Preparing Taxes for Next Filing Period

This is probably not your favorite topic, nor is it mine, but we all have to pay taxes. Did you get a refund or have to pay more taxes when you filed last year’s tax returns? If you had to pay, now is the time to consider making some adjustments and getting organized for next year’s taxes.

Payroll Deductions

Evaluate if you should adjust how much is deducted for taxes from your pay check. It is better to pay a little bit more each pay period instead of having to come up with a big lump sum payment at the end of the year. Consult your payroll or human resources department at your work to get the proper forms to complete. Make sure that the changes are made by double checking your deductions on your pay check stub.

Donations

 If donating to a nonprofit organization like Goodwill, consider documenting each item and taking pictures of them so that you can deduct them as a charitable donation. When you donate items to the nonprofit organization, be sure to ask for a receipt. The goodwill website (www.goodwill.org) has a donation valuation guide located under “Donate Stuff”. This guide shows the estimate of value for many of the common items donated. Each item has to be listed with an amount for the Internal Revenue Service (IRS) to use for tax purposes. These are for items in good condition. Make a packet of things donated that includes the list of items donated with the value, pictures of the items, and the receipt given by Goodwill and keep together for taxes. This does involve some work, but the little things add up so it is worth considering.

When donating money to non profit organizations, keep the statements they send.

Other Income

Do you have a side business selling, consulting, or doing contract work? If so, be sure to keep the receipts of expenses associated with it. You also need to keep track of the revenue associated as well. By summarizing them in an excel spreadsheet by month, you can determine how well you are doing as well as be more organized when it comes to the end of the year.

Paperwork

Designate a folder that will be for taxes.  Organization is the key when keeping all your receipts, donation receipts, etc.  Anytime you get documentation to be used, or potentially used, for taxes, put them in the folder.  At the beginning of the calendar year, there will be multiple tax forms that you receive.  Instead of putting them in a “to be filed” stack of papers, put them directly in the designated tax folder. I am not a tax expert, but by keeping these documents, your tax preparer can determine what can be used for taxes.

Steps to prepare for next tax season

f you had to pay, now is the time to consider making some adjustments and getting organized for next year's taxes. It will make filing taxes easier.