April 18 is fast approaching, and for many Americans “tax season” is, well, taxing. Whether you qualify for a 1040EZ or your tax situation is much more complicated, there are steps you can take throughout the year to make April a little less stressful. In many cases, it’s too late to plan ahead for the 2016 tax year, but there are a few items you can still tackle:
Make your tax appointment now
Many CPAs and tax preparation businesses (i.e. H&R Block) are already booked and it can be tough to get an appointment. However, the closer you wait to April 18, the more difficult it will be—and the more stressed you may get. If your tax situation requires anything more daunting than a 1040EZ, it may be in your best interest to find a CPA who will be there for you year-round. In some cases, the final cost of a tax preparation business and a qualified CPA is very similar.
Find the right software
You can always do your taxes on your own if you have the right programs to help you. Doing so can be intimidating, but it doesn’t have to be. W-2 software and 1099 software can both be of tremendous use depending on your particular needs.
Gather your tax documents as they arrive
If you’re not already organized, get started immediately. Gather any receipts from 2016 you’ll need, keep track of your incoming tax documents related to your work, health insurance, retirement benefits, or school documents. Remember that you now have to prove you have health insurance, and your health insurance provider should be sending you a Form 1094-C or 1095-C. Just like you clean as you go in the kitchen, organize as you go with taxes.
If you suspect you’ll owe the IRS, start saving now
It shouldn’t be a nasty surprise come April 18, but those who aren’t prepared might have a balance due sneak up on them. Ideally, a CPA will tell you that you shouldn’t owe or receive a refund in April. If you get a refund, that means you were basically giving the IRS a free loan. Aim for breaking even.
Start researching a high-quality CPA for next year
Almost any taxpayer can benefit from having a CPA in their corner instead of a non-licensed “tax preparer.” You might not be able to secure an appointment with an esteemed CPA this year, but start researching to get on their roster for next year.
If you’re a real go-getter and want to get a head start for next year, it’s time to find your perfect match. A CPA is a professional who’s passed a very difficult exam to earn that title and likely has many years of training and schooling behind them. Alternatively, a “tax preparer” can be just about anyone. These workers are often hired on a temporary basis by big tax preparation companies and have minimal training compared to CPAs.
Only a CPA can ensure you maximize your write-offs and tax credits. Plus, they’re available year-round for all your questions. Many times, tax preparers seemingly disappear after April 18. Particularly for contractors, sole proprietors, entrepreneurs and small business owners, it’s paramount that you have a CPA to help with quarterly taxes, year-round preparation and additional tax-related tasks.
As you commit to staying on top of your 2017 tax situation for annual filing one year from now, here are a few items to keep in mind:
Record, record, record
Your CPA can help direct you towards what receipts need to be saved, from meals to entertainment and travel to technology fees and business-related books. If you qualify to claim gas mileage, find a system that works for you. U.S. News gathered some of the top-rated apps to make taxes easier.
Figure out if quarterly payments are in your best interest
Again, your CPA can tell you if you should be making quarterly payments and how much. If you should (and you don’t), the IRS might come after you with a penalty.
Plan ahead for write-off purchases
You might be able to write-off a host of items to help lower your income bracket from office desks and chairs to a new computer or smartphone.
Tax planning all has one thing in common: You’ll be better off with a CPA. As a bonus? For some taxpayers, even a CPA’s fee is a write-off.
Guest article written by, life and career coach, Julie Morris.