Income taxes are due in a little less than 60 days and, unlike last year, there’s little reason to believe the deadline will be extended beyond April 18th, 2022. According to a recent IPX1031.com survey, a third of us wait until the last minute to start working on our taxes, mostly because it’s too time consuming or complicated.
It doesn’t have to be that way.
Here are a few things you can do NOW to make this tax season easier.
Have a “place” for all your tax records…and USE IT!
Starting this month, we’re all getting lots of tax info from employers and financial institutions. Instead of just tossing those envelopes somewhere to find later, put them in their place. Don’t worry right now about sorting out duplicates or trying to decide what’s important. You can do that when you’re preparing your filing. It can be as simple as a manila envelope or a particular desk drawer or as complicated as an alphabetized set of hanging files.
Whatever way fits with your lifestyle, just do it. W2s, 1099s, K-1s, transaction reports, charitable donation receipts, deductible expenses receipts…put them in their place so when you start filling out forms, you’re not running around the house looking for this or that piece of information when you file.
If you get any tax information on line…get it NOW!
Print it out and toss it in your tax records “place”. There’s nothing more frustrating than waiting until crunch time to do your taxes and finding out you don’t know your password or there are other login issues. If you need tech service to get logged in, that could take hours. If you need a new password, many financial institutions send you the reset information through snail mail and that will take days, if not longer.
Max out your 2021 IRA contribution.
You have until April 18th to make any additional contributions up to the maximum ($6,000 across all IRAs – $7,000 if you’re over 50). Make that decision now so you’re not up against the clock if you have to move money around to make that contribution.
Beyond an IRA, if you’re a small business owner or highly compensated 1099 professional service provider (that includes doctors, dentists, lawyers) you should be leveraging both defined benefit and defined contribution programs to maximize your tax deferral oppotunities. Contact us to learn how our team of enrolled actuaries can design a customized program for you.
Get the cost basis on any investments sold during 2021.
Depending on the investments and how long you’ve held them, this can grow into a whole project.
Decide NOW how you’re going to prepare your taxes.
Your choices range from a calculator at the kitchen table to an on line software package to a professional accountant. The longer you wait on this one, the fewer choices. Professionals will start getting booked up and, while on line software has come a long way, you’ll still need some time to learn how to use it. There’s nothing more frustrating than staring at all your IRS forms on April 14th wishing you had another way to fill them out.
Nobody likes doing taxes but with a little planning up front you can take some of the stress out of it. Good luck – NOW go get organized!