With the start of a new year just around the corner, it’s important to start planning for your taxes. While taxes aren’t due until mid-April, it’s a good idea to begin planning for taxation now.
Knowing what you’ll owe, paying taxes quarterly and preparing for taxation ahead of time can help you be better prepared and organized when tax time finally comes.
What are some basic tips to help you plan for taxes better?
The first tip is to make sure you have a good filing system. There is no way to remember every purchase you’ve made for your business, and you’re even less likely to know the amounts you paid. Start a filing system, and keep all your receipts.
Next, get to know the tax requirements. Know what the IRS deductions and credits are, so you know if you’ll qualify for them. For instance, if you’re an independent contractor but go to school, you might be able to claim a credit for being in school or use your loan’s interest as a deduction.
Another great idea is to use your retirement account as a way to reduce your tax liability. You can avoid paying tax on interest if you do this, which is helpful in reducing your overall tax burden.
If this is the first time you’ve done your taxes, consider working with your attorney and accountant, so you can make sure they’re done right. You don’t want to miss important credits, deductions or requirements. If you do, you might have to resubmit documents and edit your return, which creates more hassle for you.