When my husband and I started filing our taxes, we didn’t know everything we needed to know about filing taxes. We learn more and more each year and adjust our “system” as needed, especially since I’m self-employed. With the help of TurboTax Self-Employed, we feel more prepared and confident than ever in getting our taxes done.
Though Autumn just began, now is a smart time to start getting your stuff ready for tax-time (if you haven’t already). Since things are slow tax-wise, you can take the time to get your documents in order and make some tax moves without the crunch of tax time, which can help you save money in the long run.
Looking to make filing taxes easier? Here are tips to smooth out the process now and later:
Know what to expect. Having the right paperwork in front of you makes it much easier (and more accurate) when you file. Not sure what you need? Don’t worry, TurboTax will walk you through what you need, ask you simple questions, and give you the tax deductions and credits you are eligible for based on your entries.
Have a regular system for your taxes. As an entrepreneur, I learned that I can save myself a lot of time by staying on top of finances little by little. More frequent tracking of your income and expenses will save you time and help you avoid missing anything at tax-time.
Sylvia Inks, author of Small Business Finance for the Busy Entrepreneur, suggests scheduling time each week to review your finances. This helps avoid forgetting or losing receipts that we need to claim certain tax deductions. A quick review and tidying up your records can pay dividends at tax time.
To make this process easier, QuickBooks Self-Employed helps you track your business income, expenses, mileage, and capture your receipts all year long. You can then export your information directly to TurboTax Self-Employed at tax-time.
Keep Human Resources updated. Have you had a recent change in your life, like a new baby or move? Go ahead and let your Human Resources representative know. Your HR representative may need to know if you had a change of address so you don’t miss important documents that are being sent to you. Additionally, you may also need to file a new Form W-4 to change your withholding with your employer or payroll provider. If you’ve experienced life changes, it’s important to update your W-4 so that there are no tax surprises when you file your taxes. If you experienced a life change due to the coronavirus pandemic TurboTax is here to help with resources and tools like our Unemployment Tax Center and our Self-Employment Coronavirus Relief Center where you can get advice and tips about coronavirus tax implications and keep more money in your pocket now and at tax time. Our TurboTax W-4 calculator will also help you easily estimate your 2020 withholding in light of your life events.
Go over your investments. Are you taking advantage of your financial situation before the year ends? If you have losing stocks, you can sell them and offset your capital losses against your capital gains. You also may want to look at maxing out your retirement. For 2020, you can contribute $19,500 ($26,000 if 50 or older) to your 401K and reduce your taxable income at the same time. If you are self-employed, you can contribute up to the lesser of $57,000 or 25% of your net income to a SEP IRA for 2020.
Make end of year moves. You can start making some end of year tax moves now that can help you lower your tax liability like donating to charity or purchasing that computer equipment for your business before year-end can help lower your tax liability.
Try to make some time over the next week or so to get things together — you’ll be so much happier now and later!
We’d love to hear from you… What tips do you have to make taxes easier? How do you organize things?
Don’t worry about knowing the tax rules shared. TurboTax will ask you simple questions about you and give you the tax deductions and credits you’re eligible for based on your entries. If you have questions, you can connect live via one-way video to a TurboTax Live CPA or Enrolled Agent with 15 years experience to get your tax questions answered. TurboTax Live CPAs and Enrolled Agents are available in English and Spanish and can review, sign, and file your tax return.