Few things as excruciating as filing your taxes happen every year. Few things that happen more than once a year are as unbearable as filing your taxes. Alas, we gotta do what we gotta do. I can't promise making filing taxes a breeze, but hopefully, these tips below can help you get through it with more grace.
DIY vs Professional Help
Taxes can be deceptive in their complexity. Whether you need professional help depends on how comfortable you are with filing taxes on your own, how complex your tax situation is, and whether you have the budget to hire a professional.
I always recommend hiring a tax pro for these clients: small business owners, rental property owners, people with cross-border tax issues such as U.S. expats in other countries as well as immigrants with assets in their home countries,. Also, If you have an IRS notice, it's a must.
Certified Public Accountants (CPAs) that focus on tax and Enrolled Agents (EAs) are qualified to handle tax filing. If you want to work with professionals, start your search as soon as possible because availabilities become more limited as tax season heats up.
Get Organized
Whether you DIY or hire a professional, organizing your tax documents is an inevitable step. Save all tax documents as soon as you have them in a centralized location. The typical tax documents are related to the following:
Income: This includes your W-2, 1099s, K-1, etc., from any source of income, such as your job, business, freelancing, dividends, and social security.
Deductions: This includes expenses like business expenses, medical expenses, education expenses, mortgage interests, charitable donations, childcare costs, and self-employed healthcare costs.
Investments: Anything related to investments, such as 401(k), IRA, or a brokerage account like 1099-Rs, 1099-DIV, etc.
Collect everything you think is relevant. Your tax pro will provide an organizer for the necessary documents. If you're handling your taxes yourself, you can find tax organizers online.
Double Check
Once you've completed your taxes, it's tempting to forget about it until next year. But as humans, we make mistakes. It's important to double-check your work to ensure everything is entered correctly, and all documents have been included. If you have any doubts, reach out for help.
Cheers!
Lei Deng, CFA, CFP®
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