March 24, 2022

Does the name Uncle Sam make you cower in fear of filing next year’s taxes? Though you probably want to put taxes out of your mind until the calendar year has changed, you’ll keep next season’s stress levels down by getting organized early.

Just as regular teeth cleanings make your dental checkups less painful, checking in on your finances throughout the year can minimize the tax-time pain too. See five ways to create a less stressful tax season.

1. Double-Check Your W-4

If you owe taxes this year or received a huge refund, chances are your W-4 withholding amounts are off. Pay a visit to your company’s human resources department and find out if you should fill out a new form with more accurate information.

2. Archive Your Old Tax Returns

Unfortunately, previous years’ tax returns should not be treated with an out-of-sight, out-of-mind mentality. Archive these documents so they are readily available should you need to reference them, but keep them separate from anything that has to do with the current year’s taxes.

3. Create New Files

Instead of throwing all of your receipts and documents in the same envelope, create a filing system for the current year’s taxes. It just takes a Sharpie and a couple of folders to get organized.

4. Hold On to the Important Information

There are important documents besides the W-2 you’ll get from your employer next year and any 1099 statements from your investments. Make sure you hold on to anything pertaining to the following expenses so you don’t have to dig up duplicates later: job-related moving costs, property taxes, donations, medical bills, childcare, and mortgage interest payments.

5. Save a Date!

Commit to a date on next year’s calendar, like some time in February when you’ll have received most if not all of your tax-related forms.

If you’re self-employed, then you know that your taxes are not automatically withheld from your paychecks. You need to calculate how much taxes need to be withheld by making estimated tax payments either monthly or quarterly. Here are a few tax tips the self-employed should follow in order to stay up to date with the IRS.

  1. Determine your business income. If you expect to be in a higher tax bracket this year, you’ll want to review what deductions you qualify for in order to reduce your income since you will most likely be subject to the highest tax rate. 
  2. Decide when you want to receive your income. Being self-employed usually means you can determine when you receive your payment for the service that you rendered. This can help you estimate how much income you will have and when you need to make your estimated tax payments in order to stay compliant. 
  3. Review what medical deductions you qualify for. Make the most out of your medical insurance deduction by deducting yourself, spouse, or any dependents you have. This will adjust your total income for the year which could help you owe less at the end of the year or even possibly receive a refund. 
  4. Understand itemized deductions vs. business deductions. It’s important to understand the difference because taking business deductions instead of itemized deductions will help you reduce your total adjusted gross income and self-employment tax for the year. 
  5. Track your business mileage. Make sure to keep all business expenses that you incur throughout the tax year such as gas, oil, vehicle maintenance as well as other expenses that may apply. Once you have kept a record of these business expenses, you can deduct it from your tax return. 

Get your refund faster

When you e-file with your direct debit information on your tax return, you’ll receive your refund much quicker compared to mailing off the return and having the IRS process it.

If you need tax help, contact us for a free consultation.