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There are a lot of people out there who dread tax season. Preparing your own taxes, or even just preparing the information to allow someone else to do your taxes for you, can take plenty of time. This can have people delaying the process, which could make tax preparation even more difficult and time consuming. In fact, I myself don’t particularly enjoy preparing for and doing my own taxes, but I at least have some rules to follow that help make it a more bearable process.
Make it a Continuous Process
To not let my tax duties get the better of me, I try to make my preparations a continuous process throughout the year. Since I’m self-employed, doing so makes my life — when it comes to taxes at least — much easier to stay on top of.
I continually gauge my tax progress, retain receipts and records in one central location, and do my best to stay appraised of any changes or adjustments to the tax code both in the state in which I live as well as federally.
Do a Practice Run
Several months before taxes are due, as I near the end of the year, I tend do a practice run. This typically entails doing a quick run through of all the schedules I’ll need, going through and making sure I have all the documentation I need to prove any deductions, and doing a rough draft of sorts to get a better idea of what my year-end totals will look like.
While this doesn’t mean my practice run will tell me exactly what I’ll be looking at tax wise, it certainly gives me a better idea of what I need to be prepared for and makes the full tax process at the end of the year a little easier.
Keep it Clean
I don’t like to worry about things; therefore, I find that by keeping my tax documents clean, honest and as accurate as possibly, I really don’t have to. Rather than try to sneak the family cat in as a dependant, claim a bunch of exemptions or deductions I’m not eligible for, or conduct some other financial figure fudging in hopes that the IRS won’t notice, I prefer to keep things on the up-and-up.
Keeping my taxes as clean as possible might not make my tax payment or refund better, but it sure does give me peace of mind, and when it comes to taxes, I prefer that over a little extra savings.
Retain Documents Safely
At the end of the year, and after my taxes are prepared and filed, I’m inevitably left with some relevant documents I must retain. Over the years, this has grown to more than I could easily fit into a safe deposit box.
Therefore, in an attempt to safeguard my personal and financial safety, I retain as much of this information as possible without the most pertinent information listed upon it. Either by leaving copies of my taxes without a name or social security number (items I could easily fill in if needed) or by blacking or cutting out similar items on other documentation, I can better protect my tax documentation in case of theft or loss.