With tax season now upon us, it is important to spend some time getting yourself organized to make the process of filling out and filing your tax return as stress-free as possible. Hopefully, you have done a good job of staying organized throughout most of the last year, but even if you haven’t, here are some steps you can take now to cut down on the amount of time you spend on your tax paperwork this year.
Analyze last year’s tax return
It can help to take out your tax return from last year to help you develop a list of the items you will need this year. This way, you don’t have to rely on your memory to make sure you have everything you need.
Determine if you will itemize
When filing your personal tax return, you have two main options: standard deduction or itemized deductions. If you decide you will file itemized deductions, you will be helped greatly if you have kept good records of your purchases throughout 2017. Though not every dollar you spend is eligible for a tax deduction, you can itemize expenses that cost more than 10 percent of your adjusted gross income.
Regardless of your tax filing status, you are always eligible to take the standard deduction. This deduction is $6,300 for single taxpayers. Your CPA can help you determine if you are better off taking the standard deduction or itemizing.
If you decide you did not keep good enough record of your expenses to itemize this year, you should commit to doing so in the next year. The most common itemized deductions include medical expenses, state and local taxes, charitable contributions, mortgage points, health insurance for self-employed people, losses caused by natural disasters and foreign taxes.
List your business expenses
If you haven’t already, create a list of the business expenses you had in 2017. Anything you think could potentially be written off as a business expense should go on this list. You might find it easiest to make a spreadsheet in Excel with this information, or take photos of all your receipts and combine them into one single PDF document.
Compile your donations
If you made donations to any nonprofit organizations in 2017, make a list of all of those contributions. Get receipts from these organizations whenever possible—you should either receive an email from these organizations at the end of the year giving you the total amount of your donations for the year or get a receipt that tells you how much of these contributions were tax deductible.
These are just a few tips to help you get organized this tax season. For more information and for assistance in preparing all your tax paperwork, contact us today at MCG Solutions.