Getting ready for tax season might not be the most exciting thing in the world, but it is inevitable. However, if you start your prep today, you’ll be better prepared for the upcoming tax season and in the future. It could save you thousands of dollars in the long run.
We’re here to help you figure out what to do if you feel lost. Here is our NY tax season prep list to get you started.
#1: Hire a New York Tax Agency
Most Americans file their own tax returns. Do-it-yourselfers might be comfortable navigating complicated tax forms and have the patience to gather documents. Having a straightforward tax situation can also make it easier.
Others go to a professional. When your financial situation gets complicated, consider working with a professional. You can get help from a tax pro in:
- Making sure your accounts have the right tax and financial info
- Taking advantage of any deductions or credits you’re entitled to
- Getting your taxes done
- Giving advice based on your situation
You can also get income tax projections, including quarterly estimated payments, so you don’t get surprised if things change.
#2: Organize Your Paperwork
There’s a load of paperwork involved with tax time. Make sure you have all your important documents before you file so you don’t make mistakes and get all the deductions you deserve. Here are some documents and info you might need:
- Forms W-2, Forms 1099 and other tax forms showing income earned
- Previous year’s tax returns
- Records of mortgage interest and property taxes paid
- Records of charitable contributions
Your tax professional can help you figure out what documents you’ll need.
#3: Max Out Your Tax-Advantaged Accounts
Tax deductions and credits are crucial to filing. Businesses can reduce their taxable income by taking advantage of deductions, while individuals can reduce their taxes by taking advantage of credits.
Businesses can take advantage of several tax credits. The IRS website lists various credits that apply to specific industries, work opportunity credits and disabled access credits. You can get a lot of credits, so check with your tax preparer. To make sure you don’t miss any deductions or credits, answer questions about your business operations on your tax prep software.
#4: Think About How You’ll Pay Your Debts
If you end up owing the IRS money instead of getting a refund, you’ll need a plan. Writing a check may be the easiest option if you have the cash and don’t want to risk draining your savings.
It’s a good idea to look for additional sources of liquidity if you’ve got a big tax bill. To raise cash, you can sell some of your assets. Be aware of the downsides, including taxes on capital gains, lost future growth potential, and asset-allocation imbalances.
You can also take out a loan or pay IRS in installments -— both have pros and cons. Think about which payment method works best for you.
#5: Take a Look at How You’ll Spend Your Refund
Consider using your refund to support your long-term financial well-being instead of spending it all outright, like:
Reducing your tax burden
Preparing for the unexpected
Make sure you’ve got at least three to six months of expenses set aside for a rainy day with your refund, or use it to start an emergency fund.
A little preparation can save you time and money on taxes. Take steps today and throughout the year to make tax season easier.
Plan Ahead with Melanin Tax Today
Tax planning is the key to reducing your liability legally and successfully. As a trusted tax planning company in New York, we go beyond tax compliance to maximize your after-tax income.
Our team of expert NY tax planning attorneys assist clients with finding ways they can comply with the laws while paying the lowest amount of taxes allowable. Since we want to make tax accessible and understandable, we’re committed to helping you understand the latest tax topics and tax reform laws in New York.
Schedule a free consultation with Melanin Tax and see how we can help you for the upcoming tax season. Call us today at (347) 943-6772.