Hello, 2016: How to Prepare for EOY Taxes

2015 is dwindling to an end – here come the holidays, and hopefully a light bulb telling you to get ready to file your taxes. You can now file starting as early as January 20th, and the sooner you file, the sooner you get your tax refund. Ready, set, get that paperwork together!

Gather Your Documents

Depending on your work circumstances, family, and lifestyle, there can be quite a few things to collect; although you might have the same job and no additional assets from last year, updated information is pertinent, especially if there are any changes in income, and there will likely be a slightly different group of deductions taken. Don’t forget to keep an eye out for your W2s, and 1099 if you’re a contractor.

Account For All Assets

Your income is just one facet of your tax filing. Interest accrued in most savings accounts is taxable; you’ll need a 1099-INT for that. You will also need to file a 1099-DIV for stocks, mutual fund, or money market account. Although these forms will arrive closer to tax time, keep note of all statements and documentation possible for assets of any kind purchased, sold, and maintained over the tax year. This will allow you to properly match numbers and have a better view on the breadth of your ownership.

Organize, Organize, Organize

Spreadsheets are your friends. Regular filing folders will be sufficient for some, but if you’re a small business owner or a freelancer, putting together an electronic database will be a literal money saver; don’t rely on the ink of receipts to hold up or vague credit card statements to explain your expenses. Regardless of what you choose, divide everything into sensible folders and organize accordingly. You can be audited for up to 6 years prior, so to be safe, scan receipts and documents, and back them up on an external hard drive or save them on Google Drive. Here’s an organizational outline to get you started. Now all of your numbers are in one place.

Research Deductibles

Don’t rely on the same deductibles you always take – maybe you donated extra to charity in 2015, or now have a home office deductible if you’ve rearranged your schedule to work remotely. Think long and hard about where your money went and how it came in, (a good reason why keeping tabs all year long is a good idea), and check the group of deductibles oft-forgot.

Double Check Accuracy

This sounds like a no-brainer, but you’d be surprised at how many tax filings have this problem. When you submit these types of careless errors, it delays your tax refund. List and check not only spellings of names, but social security numbers, and that all numbers match up across your records.

Estimate your Refund or Payments

Now that you’ve gathered the troops and prepared for battle, estimate how much you’ll get back, or how much you have to pay. Keep in mind that tax codes change every year; know the changes, like how the Affordable Care Act can impact your refund.

The easiest way to estimate is by using your paystub. All you have to do is enter your demographic information, number of exemptions, and enter your taxable wages for the year, found on your paystub. Tax Slayer’s online calculator estimates your refund in moments – much more quick and simple than downloading an online software or doing it the old fashioned way. Check out Tax Slayer for the detailed instructions.

There are several calculators to estimate your payment amount, similar to Tax Slayer, but are more in depth, although providing a fairly rough number. Once you estimate the amount you may owe, ponder your payment options; pay in full or you can pay in installments through the IRS, ideally if you owe $1,000 or more. After you file your return to avoid the failure-to-pay penalty, decide how much you can pay; the more you pay, the less interest you will accrue. Depending on your circumstances, you can receive up to 120 days through the online payment application or over the phone.

Now get ready to file – doing so online and yourself is simple and straightforward for most.

Pro Tip: Prepare for the next tax year now! Get a sturdy filing system in place, whether that be a manila folder or full-fledged software, to store all of your paperwork and information in a safe place. This way, you can annotate deductions as they happen (like accounting for charity). No need to scramble and delay your cash!