It’s never too early to get your finances in order and start preparing for tax season 2021. Getting a head start on your taxes can help make the process less stressful. Read on for tips about how you can prepare for the upcoming tax season.
Since tax season can be complicated and frustrating, you could be wasting time and money if you don’t plan accordingly. Whether you’re looking to reduce your tax bill or increase your refund, then tax preparation throughout the year is critical.
Steps to Take to Prepare for Tax Season 2021
1. Gather your Tax Records
Organizing important documents, like W-2 forms, Form 1098, retirement contributions, medical expenses, and charity contributions, should be the first step you take when preparing for tax season 2021.
2. Follow a Tax Plan Guideline
Here’s a timeline to follow throughout the year for the tax season 2021:
January 1- April 15th:
April 15th is the tax return filing deadline, during this time make sure you have received all W-2 forms, 1099 forms, and other tax documentation before you start preparing your IRS and state tax return.
April 15 - October 15:
Have copies of your past years tax returns in case you receive an IRS notice. Update your W-4 paycheck withholding and get your tax refund earlier.
October 15-December 31:
Make sure to take qualified tax breaks by December 31st to save money on your taxes. Before you file your tax return, make sure you’re aware of all the 2021 tax credits and deductions you can claim before the new year.
3. Track Income
When preparing your tax return, it's important to keep track of your income statement from the previous year. It can help predict if you're actually making a profit after deducting your expenses. Your income throughout the year will also determine how much you owe in taxes and what your refund will be.
4. Plan for a Refund
If you’re anticipating a tax refund, there are several ways you can receive it. If you want your refund directly deposited into your account, make sure your bank information is filed with the IRS. The refund can also be mailed to you as a check or debit card but this could take a couple of weeks. You can check the status of your refund on the IRS website.
The earlier you start preparing for tax season 202,1 the more time and money you may save. Because filing your taxes can be complicated and stressful, hiring an accountant could be beneficial. The financial experts at Satty, Levine & Ciacco, CPAs, P.C. can assist you. Visit our website today to get started.