Early Bird – 5 Tips That Will Help You Prepare For Tax Time Early
Taxes are something that we all have to do, and although they aren’t ever easy, there are some steps you can take to make this fun-free task a little less unpleasant. To help get you started, here are five tactics that will ensure you’re prepared for tax time early:
1. Use A Tool To Estimate Your Return
There are some handy tools out there to help you track your incomings and outgoings, allowing you to estimate your tax return well in advance of it being due. This is helpful because you can then know how much money you will need to put aside. A good personal income tax calculator will be up-to-date with the latest tax rates, so you can rely on it being accurate.
2. Keep A Spreadsheet
Keeping a simple spreadsheet is a great idea when it comes to preparing for your tax return. Every month, try to update it with your incomings and outgoings, even if you’re just adding links to invoices, statements, or scanned receipt files. If you don’t know how to get started with this, a quick internet search should reveal plenty of detailed guides for creating a simple income and expenses spreadsheet.
3. Save For Your Tax Bill
One of the easiest ways to end up in a real pickle is to avoid saving for your tax bill. You enjoy the money you earn all year, but then tax season comes around and you owe a chunk of money you haven’t put aside – oh boy!
The one way to avoid this is to make sure that you put aside money for your tax bill every single month of the year. You will need to work out your tax bracket for this, and if you aren’t confident about the bracket you will fall into by the end of the next financial year, save more than you need.
4. Keep Everything
You’ll need all kinds of documents and receipts to help you when it comes to tax time. Keep a record of your login details, store digital copies of paper records, include any important letters or statements, and take screenshots if they are relevant. Consider keeping this folder encrypted since it contains so much sensitive information. For physical documents, use a secure storage option like a safe to protect these important files from theft or damage.
5. Hire An Accountant Well In Advance
If you know how to do your taxes yourself, it may be okay for you to leave them to the last minute. As long as they are submitted by the deadline, it really doesn’t matter about the timing.
If, however, you know that you cannot do the return yourself, you will need to prepare a little more in advance. Hire a legitimate accountant well in advance to make sure that they have time to do the work.
If it is your first time doing taxes, and you want to do them yourself, consider tackling this task at least a few months before the deadline in case you have any issues. That way, there is room to seek help if you need it. You can use an online tax calendar to keep track of the relevant dates.
Use the tips above, and you’ll have a much better chance of being prepared for tax time. It’s not something to look forward to, but at least with proper prep, it can be as easy as possible, leaving you on the right side of the law and financially in the know for the coming year.