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Simplify Your Taxes: A Checklist for Getting Started

carefulcents profile picture
Carrie SmithGuest Blogger
January 09, 2017 · 6.2k Views

As the tax season deadline approaches various questions will start popping up in your mind. How should you do your taxes this year? Will you receive a tax refund or a bill? How much time and money will it cost to file?

Taxes are often a very stressful topic for everyone -- and with good reason. Filing your tax return can be completed a number of different ways using various methods. In order to simplify your taxes and reduce stress, use this tax checklist for getting started.

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Simplify Your Taxes: A Checklist for Getting Started check icon

1. Collect all tax documents

tax documents

Source: Lifehacker

Depending on your personal tax situation you may only have a W-2 to track down during tax time. Or your situation may be more complicated and require several tax documents and loads of receipts. Start collecting all documents, papers and receipts in one place throughout the year, such a file folder. That way you can reduce stress and save time when tax season rolls around.

► Here’s a list of the income documents you may need to collect.

  • W-2 from your employer

  • 1099-K from sales via PayPal

  • 1099-MISC from freelance clients

  • Personal income receipts not included above

  • Interest earned from savings or CDs

  • Dividends from sales of stock or property

  • Income from other sources, such as pensions, IRAs, Social Security

  • Income from rental property or royalties

► In addition, now’s a good time to gather all records of tax deductible expenses you are eligible to claim.

  • Interest paid on a mortgage

  • Donations made to charities

  • Medical expenses or health insurance premiums

  • Childcare and daycare expenses

  • Job-related expenses, including job search costs

  • Tax preparation fees from the previous year

  • Retirement contributions

  • Mileage and use of vehicle

  • Costs for starting or maintaining a small business


2. Prepare your financial reports

financial reports

Source: www.inspiredaccountingllc.com

Now that you’ve had a chance to gather all your income and expense documents, the next step is to organize your bookkeeping software. Start preparing your year-end financial reports and categorizing all expenses. You’ll likely need a profit and loss sheet, expense report and a summary of accounts receivable and accounts payable if applicable.

Start by categorizing all of your income sources as well as expenses you made throughout the year. The IRS will charge you a fee if fail to include all the income attributed to you during the year -- even if you never received a tax document to file. It’s still your responsibility to report all the income you earned.

Likewise, you don’t want to pay more taxes than you have to and keeping a good record of your expenses will help offset any tax bill.

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3. Choose the right tax filing service

tax app

Source: Tom's Guide

The next important step in simplifying the tax filing process is to choose the right tax filing service. If you feel comfortable filing your own taxes, there are several DIY software options to choose from, such as TurboTax and H&R Block Online.

If you need more customized help, seek out a tax professional or CPA who can help guide you through the process of preparing your taxes correctly. And remember, the cost of tax prep fees are tax deductible so don’t skimp on quality tax help just to save a few dollars.

If you need help choosing the right tax filing service, the IRS has a list of recommended efile services on their website, some of which are free. In addition, you can use this online questionnaire to help accurately determine the best free file tax software.

4. Make note of big life events

buying a new home

Source; Jackie Gibbins Orange County Real Estate

Throughout your life you’ll experience various changes that will affect your tax situation. Some of these life changes will qualify you for different tax deductions and credits that go towards reducing your overall tax burden.

► Here are some life events you’ll want to make note of.

  • Getting married or divorced

  • Have a new baby or losing a child

  • Buying a new home

  • Moving to a new state for a job

  • Going to college

  • Opening a retirement account

  • Starting a new business

  • Losing a spouse

The happenings in your life will determine your filing status and how much (or little) taxes you’ll end up paying. So it’s important to thoroughly review any life-altering events you may have experienced in the past year.


5. Set aside time to file your taxes

filing taxes

Source: Quicken Loans

After using this tax checklist to get started it’s time to make an appointment to file your taxes. Set aside time in your calendar to organize, prep and input the numbers into your tax software. This may take a few hours, or even an entire weekend, so it’s important not to wait until the last minute.

Rushing through the tax filing process can cause errors and mistakes that can result in your tax return getting rejected or delayed. On top of this the IRS may charge you a late filing fee or other penalty for not filing your tax return correctly, so take your time to double check the information before hitting the “submit” button.

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carefulcents profile picture
Hi, I'm Carrie Smith! I'm a financial writer and small business expert who helps freelancers build client-based businesses through meaningful relationships. I have a background in small business accounting and taxes and recently won an award for Best Entrepreneurship Blog for my site, carefulcents.com.