Unless you requested an extension, 2021 tax filing is finally over! Many taxpayers stop thinking about taxes as soon as they file and don’t worry about it again until the next April deadline is approaching. But this can make tax preparation more stressful than it needs to be and limits the ability of your tax advisors to help. Here are 4 things you can start doing now to make filing next year’s taxes easier, as well as lowering your financial stress year-round:
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Keep good financial records. There are lots of forms and documents involved in accurately reporting your income and expenses on your tax return. One of the best things you can do to stay ready for tax time is to keep good records. Set up a system to file your documents when you get them, so you know exactly where they are when you need them again. If you itemize your deductions, be sure to also retain receipts for approved expenses, like charitable donations.
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Consider adjusting your withholding. If you owed taxes this year, or even if you received a large refund, you may want to consider adjusting your withholding to more accurately meet your anticipated tax obligations. If your situation has changed—especially in the case of a new marriage, child, or job—you may need to change your withholding to match your new financial circumstances. Talk to your tax preparer or accountant about filling out a new Form W-4 or changing your estimated tax payments if you’re self-employed.
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Set up an online IRS account. If you haven’t already done so, setting up your online IRS account is a good way to stay on top of your information. With an online account, you can view your payment history, and check your payment plan if you have one. If you need help setting up the account, we have a handy step-by-step guide available.
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Work with an accountant during the year. If you want to make next year’s tax filing process easier—as well as being more on top of your personal or business finances in general—consider working with an accountant during the year. Many people consider finances to be their number-one cause of stress, but it doesn’t have to be! An accountant or bookkeeper can help you stay in control of your financial situation.
If you need a partner to help you manage your finances and make next year’s tax time less stressful, Padgett is here. Our nationwide network of financial advisors, accountants and tax professionals are ready to help. Find your local office today!