With the April 18 Tax Day deadline behind us, you may be of the mindset that the last thing you want to do is start preparing for your 2017 income taxes. But there’s really no better time than now, when your most recent tax experience is still fresh. Here are a few things you can do now to prepare for 2017 tax returns. You’ll be glad you did.
File, Don’t Pile
Come tax season, a pile of receipts and documents shoved into a drawer or folder can be completely overwhelming. If you don’t already have an organized filing system in place, create one now. Mobile filing folders, boxes, or totes work well if you don’t have a filing cabinet and are available at office supplies stores. If possible, keep this separate from your non-tax related filing, such as credit card statements or correspondence. Take a look at your documents and receipts from your 2016 return to determine which categories you’ll need for each file folder, and keep up with your filing on a weekly or monthly basis. Next January and February when you receive your W-2, 1099s, mortgage interest statements, and other important documents, you’ll be ready to file them, and they’ll be easily accessible when the time comes.
Identify Areas of Weakness
Were there any specific items that caused delays or other issues with your 2016 tax returns? For example, were your mileage records incomplete? Did you neglect to thoroughly document clothing or household goods donations with photographs and receipts? If you haven’t already logged your mileage or documented donations for 2017 – or any other items that you may have missed – start now.
Spreadsheets provide another excellent method of tracking expenses, tax deductible donations, mileage, and other important information. The more detailed the information captured, the better. If you have online receipts, include the hyperlink for easy access. Scan and save paper receipts electronically. Be sure to back up all your files.
Review Taxable Income
Did you withhold too little in 2016? Too much? Now is the time to review your taxable income and make necessary adjustments to your current withholdings, 401(k) contributions, and other components that determine your taxable income – and subsequently, your tax bracket. If you’re unsure of the best course of action to most positively impact your 2017 income tax return, contact Ramsay & Associates. Our tax planning services – for both individuals and businesses – allow you to make the best financial decisions for your family or your business. Contact us for more information or to set up a tax planning appointment.
Take the stress out of tax season – a little preparation now will go a long way in early 2018.