One of the best ways to prepare for a new tax season is simply stay organized.
That is according to Phipps CPA Owner Jennifer Phipps. Phipps said keeping up with monthly finances can make each April more manageable.
“Even if it is not in a tax software, if you just pull together a folder, and you are throwing in all your January expenses and receipts at least you are keeping your documentation by month. And then, if you are not doing a separate software, maybe a Excel file will be very good.”
Phipps said to also keep a mileage notebook for your business trips. Phipps said it is wise for employees to review W-4’s and W-9’s to not be surprised at filing time.
“As an employee that W-4, you are telling your employer how much to withhold from your check throughout the year,” Phipps said. “It is a good thing for the employee to be sure their tax position is the same. (…) The other big form to think about is related to independent contractors. Those guys are going to have a W-9 responsibility.”
Phipps said employers taking advantage of the contractors need the W-9’s in order to complete their tax returns.
Phipps said completing your tax return as quickly as possible is not as important as you think. Phipps said many people misunderstand extensions. The only thing that is timely are tax liabilities, Phipps said.
“I don’t necessarily think it is super critical,” Phipps said. “Unless, you are one of those tax payers who absolutely wants your return filed as quickly as possible and you are absolutely not interested in an extension.”