The 2018 tax season is quickly approaching. There are many ways taxpayers can start to prepare now so they are not thrown off-guard once tax season comes around. Here are five ways you can save time, stress, and money during next year’s tax filing season.
- Complete Your Tax Organizer
Being organized is key and can be very helpful for your accountant. Many accountants provide their clients with tax organizer packages to help them logically sort their tax documents. The tax organizer typically includes a detailed questionnaire that helps you determine which records and receipts are necessary for your accountant to adequately prepare your tax returns. It’s time to move away from the outdated shoebox storage method. If you do not have one already, ask your accountant for a tax organizer today.
- Be Mindful of Filing Deadlines
Doing taxes is stressful enough, so why not make it a little easier for both you and your accountant? Taxpayers can minimize their stress level during next tax season by keeping a close eye on the calendar. Submitting all of your tax documents to your tax accountant in a timely manner increases the likelihood that your returns will be completed and filed on time. In fact, many firms guarantee the timely filing of their clients’ personal tax returns if all required documents are submitted by a certain date prior to the April 15th due date.
- Don’t Fear the “E” Word
Oftentimes unforeseen circumstances arise which can throw you in a panic. When this happens, a taxpayer’s best option is to extend the time to file their individual return. Most extension requests are filed for reasons outside of the taxpayer or accountant’s control. For example, an extension request would need to be filed if a taxpayer was waiting on a final K-1 from a partnership entity in which the taxpayer is an investor. It is important for taxpayers to understand that extensions are not inherently “bad.” Additionally, filing extensions provide the taxpayer additional time to gather all documents needed to accurately complete their tax returns without being subject to late filing fees. Keep in mind that extension requests only extend the taxpayer’s filing due date only; it does not extend the due date of any tax payments.
- Protect Your Identity
According to the Federal Trade Commission, tax identity theft is the largest and fastest growing category of identity theft in the United States. Tax identity theft occurs when someone steals your personal information, such as your social security number, to file false tax returns in your name for the purpose of receiving fraudulent tax refunds. Many identity thieves contact their victims by phone or email, requesting personal information while impersonating an IRS representative. The IRS advises taxpayers to take the following preventative measures to reduce the odds of falling victim to tax identity theft:
- File your tax returns as early as possible during the tax season.
- Use a secure internet when filing electronically. Avoid using unsecure, public Wi-Fi hotspots.
- For paper filers, mail tax returns directly from the post office.
- Properly destroy any copies of tax returns, drafts, and supporting schedules.
Learn what other proactive measures you can take in order to protect yourself from IRS impersonators in Larry Rubin’s blog, “IRS Impersonator Sent to Jail.”
The tax code changes on a yearly basis and your accountant works diligently to keep up to date with these changes and provide you with the most advantageous tax advice. However, many taxpayers unknowingly undercut their accountant’s efforts by failing to maintain an open line of communication throughout the year. The most significant tax savings are achieved as a result of effective tax planning, not the actual preparation of your tax returns. Be sure to keep your accountant in the loop on all potential, significant transactions under consideration. By doing so, they will be better positioned to structure your transactions in a way that will minimize tax consequences.