These tips can be utilized for your personal and professional tax preparation.

  1. In most cases, I recommend you working with a professional accountant. Just as it is our job to stay on top of safety, laws, and things that could benefit our clients. It is the job of the accountant to have several hours of continuing education yearly and to stay on top of tax laws and tax benefits for you. Doing the taxes yourself especially with a business could potentially leave you missing an opportunity to have more money or leave you in a position of taking too much. Also, if you own a company, that expense of your professional accounting fee is a write-off. There are many different types of accountants and styles. Some will be more conservative than others. Find one who aligns with you and gets you. I would recommend asking around with friends, perhaps in FB groups or communities for an accountant referral.
  2. Log as you go! If you are normally someone who tries to organize at the end of the year or now for last year’s accounting, I don’t recommend this. You are likely to miss some type of income or expense that could change the actual outcome of your taxes. To make things so simple and intuitive we offer this bookkeeping guide book. Otherwise have some type of system that works for you. Ideally, you have already started logging this year’s expenses and income. If not, here’s your sign (wink, wink).
  3. Scan your receipts. Scanning your receipts and storing them in a cloud system like google drive, iCloud, drobox, etc.… will keep things organized. You can even put them in folders, especially if it is for something you think you may need to reference.
  4. Claim your cash and electronic income. I am sure you have heard this before, but cash is income. Venmo, Zelle, PayPal, etc.… that is all income. The electronic payment companies have already begun to warn they will be reporting income. If you get audited, the IRS can then open seven years worth of tax returns to audit them all. If you had not been claiming cash and electronic payments that can open a big can of worms and could cost you a lot of money that likely was spent long ago. Additionally, when you go to purchase something like a car or house if you were planning to utilize a loan with a bank your income is only based on what you “claim”. So, while you may make much more than what you claim, they won’t be able to base your loan amount on that.

We hope you find these tips helpful. Start this year out right by creating a system to stay organized throughout the year. Your next year self is already thanking you.

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