Filing taxes doesn't have to be stressful. If you gather the information you need throughout the year, when tax time rolls around, you have all of the information to enter into your tax preparation software. Being prepared will make this process less stressful.
1. Personal Information
You should have any personal information handy for your taxes in a secure file. This will include the social security numbers and dates of birth for any dependent and spouse. You will also need your primary bank account number and routing number, so you can easily pay your taxes or sign up for a direct deposit for your refund.
Second, you are going to want to keep a file with all of your income information. How complex this folder will depend upon how many sources of income you have. If you work directly for an employer, you will need your W-2 in this file. If you are self-employed or if you have retirement distributions, this should include all your 1099 forms. If you are involved in a partnership, you will need to collect your K-1s. All of these forms should be mailed or sent to you in a secure digital file at the start of the year.
If you are involved in selling security, you will want to keep track of all buying and selling dates, so you can determine if you need to file for capital gains.
3. Personal Expenses
Third, you will want to keep track of all personal expenses that can qualify for deductions. That may require you to have multiple subfolders of information.
You are going to want to keep track of your contributions to health savings accounts. You will need your Form 1098 for mortgage interest deductions. You will need to keep track of any upgrades you make to your home.
4. Business Information
If you have a side-hustle or run a small business, you will want to keep track of all the money you spend and all the money you make on your business throughout the year. Detailed records of everything you spend money on will allow you to deduct those expenses from your business earnings and reduce your taxable business income.
If you want to make your tax time easier, you will want to create physical or digital folders where you store the relevant tax documents as you get them, such as W-2s and Form 1098. You will also want to keep track of all personal and business expenses that could qualify you for deductions throughout the year. This will allow you to have all the information handy when you sit down to do your taxes.
For more information on tax preparation, contact a company near you.