When should you start doing your taxes?
No prize for being first: While advertising for tax services and accountants may start on Jan. 1, the IRS doesn't accept tax returns until Jan. 20. You can certainly prepare to file your taxes before then, but they will not be accepted by the IRS before that dateGather your materials early: Start organizing your W-2, 1099, 1098 and other forms as you receive them. You should receive most of these throughout the month of January. You - or a tax preparer - are not allowed to submit your tax returns to the IRS before you've received these forms. Establish a plan: Months before the tax deadline -- in January or February -- decide how you are going to handle your taxes this year, whether you will do them yourself, hire a tax preparer, purchase software or use an online service. This will help you determine how much time preparing your taxes will take. Hire a tax preparer: Spend the first couple of months of the year researching who you want to hire to prepare your taxes. Find out when they need you to submit your tax materials and what timeline you can expect.
Should you itemize?
For many taxpayers, the question whether to itemize is akin to a rite of passage. As our lives become more complicated financially, and ideally, as incomes rise, the option can become more attractive or beneficial.
There are some basic rules that apply to help answer the question.
If you had significant payments for medical care, charitable contributions, mortgage interest, taxes or other deductions, they can help reduce taxes when itemizing.
The total spent in these areas should add up to more than the standard deduction to achieve a benefit from filing the long form, the 1040 and Schedule A.
Prepare for next year's taxes now
While this year's tax season is still in full swing, it's not too early to start thinking about next year. To avoid the chaos that can come with filing taxes, use these tips to start preparing for next year's return.
Start filing: Dedicate a box to all of your documents that you will need to file next year's taxes. As you accumulate these throughout the year, put them into the box. When it's time to do your taxes all of your materials will already be gathered.
Adjust your withholding: Depending on the size of your return this year, you might want to adjust your withholding now to either get a larger return next year, or get a smaller return and more cash throughout the year.
Look over financial documents: While there is time, review all of your financial documents as you get them throughout the year to ensure they are accurate. This will save you headaches during next year's tax season.
Keep up with tax news: Throughout the year there will be changes to the tax code. To make sure you know the latest on what's deductible pay attention to any changes throughout the year.
Find a tax specialist: If you are in the need of a tax specialist for next year, now is the time to look. As your friends and family who prepared their taxes and search for recommendations.
Keep a list of questions: If you have questions throughout the year about your taxes, keep a running list so you can ask your tax professional when it is time to file.