It’s been a hectic 2017 for all, and maybe some of us still can’t move on from the pressures we had experienced last year. Good to hear that you have been able to celebrate after you had finished all those hard day’s work, and had submitted those returns in the nick of time.
Well, tax season is here again, but don’t worry because we’ll share some tips on how to start your 2018 right by preparing for the upcoming tax year!
1. Reflect on Your Past Tax Year
This is a good time for you to do some reflections on how your past tax year had turned out, as well as think of ways on how you can further improve your organization of data as well as other tax practices so that you’ll have a less stressful tax year.
2. Analyze Your 2017 Returns
Yet another good measure for you to do is to make some reviews of your previous tax return. Remember to be keen on important details, especially when it comes to marital status, child adoption cases as well as work location, for any changes on those information can change the landscape of your tax return. Also, when it comes to location, you should also remember this simple phrase:
“SIT where you live, SUI where you work.”
This phrase alone is a general rule-of-thumb when it comes to payroll. It means that you should pay State Income Tax (SIT) based on where you live, while SUI (State Unemployment Insurance) is paid based on where you work location is.
3. Organize Your Files
It’s also important that you organize the necessary documents that you have, especially the ones you’ll be receiving such as:
- Form 1099-MISC
- W-2 earning statements
- Form 1095-A
- W-2Gs Form
- 1098 Forms
- Schedule K-1 Form
It’s also a good thing if you check your inventory products to be sold before the year ends, for you to monitor costs in factors such as labor, raw materials, etc. You should also organize your receipts, which are important especially when it comes to standardized deductions (optional).
Furthermore, it’s best if you review your books for any unreconciled transactions, so that you can easily explain the situation of your books once you’ve come to the point that you’ll need the help of a tax preparer.
4. Hire A Tax Preparer
Speaking of tax preparers, if you already think that there’s something wrong with your books, or you’re having difficulties in preparing the documents that you need, then it’s highly recommended to hire someone who will help you in fixing any kinds of horrible tax dilemmas.
5. Justify Your Expenses
If ever you’re running a startup business, it’s best recommended that if you want to claim items as business expenses, then you need to justify this with the IRS.
6. Stay Updated with Tax Laws and Deadlines
You should also stay updated with the latest tax news, especially on those which involves changes in tax laws that may or may soon affect your tax return. These involve factors such as state tax regulations, eligibility as well as limits in contribution.
Preparers on the other hand, also needs to be alert when it comes to publications and updated forms that will be released by the IRS so that there will never be issues of overlooking within their client’s tax returns.
Both parties should also have the utmost responsibility of keeping an eye out on tax deadlines to prevent penalty issues with the IRS, and stay put when it comes to system updates made within the tax software they’re using.