How to Prep for Tax Season

It’s officially tax season! To help you get a jump on the April 18 filing deadline, our tax team at Truepoint compiled this list of the most beneficial steps you can take to prep for tax season.

Here are five actions you can take right now to maximize your organization while minimizing your stress:

1. Designate a central place to collect your tax forms.

• You will receive lots of tax forms in the coming weeks, including W-2s, 1099s, 1098 mortgage statements, real estate tax forms, charitable contribution receipts, and 529 contribution records, among other items.
• Select one location to collect all of your hard-copy documents. Perhaps a tray in your home office, a wicker box by your front door, or even a large envelope in your mudroom—any place that’s convenient and close to where you usually sort your mail. Make sure to use only one location, so you don’t have to track down forms in an assortment of drawers, files, and piles come April 14.
• Apply the same logic to electronic forms. Pick one central location to store them all so that you can easily find (and search) them later. Ideally, this location should be shareable with members of your household, so that you can all upload the files you receive. Make sure that location is secure enough to protect your personal information.
• If you work with a tax preparer, consider using an app like Genius Scan, which can quickly turn pictures into PDFs and help you easily transfer documents electronically. Many preparers will also share an electronic organizer to help you input and upload relevant information securely.

2. Make records of key information.

• Make a list of all charitable donations you made throughout the year. (Better yet–try to maintain this record in real time throughout the year so you don’t exclude any donations.) Keep receipts of these transactions, though you may not need them when submitting your tax return.
• If you have a large amount of out-of-pocket medical expenses, make a list of these, too.
• For business owners: summarize all income and expenses you incurred throughout the year. An excel spreadsheet is a great way to track these items.

3. Contribute to your tax-advantaged accounts.

• You can contribute to HSA and IRA accounts until April 15 (or the tax day on that given year).
• Before you deposit money, double check your contribution levels for each account. Your age, income level, and even place of employment can affect which accounts you can use and how much you can contribute. Consult the IRS web site or talk with your tax preparer for specifics on your situation.
• Finalize all contributions before you submit your return—or even submit documents to your tax preparer.

4. Rethink what it means to owe money at tax time.

• No one enjoys writing a check, but keep in mind that owing a balance is not always a bad sign. It does not necessarily mean you paid “too much tax” during the year. Still, if you’re concerned about your balance, a tax preparer can help you strategize for future filings.
• Remember that the most important line to look at when comparing taxes paid from year to year is the tax liability line. This shows the true amount of tax that you paid in any given year.

5. Take the pressure off!

• If you are unable to get the return prepared before the tax deadline, don’t worry.  
• Extensions are allowed, and no penalty is issued for them. It should be noted that this is an extension to file, not to pay. All tax payments are due on the initial tax deadline, not including the extension. If payments are not made prior to the deadline, interest and penalties will accumulate. 

Bonus: Continue benefitting from this year’s efforts…

• As you gather information this year, keep a log of all the forms you submit. This can serve as a checklist next year to track which forms you’ve received and which ones you’re still on the lookout for. In the following years, you can simply add and remove items from the checklist as necessary, instead of starting all over again each year.

A final reminder: you should maintain tax records for at least three years. We recommend creating a file to store a paper copy of your completed return, as well as all supporting documents, in a secure yet easily accessible location.

The Best Way to Prep for Tax Season? Work With the Experts.

There are many actions you can take today to prep for tax season next year. But perhaps one of the best advantages you can give yourself is to work with a qualified tax professional, who can worry about how to prep for tax season for you—while also lessening your workload, helping ensure your return’s accuracy, and identifying deductions and other benefits you may have overlooked.

You can take these advantages to the next level by partnering with a tax preparer who works closely with your financial advisor. At Truepoint, our tax preparers are an integral part of a larger team of experienced financial professionals, who collaborate to develop a bespoke and holistic strategy—including long-term tax planning—for each and every client.

We do more than file returns for our clients. We understand that taxes are a critical component of financial planning.