Sometime this month, tax statements will begin making their way into mailboxes around the country.
These documents serve as reminders that, like it or not, tax season is quickly approaching. January is a great time to start preparing for tax season. While the deadline to file returns may be several months away, getting a head start allows us the chance to organize tax documents and avoid a last-minute race against a deadline come April.
The following are a handful of ways to start preparing for your returns now.
Find last year’s return.
Ricky Miller of Douglas and Hornberger Accounting Services in Brentwood warns that tax laws can change from year to year, but one thing that never changes is the need to have last year’s return handy.
“Even though the new tax laws are here, you should still gather your information as in the past,” Miller advised. “Just because you may not get a (federal) deduction, you will still most likely get the deduction for California.”
You will need information from last year’s return in order to file this year, so find last year’s return and print it out if you plan to hire a professional to work on your return.
Gather dependents’ information. While you might know your own Social Security number by heart, if you have dependents, you’re going to need their information as well. New parents or adults who started serving as their elderly parents’ primary caretakers over the last year will need their kids’ and their folks’ Social Security numbers. If you do not have these numbers upon filing, your return will likely be delayed and you might even be denied substantial tax credits.
Gather your year-end financial statements.
If you spent the last year investing, then you will have to pay taxes on any interest earned. Interest earned on the majority of savings accounts is also taxable, so gather all of your year-end financial statements from your assorted accounts in one place. Doing so will make filing your return, whether you do it yourself or work with a professional, go more quickly.
Speak with your mortgage lender. Homeowners should receive forms documenting their mortgage interest payments for the last year, as the money paid in interest on your home or homes is tax-deductible. If these forms are not received in a timely manner, speak with your lender. You might even be able to download them from your lender’s secure website.
Make a list of your charitable contributions.
Charitable contributions, no matter how small, are tax deductible. While it’s easiest to maintain a list of all charitable donations you make as the year goes on, if you have not done that, then you can make one now. Look for receipts of all contributions or contact charities you donated to if you’ve misplaced them.
Book an appointment with your tax preparation specialist now.
As April 15 draws closer, tax preparers’ schedules get busier and busier. The earlier you book your appointment, the more likely you are to get a favorable time for that meeting. In addition, if you have gathered all of the information you need by early February, then booking your appointment early means you can file earlier and receive any return you might be eligible for that much quicker. Though Stephen Brandon, a master tax advisor for H&R Block, cautioned that the current government shutdown may delay some taxpayer’s refunds.
“The IRS confirmed that . . . it will process tax returns beginning Jan. 28 and provide refunds to taxpayers as scheduled,” said Brandon. “However, some refunds will still be delayed. H&R Block is offering refund advance worth up to $3,000 to help those taxpayers who need access to their refund faster.”
Tax season is just around the corner, and it’s never too early to start preparing your return.
Douglas and Hornberger LLP can be reached at 925-634-5549.
H&R Block is located at 4431 Balfour Road, Suite 3B, in Brentwood. For more information, contact 925-240-9319.