Tax season is in full swing, which means many filers are now collecting documentation and working through their filings. These prep steps can help you get through the 2024 tax season with minimal stress and create a system to make filing in future years much easier.
- Organize your documents. Most tax documentation must be sent to individuals by January 31. As these documents arrive, you will want to keep track of them. If you store them in different locations, it can be easy to forget where they are. Then, you may have to spend a ton of time hunting them down or overlooking them, which can result in errors on your tax return. If the error leads to paying less taxes than you should have, it could result in an audit. If it results in you paying more than necessary, you are losing money unnecessarily. For this reason, it’s a good idea to create a file for your current taxes and place each document in the file as you receive it. Then, you can take comfort in knowing you have everything you need to complete an accurate tax filing.
- Ensure you have all documentation before you start. If you don’t have all of your documentation before you begin working on your taxes or have a CPA start working on them, it can slow down your tax preparation and confuse the accountant. Therefore, the best course is waiting until you have all the documents before starting. If you are unsure whether you have everything, you can reference last year’s file to see what forms were included there. Absent a major change in your life, job, or property ownership, this file should give you a great idea of whether or not you are still waiting for additional documents.
- File electronically. If you aren’t already filing electronically, it’s a great way to ensure you get your return quicker than you would by sending in a paper filing. The IRA estimates that 90% of electronically filed returns result in receipt of the tax refund in 21 days or less.
- Discuss major life changes with your accountant. Whether you work with a CPA or accountant or complete your taxes on your own, you must account for some major life changes. Examples include getting married, having a child, losing a dependent, enrolling in college, changing employment, buying or selling a business, or buying or selling a home. In some instances, such as when buying or selling a business, you may want to consult with your accountant before tax filing season. They can provide you with an estimate of your tax liability, which can help you plan better and avoid the shock of an unexpected and large tax burden. All of these life events can impact your taxes, and working with a professional early on can give you an idea of what to expect and help you avoid some unintended tax consequences.
- Remember the tax deadline. The tax deadline every year is April 15, which falls on a Monday in 2024. It is crucial that you keep this deadline in mind and complete your filing on or before that date. If you are submitting a paper return, it must be postmarked by that date. If you cannot complete your filing by then, you must file for an extension, giving you an additional six months to file. And while many people think that filing for an extension means they have an additional six months to pay their taxes, this simply isn’t the case. Even with the extension, you must pay your taxes by April 15 or face penalties. The size of a failure-to-file penalty is based on the amount of any unpaid taxes and the late return.
- Reach out to a professional. Many more people are completing their tax returns independently than they have in past years. Tax and accounting software does make it easier than it used to be, but the reality is that without expert guidance, you may be leaving money on the table. Tax and accounting professionals know the deductions and credits better than anyone else, and they can be certain that you are taking all of the applicable ones to maximize your return. While getting professional assistance may seem costly, the cost is often offset by an increase in the size of your return.
To learn more about accounting, tax planning, and filing in 2024, contact Parker Business Consulting today!
Parker Business Consulting & Accounting, P.C. is a unique firm with more than a combined 75 years of experience in private industry, coupled with a strong background in public accounting. This combination enables us to provide valuable assistance based on direct experience with many of our clients’ same issues.