StockBIZ: When it comes to tax preparation, think ahead to ease the dread

According to Benjamin Franklin, “Nothing can be said to be certain, except death and taxes.” No wonder so many people look upon tax season with a sense of dread.

An online survey commissioned by NerdWallet and conducted by The Harris Poll in January 2016, found that nearly 7 in 10 taxpayers (69%) had concerns about tax preparation, whether it was making a mistake, paying too much, getting a too-small refund, or undergoing an audit.

The best thing you can do to ensure a good tax outcome is to become organized. Whether you do your own taxes or use a tax preparer, the tips in this column can help you prepare for tax season—which is already upon us. The IRS begins accepting and processing 2019 tax-year returns on Jan. 27, 2020.

Tips from personal experience

Procrastination is not your friend when it comes to tax season. It’s best to think ahead and follow some tried and true processes:

• Keep all incoming tax-related mail in one place until tax time. This includes end-of-year bank statements, investment statements, W2s, 1099s, and anything you still receive by mail that you will need at tax time.
• If you write checks, fold your check carbons in half if they’re tax related—that way they’re easy to spot when double-checking for deductible expenses.
• Always keep your previous year’s tax return handy for the next year.
• Develop a thorough checklist in a document like Word or Google Docs.
  • Start each year from a copy of the previous year’s checklist. Example: When beginning my 2019 tax year checklist, I’ll start from a copy of my 2018 checklist.
  • I keep my checklist electronically and begin by turning all the old text in the checklist green.
  • As I update each checklist entry with new numbers for 2019, I turn the text for that item black.
  • My checklist is divided between Income and Expenses. Under each section, I list the documents I have as well as the amount(s) that appear on the documents.
  • When finished, all my green text should be black. If it’s not, I’ve forgotten something or that item is no longer applicable, and I need to remove it from my checklist.
  • At the end, I log any questions I have that need answers.
• Take a look at these helpful websites for what to include on your checklist:
  • www.efile.com/tax-return-preparation-checklist/
  • novelinvestor.com/tax-preparation-checklist/
• If you itemize, create a receipts subfolder for that year in your email program. Use that folder to store electronic receipts for any tax-deductible purchases, charitable contributions, and other electronic receipts you might need at tax time.
• Be sure to make copies of any checks you send to the IRS.

Put your taxes to work for you—use your library

If you prefer to file your taxes on paper, the library is an excellent resource. As in previous years, the Stockbridge library will be receiving shipments of federal and state tax booklets and forms. If you’re still getting familiar with the new tax laws that were rolled out last year, look for books at the library that can help to shed light on the topic. In addition to paper forms and useful books, the library’s website has useful links to all sorts of tax-related topics. Just google “CADL Tax Information Guide” or ask a librarian.

Tax software—weigh your options

Do you prefer to do your own taxes with the help of tax software? Maybe you already have your favorite software tool, but if you want to find out about other software options, check out comparison sites like these:

• www.nerdwallet.com/blog/taxes/best-tax-software/
• www.cnet.com/news/best-tax-software-for-2020-turbotax-h-r-block-tax-slayer-and-more/
• www.pcmag.com/picks/the-best-tax-software

Tax preparers can ease some of the stress

According to USA Today, in tax year 2018, more than 80 million individual returns were handled by tax return preparers. If you’re paying a tax preparer, that person should have a Preparer Tax ID Number. And a professional preparer should always be willing to sign the Preparer line on your return. Go to irs.gov/ChooseATaxPro to learn basic tips for choosing a tax preparer or to find out whether your tax preparer is registered with the IRS.

I reached out to a few local tax preparers and invited them to share some tips with me. Cherie VanBlaircum of CTS Taxes & Accounting Services in Gregory (www.cts-tax.com) replied to my inquiries with the following suggestions.

“Ask about the tax preparer’s credentials! Ask about their experience. Above all, ask about their security. You are giving your tax person a TON of personal data that must be protected.”

VanBlaircum stays up-to-date on tax law by attending training throughout the year. “Tax preparation is a partnership between the preparer and the taxpayer. I am always texting clients with law changes that may help their situation at tax time.”

She recognizes that some people prefer to do their own taxes. However, she recommends, “Do-it-yourselfers should come in every few years just to get their return professionally prepared and to let me look over the past year’s return.” She has helped a lot of these taxpayers minimize their taxes and has caught potential problems that have made it worthwhile for some DIYers to amend their returns.

If you have a woman-owned business, I’d love to hear from you as I prepare my March column. Email your name and contact information to stockbridgecommunitynews@gmail.com by Feb. 7. On the subject line, please include Attn: StockBIZ.

Photo Credit: https://marylandreporter.com/2018/03/07/some-maryland-taxpayers-and-corporations-will-pay-higher-state-taxes-due-to-federal-tax-changes/