Although everyone's tax situation is different, most people are interested in how to make taxes easier next year. With a few powerful tips, you can be more efficient and less frustrated when it comes to filing your taxes.
Whether you're an individual tax filer, a contractor, or small business owner, use the following simple tax tips and tricks to learn how to make taxes easier next year and following years.
Is There an App for That?
In short answer, yes! Best of all, many of them are free. In today's digital revolution, there are apps for virtually everything, including tools for accounting and recordkeeping. For instance, if you own a small business, are self employed, partnership, or work on 1099; it's imperative to keep solid records and receipts of expenditures.
Digital apps designed to help you track expenditures and stay organized will prove to be invaluable. When it comes to saving your receipts, many apps allow you to scan digital copies that are backed up in the cloud — ready for you and your tax preparer to recall for tax season. A few of the most popular receipt apps include:
Evernote Scannable
Scanner Pro
Receiptmate
Receipts
Genius Scan
Office Lens
Track Expenses Differently
Most people assume that stuffing all receipts and expenses into a single box is a great idea. While the receipts are important, organizing them holds its own level of significance.
Whether you keep physical receipts or use one of the previously mentioned apps, it's best to sort them out, which will help you complete your taxes in record time. Best of all, if you pay your tax preparer by the hour, you will save money too.
Immediately Manage Incoming Paperwork
As a business owner, it's far too easy to procrastinate and let paperwork pile up. Although being a business owner is demanding, it makes dollars and sense to file your important paperwork.
It's important to remember if you can't find time to do it now, it's unlikely you will have time next week or the week after — once the pile has grown from a molehill to a mountain.
Incorporate Binders
The easiest way to get your tax paperwork organized is with a three-ring binder. In the binder, you can appropriately label sections and file supporting documents in the proper place. You can create sections for:
Income statements
Bank statements
And any other necessary documentation.
How to Make Taxes Easier Next Year with Deductions?
There are several deductions available for taxpayers and business owners. Far too often, however, taxpayers leave money on the table by starting too late. For instance, Christmas typically gets people thinking about charitable donations, but holiday spending can eat up free cash.
Instead, it's best to get on a schedule and plan to give. Whether it's bi-annually, quarterly, monthly, or bi monthly, getting a schedule to give can help you maximize your deductions.
This planning strategy and reasoning works the same for any type of large deductible purchase. By planning, you will have a much more realistic chance of claiming a deduction instead of simply planning on claiming one.
Plan Your Investments
When investing, taxes should be a central consideration — but not the most important consideration. Whether you're saving up for retirement or in the market for stable income, consider the tax benefits of each of your investment options.
For instance, a tax-deferred 401(k) can help you store money for retirement as well as reduce today's taxable income. At the same time, government and munis bonds can help high net-worth, high-tax individuals. Consult with your certified public accountant for different investments that may benefit your individual tax situation.
Save and File Income Documentation
In addition to your receipts, you should pay special attention to your income documentation. Based on the size and scope of your business, you can easily have several statements of income. These income statements commonly include:
W-2 forms
K-1 forms
Income forms are commonly mailed to you at different times and varying intervals. As a result, it's best to take care of them and store them as quickly as you receive them. Avoid setting them down in various piles around the office.
Contact the Experts at John F. Dennehy Jr., CPA, PC
If you have a more complicated tax return, the best step you can take is to consult with the professionals at John F. Dennehy Jr., CPA, PC. We bring decades of experience helping taxpayers and business owners simplify their taxes. Whether you are self employed, run a small business, have rental properties, or fall anywhere outside of the realm of a standard W-2 return, our experts can help.
Contact John F. Dennehy Jr., CPA, PC today to schedule a consultation.