It’s the beginning of a new year, and with that the onslaught of commercials from the tax software companies advertising their product.
Preparing a tax return can be an overwhelming task to some. To help make it easier, start by simply gathering and organizing all the forms, tax documents, and statements that you have for the year. Then, separate them into categories such as “income,” “deductions,” and “miscellaneous.”
Have last year’s tax return handy.
While things can certainly change from one year to the next — maybe your marital status has changed, you’ve had a child, or started a side business, often much remains the same. Having last year’s return handy allows you to compare that document with the one you’re preparing to make the process a little easier.
Maximize your retirement contributions.
Saving for retirement is always a good idea, but it’s particularly wise if it reduces your taxable income. If you haven’t contributed to an individual retirement account (IRA) or self-employed pension plan (SEP), you have until April 18, 2022 to do that and it could still lower your 2021 tax bill.
Consider hiring a professional.
No one wants to pay more in taxes than they should. While using a software program like Turbo Tax can be helpful, many individuals miss valuable tax credits and deductions that can cost them money. Having a professional prepare your taxes gives you peace of mind that your return is being done right, and in the rare case of an audit, have someone that is ready to represent them.