As the holiday season quickly approaches, one thing is for sure – tax season is not far behind. If you're anything like the average American, this isn't exactly an exciting time; however, it's also not something you can avoid taking care of. Easing some of the stresses that come along with filing taxes involves proper preparation. Make sure you know what to do to fully prepare for tax time.
Create A Life Map
Don't overlook the fact that many of the life changes you make throughout the year will have an effect on your taxes. Some of these changes can even result in a tax break or even a change in the way you have to file.
Creating a life map will help ensure you don't overlook any of these changes, so that you are filing accurate information. Whether or not you got married, had a child, suffered the loss of your spouse or started a business, these are just some of the details to include on your life map.
Collect And Organize Receipts
Receipts are a great way to ease some of your tax burden. However, if your collection of receipts isn't organized, you won't be able to find what you need. If you've been tossing all your receipts in the same box all year, take some time to separate them based on the type of receipt they are.
Medical expenses, work related expenses, child care and business expenses are just some of the different categories you can use. Performing this step will make things much easier when you get ready to file, and in the event you get audited, you will have all your evidence right on hand.
Think About How You Will File
There is no unwritten rule that says you have to file your taxes the same way every year. For married couples, filing jointly isn't always best. Say in previous years you and your spouse have always filed a joint return. However, this year, your spouse had a significantly high amount of out-of-pocket medical expenses to claim.
Since the IRS only allows you to claim those expenses that exceed 10 percent of your AGI, it might make more sense for you two to file separately, as your combined AGI might not allow you to meet this threshold. Have a pow-wow with your partner to see what option is best for your current situation.
In addition to preparation on your part, working with an accountant such as James Gioia & Company PC can also help ease some of the burden of filing your taxes. An account can help ensure your taxes are accurate and that they include any credits or other entitlements you're due.