Tax season is officially in full swing, with January 24 being the first day you could file your taxes for 2021. The final day to submit taxes is Monday, April 18, as April 15 is Emancipation Day and also a national holiday in Washington D.C. With tax filing being delayed last year and Tax Day extensions the last two years, it’s important to prepare as best you can for a smooth tax season.
The first step? Start collecting tax documents as they come in the mail. Save them in a stack somewhere they can be safe but also easily accessible. Depending on your situation from the past year, there are various forms to be on the lookout for. It’s important not to start your taxes until you have all the forms necessary.
Determine how you will be filing this year. Are you doing your own taxes via a reputable tax software or are you going to work with a professional CPA? Whichever you choose, take your time and do your research before jumping into the first software you find or working with the first CPA you stumble across. Be cautious of sites that claim to be “free” - free isn’t always the better option, especially when it comes to filing your taxes correctly.
Take some time to do research on deductions. Whether you DIY this year or work with an accountant to do your taxes, you should know which deductions are available and which ones, if any, you might qualify for. It’s important not to over-deduct, as this is a red flag for the IRS. To claim these deductions, you will need to provide proper documentation as support.
If you donated to charity in 2021, don’t forget to claim it on your taxes. If your donation was more than $250 and made to a qualified organization (check out the IRS Exempt Organizations Select Check for qualified organizations), you should provide proper documentation directly from the organization. If your donation was less than $250, you do not need to provide tax documentation from the organization.
If you own a business, we highly recommend working with a certified tax preparer or CPA, rather than doing it yourself with a tax software. Since business tax filing is more complex, its best to use the guidance of a tax preparer or CPA to ensure you’re not missing a single component.
The worst thing you can do is rush the process of filing your taxes in hopes of getting your return sooner (if you’re getting one). If there is any incorrect or missing information, it will spark many red flags with the IRS and issues may arise, which will lead to a delay in getting your refund. If needed, file an extension. An extension will give you an additional six months to accurately complete your filing. Always consult with a professional if you’re unsure what to do.