Yes, it’s only January and your 2020 tax return isn’t due until mid-April, but that doesn’t mean you should ignore that tax season is officially here. The last thing you want to do is wait until a few days before the deadline to file. Turning your thoughts to your tax return now and creating a plan to help you prepare them reduces a great deal of tax season stress.
The key to keeping your stress levels low during tax season is creating a plan of attack. Create a list of specific tasks that need to be completed and determine when you’ll do them. You’ll be amazed how much a solid plan of attack smooths out the process of filing your 2020 tax return.
Gather Your Paperwork
Spend the second half of January and the first half of February gathering up all the paperwork you need to complete your 2020 tax return. The paperwork you need to have on hand before you’re ready to start preparing your tax return includes:
• Documents that indicate itemized expenses such as child care, medical insurance, and educational costs
• Any 1099s connected to freelance contractors you hired throughout the year
• Donation receipts
• Mortgage interest payment documents
• An itemized list of business expenses (if relevant)
• Investment statements
• Receipts for any tax-deductible purchases you made throughout the year
Keep all of these documents in a drawer or file that’s specifically dedicated to your 2020 taxes.
Dedicating a few weeks to simply organizing all the paperwork that’s relevant to your 2020 tax returns does three things. One it means you don’t have to constantly stop and look for things while you’re preparing your return. Two, you won’t accidentally forget to add something that could impact how much you owe/receive. Three, by gathering all of the documents early, you’ll notice if something is lost and still have time to find/replace the document.
Prepare Your 2020 Tax Return
Set aside a few days in early March to actually prepare your tax return. If you’re handling this on your own make sure you have a block of time when you won’t be interrupted. Give yourself plenty of time. If you find the process overwhelming, divide the process into several small, manageable chunks. By starting to prepare the paperwork in March means you won’t be in a race to complete the work by the April 15 deadline.
When you’re done, save the documentation but don’t submit it to the IRS just yet.
Review your Work
Give yourself a week or two before returning to your completed tax return. Carefully go over every single line and make sure everything is correct. This review process is the best way to avoid making a mistake that could trigger an audit. Once you’re satisfied that everything is accurate, it’s time to officially file your taxes.
Set Up a Payment Plan
If you’re getting a refund from the IRS, you can sit back and wait for the check to appear. If you discover that you owe taxes, you’ll want to set up a payment plan and stick to it. It’s better to make your payments a few days early than to be late.
Hopefully, this plan of attack for your 2020 tax season takes all the stress out of the process, making it possible for you to file your taxes and also enjoy time with your family and friends.