The lazy, hazy, crazy days of summer are officially here, making it the perfect time to lounge by the pool, take a little vacation… and do a little tax preparation.
Yes: tax preparation.
While we think of tax season as being in the spring, planning for the big April 15th deadline is something you can (and should) be doing year round. Now is the perfect time to take care of some tax chores that will make filing so much simpler next year. (Your future self will thank you!)
How to Prepare for Tax Season This Summer
1. Adjust your withholding
Receiving a large refund may give you the same sense of delight as finding a crumpled $20 bill in an old coat — but in both cases, it’s not the best use of your money.
If you got a big refund this spring, and anticipate that your earnings and taxes will be about the same this year, then it’s probably a good idea to adjust your withholding. You’ll have more money in each paycheck, and will be making a smaller no-interest loan to Uncle Sam.
Submit a new W-4 to your HR department with your adjusted withholding. While you’re at it, figure out how much more you’ll see with each paycheck, then immediately set up an automatic transfer to your savings or retirement account. That way, you’ll have something to show for your adjustment.
2. Keep day camp receipts
The IRS allows parents to claim the child and dependent care credit to help cover day care expenses for their children. You may not realize that day camp (but not sleep away camp) also qualifies for that credit. So hold on to your receipts, and keep them organized for easy retrieval come tax time.
3. Organize your files
Speaking of organization, now is a great time to organize your tax materials. Start with your 2013 files; make sure you have them easily accessible in case the IRS comes knocking. In general, you should keep about seven years worth of tax information, so when you file 2013’s materials, feel free to shred your 2006 information. (Although it’s probably a good idea to scan an electronic copy of it just in case.)
As for the current tax year: If you’ve been in the habit of throwing receipts and documents in the proverbial shoebox, take a couple hours to create a more user-friendly organization system. An accordion-file with specific pockets for each type of receipt/documentation can make a huge difference in your stress level once it’s time to file.
4. Find a tax preparer
A good tax professional is worth her weight in gold. While it’s certainly possible to do your taxes yourself, particularly with the excellent software available, having a pro help you minimize your tax burden and look over your return offers a great deal of peace of mind.
Finding a good tax preparer in the first quarter of the year, however, can be difficult. The best ones might not be taking on new clients during their busy season, and you won’t have the time to really vet your tax pro with the tax deadline looming. So take the time now — when tax preparers aren’t inundated with desperate filers — to figure out which tax professional will best meet your needs.
What’s your favorite way to make tax season less overwhelming?