Spring of each year is a dreaded time for most Americans as tax returns are due, and unlike last year when the due date landed on a Sunday allowing an extra couple days for taxpayers to mail in their returns, the date to file personal returns is Monday April 15th, 2019. It may sound off into the distant future but rest assured it will be here before you know it. So we recommend reviewing what information you currently have and getting organized now to get ahead of any potential issues. Of course, many of you will not be able to prepare your return this early as you are awaiting year-end statements and other tax related documents (e.g. 1099’s and W2’s). Notwithstanding, it’s advisable to start preparing for the 2019 Tax Season now. Here are some tips to help you get organized and ready for next years tax season:
1. Create a Checklist
The best way to get started is with a Checklist, and the best way to create your list is by using your most recent filed tax return to help jog your memory of the various forms and schedules you will need to prepare for. As the corresponding tax related documents and statements arrive for each form you can check them off your list.
2. Collect tax related documents
Well-organized records make it easier to prepare a tax return and help provide answers if your return is selected for examination or if you receive an IRS notice. The IRS requires you to keep records, such as receipts, canceled checks, and other documents that support an item of income, a deduction, or a credit appearing on a return as long as they may become material in the administration of any provision of the Internal Revenue Code, which generally will be until the period of limitations expires for that return.
The IRS also recommends the following:
Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to figure your basis for computing gain or loss when you sell or otherwise dispose of the property.
You should keep records of your own and your family members’ health care insurance coverage, including records of employer-provided coverage or premiums paid and type of coverage for private coverage, so you can show that you and your family members had and maintained required minimum essential coverage. If you’re claiming the premium tax credit, you’ll need information about any advance credit payments you received through the Health Insurance Marketplace, the premiums you paid, and the type of coverage you obtained at the Marketplace. If you or any of your family members are exempt from minimum essential coverage, you should retain certificates of exemption you may receive from the Marketplace or any other documentation to support an exemption claimed on your tax return.
Business Income and Expenses
If you’re in business, there’s no particular method of bookkeeping you must use. However, you must use a method that clearly and accurately reflects your gross income and expenses. The records should substantiate both your income and expenses. If you have employees, you must keep all your employment tax records for at least 4 years after the tax becomes due or is paid, whichever is later.
3. Find a Tax Preparer
It doesn’t really matter whether you are an individual or a business owner, you will need tax planning and preparation strategy that includes tax saving tactics and strategies like insurance strategies, employee benefit plans, financing alternatives and more. All these things can be overwhelming for an ordinary person, but the experts in this field like TaxPM are doing this on a daily basis for dozens of individuals and businesses.