Tax season has a way of sneaking up on you by surprise and making you panic more than you’ve ever panicked before, even if you think you’ve been doing everything right in the run up, right? But, you know what? Whether you file early every year or scramble at the last minute, a little preparation can save you time, money, and stress. So, let’s take a look at five things you should remember this tax season if you want to nail it with as little stress, and as few problems, as possible.
1. Gather All Your Documents Early
Before you even think about filing, make sure you have all the paperwork you need. This includes everything from W-2s, 1099s, bank statements, investment reports, to records of any side income. Missing documents are one of the most common reasons returns are delayed or amended later, so you are going to want to avoid leaving anything out if you want an easier tax season this year.
2. Don’t Assume Last Year’s Rules Still Apply
Tax laws develop and change over the years, so it would be foolish for you to think that the rules in place even just last year are still exactly the same ones you need to follow this year too. Credits, deductions, and reporting requirements that applied last year may be different now. So if you want to avoid errors and the penalties that arise from them, then it would be smart of you to take a little time to review current IRS guidance or work with a tax professional who stays up to date on the latest changes.
3. Report All Income (Even the Small Stuff)
Every dollar matters when it comes to taxes. Income from freelance work, gig platforms, rental properties, investments, and digital assets must always be reported, even if you didn’t receive a traditional tax form.
In particular, the IRS continues to increase its scrutiny around crypto tax compliance, so transactions involving buying, selling, trading, or earning cryptocurrency should be carefully documented and reported accurately.
4. Maximize Credits and Deductions
Many taxpayers overpay simply because they overlook deductions and credits they qualify for, and this can leave you with much less money than you could or should have, which is never a great position to be in. So, it’s never a bad idea to do some research into credits and deductions you may be eligible for, such as Retirement contribution deductions or Child and dependent care credits, for example. Anything that boosts your refund is worth the effort, right?
5. Keep Strong Records
Good recordkeeping is essential, not just for filing but also for protecting yourself if questions arise later. Keep receipts, invoices, mileage logs, and expense records organized and accessible.
A good rule of thumb is to retain tax records for at least three years, or longer if your return includes complex investments, carryover losses, or business income.
Tax season is inevitable, but stressing about it, getting things wrong isn’t, if you remember these five things and do a little forward planning.
