It’s December and that means it is almost time to toast the New Year. It also means that tax season is around the corner. Thinking about taxes in the midst of all the end-of-the-year festivities can seem like a bit of a buzzkill but it’s a smart thing to do! Even though you won’t have your W-2 form yet, getting some tax-related tasks completed in December can save you time, hassles and stress when the tax season really starts to kick into high gear.
So before you sip your champagne, consider these four things you can do right now to get a head start on your 2020 tax return.
- Understand your taxes
If you haven’t had a chance to review your taxes for this year or you are new to filing, now is a good time to get familiar with the process. NerdWallet has plenty of resources available to help you understand your tax brackets, tax breaks, suggestions on filing software, and more.
- Review last year’s return
Examine your last year’s tax return. Were there any areas you didn’t understand or you had trouble with? Did you miss a deadline or make a calculation error? If there were issues the last time you filed your taxes, think of ways you can avoid the same problems this year, which may perhaps include reaching out to an accountant for assistance.
- Get your receipts together
Decide whether you will be taking the standard deduction or itemizing your deductions. If you choose to itemize your deductions, start sorting through your receipts for expenses applicable to your personal situation, such as:
- Medical expenses
- Childcare expenses
- Charitable contributions
- Unreimbursed work expenses
- Expenses related to self-employment
You may not need to include the receipts with your tax return, but if you are audited, you may be asked to show proof of those expenses.
- Research your tax filing resources
Will you be filing your taxes yourself or will you be using an accountant? Keep in mind that military personnel have access to many free or discounted tax preparation and filing resources.
For example, active duty service members, retirees and dependents can receive free, in-person tax preparation services through the IRS-sponsored Volunteer Income Tax Assistance (VITA) program. The program is available at many U.S. military installations around the world. Check with your local base to learn if the program will be available near you.
There are also services such as TurboTax and TaxSlayer that offer service members free or discounted tax software.
It might be hard to focus on your taxes this time of year, but by doing a little preparation now, you’ll make the tax filing process smoother and less stressful.
The information provided in this blog is for informational purposes only. It should not be considered legal or financial advice. You should consult with a financial professional to determine what may be best for your individual needs.
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