As a taxpayer owner in 2020, it can be incredibly tricky trying to navigate these unprecedented times. With the ongoing COVID-19 pandemic altering life as we know it, even the most fundamentally ingrained parts of our lives as American citizens have been put on hold. And even while Uncle Sam has taken a backseat to the coronavirus’ wreckage, the modified tax day date creeps closer with every week passed.
With tax day moved from the typical April 15th date to a more lenient July 15th date, taxpayers have had a few extra months to get their documents and data in order for filing. If you’re gearing up to tackle your tax season now, this step-by-step guide will serve as a comprehensive and concise guide for how to prepare your taxes.
Let’s dive in
Step 1: Confirm your tax status
Sometimes life just happens—if you’ve ever found yourself in a place where you weren’t able to file your taxes one year, your good standing with the IRS may be compromised.
If that was the case for you in the 2018 or 2017 year, you will want to make sure you’re caught up on your owed taxes or outstanding penalties before it comes time to file for the 2019 year. This is an essential first step as tax penalties can compound, effectively making it increasingly difficult to get caught up.
In case you’re currently behind on your tax duties, have a tax offset, or are worried that you might not have the funds you need to pay your balance this year, consider contacting a tax expert to assist you with managing IRS tax alleviation before things fall wildly out of your control.
Step 2: Weigh your filing options
One of the most important things you can do to prevent any possible confusion during tax season is determining early on how you plan to file taxes. Choosing an approach that works for you will help ease any stress or headache that could otherwise arise if you waited until the last minute to assess your options.
- File online: Filing online is often the best choice for many taxpayers since it is quick, convenient, and often the most budget-friendly. If you’re in a difficult or more-involved tax situation as a self-employed individual or small business owner, it may be smarter to opt for some additional professional assistance to help you file according to IRS and state tax requirements.
- File with a tax preparer: As mentioned above, those faced with more complex tax situations beyond your average individual tax filing, may find enlisting the help of a tax preparer to be far more effective than tackling tax season alone. The entire appeal of filing with an accountant is that you’re able to gain an edge of accuracy and precision that allows them to file your taxes with ease and mathematical perfection.
Step 3: Collect your tax documents
Before it’s time to sit down and tackle your taxes, make a point to start collecting and organizing the documents you’ll need. This could include everything from your W-2s and 1099s to your employers’ evidence of health insurance coverage and student loan interest documents. Any relevant tax documents should be set aside in one organized space.
Having all of your necessary documents already organized will make scanning, uploading, and copying your information incredibly easy. Once you’ve filed your taxes and have excavated all of the data you needed from your documents and receipts, be sure to hold onto those papers. We recommend holding onto tax papers for at least three years before shredding and disposing of them.
Step 4: File on time
If you need more time to file, you should consider applying for a six-month extension with the IRS. Despite Uncle Sam being a universally intimidating force to be reckoned with, he can be pretty lenient when it comes to installment plans and filing extensions.
Jot down the tax filing deadline on your monthly calendar or on a visible post-it note to ensure you file and pay your taxes on time. You will have to face fines if you bring in late. Why do you spend more on your taxes when you can only set a reminder?
It’s not fun doing your taxes—we understand. It doesn’t deliver that instant-gratification you’d get while shopping or dining out with friends and family, but it’s an inevitable fact of life that you’ll face once a year. Procrastinating or avoiding your taxes does not mean that your tax obligations are going to evaporate. Using this guide, you can tackle tax season head-on with everything you need to successfully survive another year as an American taxpayer.