3 Tasks for You & Your CPA to Complete Before Tax Time

When people think of tax time approaching, no one thinks of relaxing in a bubble bath, surrounded by candles and soothing music.
There are many reasons people get stressed out over filing their taxes. For starters, it’s one of the most complicated tax systems in the world. None of us are able to sit down, answer a few basic questions about our income, write out a check, and be done a few minutes later.
The fact that our tax system is so complicated is one of the reasons people tend to put off dealing with their taxes. But if you want to spend Tax Day relaxing, you and your CPA need to start getting ready now, rather than waiting until March or April.
With that in mind, use this checklist of tasks for you and your CPA to complete before it’s time to file your tax returns.

1) Gather Your Information
The most important part of filing your tax returns is making sure you have all the relevant information, so start there. Keep in mind this might take a while, especially if you have clients sending you 1099s. Have a designated place where you can store them as they come in, so when it’s time to take them to your CPA, you can be sure you’re not missing any important documents.

a) Information on Your Income
If you have an employer, this is your W-2. If you have clients providing you with 1099s, make sure those are all assembled in one place.
If you’re a business owner who does not get 1099s from your clients, then you need to collect all the information you have on all the revenue the business has made in the course of the year.
If you or your business have any investments that appreciated in value in the past year, that could be considered taxable income, depending on the type of investment. Be sure to give your CPA that information as well, and they’ll be able to determine whether it needs to be included on your tax returns.

b) Collect Your Receipts
Once you have all the information on your income gathered, it’s time to collect all the information on your business expenses. It’s likely that some of them will be deductible, while others will not, so play it safe by giving your CPA all the information you can. Let them determine which expenses are tax deductible and which are not.
Hopefully, you’ve been keeping your receipts in one place so you can easily locate them as the tax deadline approaches. Better yet, since the ink on paper receipts tends to fade over time, scan your receipts as they come in and keep them in a dedicated folder on your computer.
If you get receipts emailed to you, keep them in a dedicated folder in your email so you can easily find and access all your expenses before Tax Day.

c) Taxes You’ve Already Paid
The next thing you’ll need to gather is all the information on any tax payments you’ve already made over the past year. For example, sales tax, real estate taxes, etc.
If you had an overpayment last year that you decided to use towards this year’s taxes, be sure to include that as well.

2) Decide Whether to File for an Extension
If you decide to file for an extension to pay your taxes, you still need to provide an estimate on that filing as to how much you’ll owe in taxes. That means you or your CPA need to have gathered and analyzed your tax documents to the extent that they can at least guess as to how much you’ll owe before you file for your extension.
Your CPA can also help you decide whether filing for an extension is in your best interests. Yes, it gives you and your CPA more time to thoroughly review your financial information and fill out all the forms, but it also comes with an interest charge, so keep that in mind. Your CPA can provide you with all the information you need to make an informed decision and help you decide whether you’re better off paying all your taxes by the initial tax date in April, or if you should file for an extension.

3) Plan Ahead for Possible Refunds
If you and your CPA suspect there might be a tax refund in your future, start thinking about what you want to do with that money before you get it. You can buy that big-screen TV you’ve had your eye on, you can put it into savings or an investment portfolio, or you can choose to apply it to next year’s taxes.
The choice is yours, but be sure to discuss the possibility with your CPA, as they will be able to advise you as to the smartest way to handle any potential extra money that might be headed your way.

Need a Bookkeeping Doctor?
I can’t draw up a bubble bath for you, but I can make sure all your paperwork is in order to make life easier for you or the CPA filing your taxes for you. Together, we can help make sure you get to spend Tax Day relaxing however you see fit, whether it’s in a bubble bath or the Bahamas. Just use this link to answer a few simple questions (nothing as long as a tax form), and we’d be happy to discuss your needs.