Any day after April 15th is ideally a great time to begin prep for next year’s personal tax returns. Doing so will help you cut down on the work and time required to complete your taxes in 2017.
Here are a few simple steps you can complete this year to make next year’s taxes process easier.
Convert Your Paper Tax Documents to Digital
Before filing away this year’s tax forms away, you may want to consider placing your tax document in an easy-to-reach place. However, if the thought of paper tax returns hanging around for a year makes you think of large piles of messy paper, consider scanning your tax documents instead. An electronic copy provides an excellent backup for your tax information and returns.
In addition to providing a useful backup for your tax documents, scanning, and digitizing your tax files is also an easy way to keep past documents around for as long as you want without running out of room.
Tax consultants often suggest you can shred your hard copies after about three years, but keeping them for six years is sometimes warranted.
Create New File Folders to Hold Future Tax Documents
After organizing, scanning, storing, and shredding tax documents as needed, look at collecting documents for next year. If you didn’t create file folders at the beginning of the year to hold records like receipts, charitable donations, or business expenses, now’s the time to create those folders.
One of the tasks that often takes the longest when tax time arrives is finding all your receipts, particularly if you itemize on your taxes. Don’t spend a day in 2017 looking for the donation receipt you got after you donated a car to a local charity. Instead, make a file now and start tossing everything in the file.
Remember: The file you create now is just a convenient repository of tax items. Put everything that you know you’ll need in the file, as well as any documents you’re not sure about. Your tax professional can also help you determine whether the files you saved will impact your taxes.
Here are just a few of the items that may require records storage to help you file your taxes next year:
- Educational payments
- Health insurance information (Affordable Care Act)
- Investments and income from investments
- Rental property income
- Retirement income & contributions
- Savings accounts with interest
- Self-employment expenses and income
- Classroom expenses
- Moving expenses
- Mortgage interest
- Property tax
- Vehicle sales tax
- Investment expenses
The list above are some of the main types of information you’ll want to keep in your tax file. Your tax prep provider is also an excellent resource for helping you determine what files you should keep handy for next year.
Why is Tax Planning So Important?
Did you know that many Americans pay the IRS too much money because they don’t realize they’re eligible for certain tax rebates and tax reductions? For example, investing in retirement accounts helps reduce your taxable income, and setting aside the correct amount helps maximize your retirement savings and minimizes the tax you pay.
Tax planning not only ensures your taxes are accurate, but planning also helps you take advantage of those tax reductions
Prepare for Next Year’s Taxes With Plano Tax Prep
You may consider tax time in April the only time you need to think about taxes, but a little planning can go a long way. Get personalized assistance or online tax preparation services from Plano Tax Prep to help ensure accuracy in your individual or small business taxes in 2017. To get started, contact us today.