You can probably think of at least a dozen things you'd rather be doing than taxes. I know I can. But unless you like surprise visits from the IRS, you don't have much of a choice. Failing to file a tax return will result in penalties; for the worst offenders, it could even mean some time in jail for tax evasion. It's best to just get your taxes over with.
You must take the time to do them right, but you also want to be as efficient as possible so you can put the tax season behind you and get back to doing what you love. Here are a few tips to help you make that happen.
1. Gather all of your tax paperwork together
Your employer has until the end of January to send your tax forms, but you don't have to wait until then to start getting ready. Create a folder where you can keep all of your tax paperwork for the year. You can add your tax forms when they come in, but for now, focus on adding documentation for any tax deductions or credits you plan to claim. This includes receipts proving what you spent on business deductions, large medical expenses, educational expenses, or anything else that might count as a tax break.
If you only received online bills for some of your deductible expenses, you may want to print these out or at least save them to your computer; record the amount of each bill that's tax deductible so you have this information at hand when you file your taxes and don't need to look it up.
You may want to go through and highlight the relevant information in each of these documents so you can quickly locate the numbers you need when you're ready to file your taxes. If you want to make next year's tax season even easier, start doing this step right now for 2020. As you accumulate documents that pertain to your tax deductions, place them in a new folder so you know right where they are come tax time.
2. File your taxes as soon as possible
Once you have received all of your tax documents, including your W-2s or 1099s from your employer and any investment tax forms you're expecting, you should file your taxes as soon as possible. This is especially important if you plan to have someone else do your taxes for you. Tax professionals often get busier as tax season wears on, and if you wait to get your information to them, you'll probably be waiting longer to get your tax refund as well.
Time isn't quite as pressing if you plan to file taxes on your own, but the sooner you file, the sooner you get your refund. Waiting is also risky because, if you realize in the midst of filing your taxes that you're missing some crucial information, you may not have adequate time to track it down before the tax deadline. You'll either have to submit your tax return without claiming all the deductions you're eligible for if you're missing paperwork, or file your tax return late and pay a penalty.
3. E-file your taxes instead of submitting a paper return
Virtually everyone uses a tax filing software these days instead of dealing with those antiquated paper forms, but once you've got your tax return complete, you have a choice in filing. Most tax filing software gives you the choice to e-file your return or print it out and mail it to your state and the federal government. E-filing may come with a fee, but it's a faster way to submit your paperwork, and you don't have to worry about your return getting lost in the mail.
If you choose to print and mail your tax return, you should do so right away so you don't forget. Remember, you must have filed your paperwork and paid by April 15, 2020 to avoid failure-to-file and failure-to-pay penalties. According to the IRS, "An extension to file doesn't extend the time to pay."
The key word in all of this is efficiency, not speed. Start on your taxes right away and streamline the process by having all of your important documents in order, but don't rush through them so quickly that you end up making mistakes. This could get you audited, and you'd have to spend even more time on taxes.