How to be ready at tax time to maximize deductions
When tax time rolls around, are you scrambling through boxes upon boxes of receipts looking for ones that can be used as tax write offs? Do you find each year after you finish your taxes that you think of a few more deductions that could have been a little more on your return, or a little less you would have paid? Well, not this year. The following are some suggestions for how to be ready at tax time to maximize deductions:
Get a good accountant: a great accountant can make all the difference in the world when it comes to tax time. A good tax preparer or accountant will be able to remind you of all of the little things you can deduct. They will also be able to tell you what to do for the following year to get ready for tax time so you can maximize the deductions that are personal to your specific tax needs. If you have a good accountant, chances are they will instruct you well, and you will but need to do what they tell you and you will find you get much more back, or pay much less.
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Keep your receipts, but not in a shoe box: if you have done taxes in the past, you should have a pretty good idea of what is tax deductible and what is not. So, instead of throwing all of your taxes in a shoe box, file them away in such a way that indicates which are tax deductible, which are questionable, and which have no bearing on taxes, but ought to be kept anyway. Then, come tax time, your accountant can go through the receipts with you and verify they are indeed deductible, and they can go through the questionable ones and see which fall under the legalities, and which do not.
Purchase a great accounting or filing system, such as Quicken. Quicken is a great way to keep track of spending, receipts, and more. So, if you can afford to, take your taxes into the new generation, and instead of using the old go through your receipts system, take 10 minutes at the end of each month to update and download your account information and categorize it in Quicken so that at tax time you can simply print a summary, and have all the info you need at your fingertips.
Get separate credit cards and bank accounts for business and personal. Many people who do not maximize deductions do not do so because they are bad at keeping track of what is business (and thus deductible), and what is personal. So, to make your life easier, get separate cards and accounts for your business and personal spending, even if you work from home, in fact, especially if you work from home.
Keep a file of things you want to know if you can deduct. If you write down any tax questions you have throughout the year, in detail, and keep these all together in a file, you will remember to ask them, and chances are be able to deduct more than you thought.
Keep track of donations, etc. There are some smaller things that are deductible at tax time, such a charitable donations, not just in the monetary form, so be sure to keep track of such donations, get receipts when you donate to good will, etc.
If you can manage to do the above items, you will be far more ready at tax time, and thus able to get more deductions than otherwise. You will have a faster tax preparation time, and you will be happier with the results because you will not lie awake at night wondering if you remembered everything that you can deduct.
