LUTZ BUSINESS INSIGHTS
2019 Tax return: why you should prepare early and how to do it
adam austin, tax manager
Filing your taxes isn’t always simple and enjoyable. For this reason, many people tend to put them off as long as possible. Unfortunately, delaying your tax preparation will only hurt you in the end.
Starting your tax prep early will help you stay organized, allow you to collect documents at a leisurely pace, find more deductions, and overall, save yourself and your accountant time and trouble.
An Initial Meeting in 2019
Start thinking about your 2019 taxes before 2019 ends. By December, you should meet with your accountant to talk about any financial changes you’ve experienced this year: income fluctuations, new deductions, outdated deductions and so on. This way, you’ll have a good sense of your tax liability and you can avoid being hit with unforeseen penalties or other negative surprises.
Tip: Early tax prep is especially important for those with significant income that’s not subject to withholding. Examples may include investments and income from a flow-through entity (partnership, S-Corporation, sole proprietorship).
Another benefit to early tax prep is getting a head start on your document collection. Your accountant can specify which forms, statements and itemized deduction materials to gather to facilitate preparing your return. You’ll then have a few unhurried months, not a few hectic days, to find them. Naturally, your stress level will go down when you are more prepared.
Tip: Early preparation also increases the odds of locating receipts and other records that can lead to more deductions!
File Early in 2020!
Once 2020 dawns, it’s wise to file that return as soon as you can. Get all of those documents you’ve been collecting to your accountant!
There are a few major advantages to submitting a tax return well before the April 15 deadline.
- You’ll get your refund sooner. The IRS and states can process it before the stampede of returns in March and April.
- You’ll know how much you owe earlier, and you’ll have more time to figure out when and how to make your tax payments. You and your accountant can discuss how much to pay upfront and how much, if any, to put on a credit card or set up on an installment plan.
- Your tax preparer will certainly be less busy in the winter than the spring. He or she will have more time to devote to you, and it’ll be easier to schedule appointments at your convenience.
Keep It Organized
When you file your taxes, a tax organizer can come in handy. What is a tax organizer you ask? It’s a lengthy checklist that you can find online or get from your accountant.
Make sure you fill out your organizer each year. Then, the following year, you can review every item from your prior tax return. Consequently, you’ll know which documents to have on hand.
Your organizer will supply your tax preparer with changes to your personal information, including changes to your address, dependents, or employment situation, as well as any major changes in your income or deductions. This list also includes an estimated tax payment timetable. It records the amount and timing of any tax payments you made to the IRS or states throughout the year.
The organizer will include summary sheets you can fill out. These statements outline your charitable contributions (both cash and non-cash), Schedule C business income and expenses, rental property income, farm income, and other detailed financial matters, particularly those with lots of receipts. Again, it greatly facilitates organization.
Another useful tool is something you probably already own: a file folder. Instead of sending your accountant each document as you find it or as they arrive in the mail, organize those sheets into a folder first and send to your accountant all at once. Your tax prep will be more efficient, and the odds of an accounting error will decrease. Additionally, you might keep digital copies of those forms in an online folder and send to your accountant electronically.
Tip: You’ll especially appreciate your folder if you’re ever audited. Everything will be ready for the IRS right away.
In summary, when you file your taxes early and begin tax prep even earlier, you and your hardworking accountant can enjoy a smoother experience. Your return will be more accurate, and you’ll get to spend your refund dollars sooner!
ABOUT THE AUTHOR
ADAM AUSTIN + TAX MANAGER
Adam Austin is a Tax Manager at Lutz with over nine years of tax and consulting experience. He is responsible for providing tax consulting and compliance services to clients with a focus on business income tax for a variety of industries and individual income tax.
AREAS OF FOCUS
- Tax Planning & Consulting
- Individual, Partnership, & Corporate Taxation
AFFILIATIONS AND CREDENTIALS
- American Institute of Certified Public Accountants, Member
- Nebraska Society of Certified Public Accountants, Member
- Certified Public Accountant
- BSBA in Accounting and Finance, University of Nebraska, Lincoln, NE
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