Spring is in the Air - And it's Tax Season Once Again!
As the days are getting longer, it feels like Spring is in the air! You know what that means…it’s tax season!! We decided to take a moment to discuss what you can do to make this tax season painless and worry free.
As much as most people dread filing taxes, it is a necessary evil. Most everyone has begun receiving all those envelopes marked “Important Tax Information Enclosed”. While some people are overwhelmed with the prospect of filing taxes, others are eager to get this necessary task behind them. No matter which group you fall into, it is important to realize that it is better to get everything done sooner rather than later.
Most people know that individual tax returns are due on April 15th. The Internal Revenue Service opened the filing season on January 27, 2020. Your employer was required to give you a W-2 by January 31. And while most other institutions are required to send out their tax documents by January 31, brokerage firms are required to mail or electronically deliver 1099 tax statements by Feb. 15th each year. So, in effect, tax season extends for just 2 months! You have about 8 weeks between receiving all your documents and getting the return filed. Talk about a time crunch!
What can you do to be more efficient and avoid filing an extension? Here are a few suggestions:
If you own a business or rental property, go ahead and total your receipts, providing your accountant or CPA with an organized summary of your income and expenses.
Segregate receipts and/or canceled checks for charitable donations, property taxes, and medical expenses. While the majority of taxpayers are no longer itemizing their deductions, it is important to gather this information - just in case.
Have a system for gathering the tax documents as they are mailed to you – a file folder, a big envelope, a box. Whatever works for you!
Don’t overthink what to include for your preparer. They would rather have too much information than have to follow up with questions.
Complete the organizer and questionnaire that your tax preparer provides to you early. You don’t have to wait for your tax documents in order to complete this necessary form.
When you have most of your documents, go ahead and give them to your tax preparer. There is no need to wait until you have everything. Your CPA can go ahead and begin working on your return even if you are missing a few items. Please note that all Beacon clients have complimentary access to Sharefile, an online portal that allows you to securely upload your confidential documents.
Beacon also has copies of all your 1099s and brokerage statements. Let us know if you need us to send out a copy for you or your preparer.
Get everything in early! The earlier the preparation starts, the more time there is to make adjustments and ask questions.
We hope you have a smooth and hassle free tax season!