It may be hard to believe, but Tax Day 2017 has already come and gone. And while you might just be getting over the stress of the past tax season, it’s important to be proactive and prepare for 2017. Procrastinating is popular – Bloomberg reported that the IRS collected nearly 29 million returns between April 8 and 22 last year, and only 4 million fewer people waited to file until April 7 this year.
But instead of pushing the task off until the last minute and becoming an overwhelming statistic, get yourself in good shape to file in advance in 2017.
Here are a few ways to prepare yourself for the next tax season:
Save tax documents throughout the year
Instead of stressing out at the end of the tax year, scrambling through piles of paperwork to collect the information you need to file, start compiling all relevant tax documents through the year.
“Turning tax prep into a routine that you replicate yearly and implement year-long will eliminate the anxiety of having to re-learn something you only think of once a year,” Dearing told Forbes.
Whether you love the old school method of saving receipts in a box until tax time, using a scanner and an excel spreadsheet, or want to try a new smartphone app, U.S. News & World Report suggested squaring your recordkeeping method in place as soon as possible.
Pay attention to tax code changes
With the new White House administration, talks of tax reform and condensed tax brackets are circulating. Stay on your toes and pay attention to potential changes, but also – don’t sweat it too much. Carla Dearing, CEO of the online financial wellness firm Sum180, told Forbes that changes won’t necessarily affect you significantly.
“Tax reform is discussed every year,” she said. “When it does happen, it’s rarely so transformative that your tax prep changes significantly from the year before.”
Chances are, tax code changes won’t affect your recordkeeping or preparation at all.
Our advice: Keep tabs on what’s going on, and reach out to a tax professional if you need help navigating the changes. But just focus on keeping a filing system in place to organize receipts and tax documents throughout the year so you are ready when it’s time to file.
Adjust your withholding
This year, Bankrate recommended checking your year-to-date withholding and reconsidering your current set-up – you may want to think about changing the taxes withheld if you want a larger refund or rather, more immediate take-home money.
“It’s a personal choice if you want to have extra money withheld to get a bigger tax refund, but you have options available if you prefer to have a smaller refund next year and more take-home money now,” IRS commissioner John Koskinen said in a statement.
But if you ended up owing the IRS at tax time this year, you’ll definitely want to review your withholdings to ensure you’re withholding at the proper rate and that you claim the right number of exemptions. No one wants to write a check to the IRS.
To adjust the amount of taxes withheld, you’ll have to fill out a new W-4 form and submit it to your employer. Remember: Now’s the perfect time to adjust your withholdings for 2017. If you wait too long and more than six months of the year have already passed – the changes likely won’t achieve your desired effect for the total amount of taxes withheld for the year.
If you’re looking to be more proactive during the next tax season, but would like to receive additional assistance to prepare, reach out to one of the tax, trusts, and estates attorneys at Scarinci Hollenbeck. With help from a professional, you’ll receive the guidance you need to stay ahead during the 2017 tax season. For more information about filing your taxes or general tax questions, reach out to one of our experienced professionals at 201-806-3364.