Face the tax season all by your lonesome self and it will surely feel stressful. However, getting the help of a certified public accountant for taxes can reframe the problem into a situation that’s not only manageable but will also allow a taxpayer keep more of the money that one has earned. Here are the tried-and-tested strategies that you can use as a road map toward a more successful tax season.
1. Organize Your Financial Records Early
Avoid the last-minute rush by compiling the needed paperwork such as investment statements, invoices, and receipts before the tax season. A smoother tax preparation process results from starting early, as it guarantees complete paperwork for submission and allows you to identify any deductions that exist.
2. Track Deductible Expenses of the Year
Check your spending for tax-deductible outlays, as this is an effective money-saving tactic. Be on the lookout for qualified write-offs (business expenses, charitable contributions, medical bills). This lowers your tax burden.
3. Maximize Your Tax Credits
Credits offer a dollar-for-dollar decrease in your taxes. Look for applicable investments that will be considered valid (childcare, energy-efficient home upgrade, schooling). One stands to get a bigger refund each fiscal year if proper records are kept and you know what to look for.
4. Separate Personal and Business Finances Properly
It's critical to keep personal and corporate funds apart. Keep both trails with credit cards and bank accounts that are well-defined. They ensure your claim on business deductions and safeguard personal assets.
5. Avoid Penalties with Quarterly Estimated Taxes
The tax system is pay-as-you-go, and the Internal Revenue Service may impose fines if expected payments are not made. To avoid year-end fines, in the CPA tax survival guide, business owners and freelance entrepreneurs are advised to pay their quarterly estimated taxes, as it best assures compliance.
6. Know Annual Tax Changes
Accurate filing requires you to keep up with tax changes that crop up yearly. Modifications to income brackets, credits, and deductions can have a big effect on your return. New IRS terms might carry new opportunities.
7. Document Every Claim
Keep track of the bank statements, mileage logs, and receipts that support your credits and deductions with clear documents. Verify each item on your return with this thorough procedure. This produces a clear audit trail that optimizes savings if what you’re filing is well supported.
8. Use Retirement Contributions
One good way to reduce tax burden is to include retirement contributions in the filing. Your annual taxable income is lowered dollar for dollar by contributions to IRAs and 401(k) plans. It's a win-win strategy.
9. Work With a CPA
At the end of it all, you’re probably thinking that there’s no way you can do all of the above and still live your life. The good news is they’re not so hard to comply with if you work closely with a Certified Public Accountant. Added to completed paperwork and flawless filing, a CPA gives peace of mind and free time.
Complexity to Clarity
You may approach the tax season with confidence if you incorporate the CPA-recommended tactics we’ve put together for you. Use this checklist as your year-round guide. Long after April 15th, you’ll say to yourself, “Wow, that wasn’t so bad.” Don’t overlook the valuable assistance that having a certified public accountant for taxes can provide. Call Nicholas J. Coco, CPA, at 201-955-3100.
