There is little debate that the annual tax season is the busiest time of the year for CPAs. Between business and personal taxes, CPAs are left burning the midnight oil from about the end of January until April 15. The closer they get to the tax deadline, the hotter that oil burns. Why? Because of tax procrastination.
Why put off until tomorrow what your tax preparer can handle on April 14, right? As strange as it sounds, this kind of thinking is not all that unusual in the CPA world. Gurian CPA, one of a number of Dallas accounting firms that offers both business and personal tax services, says that procrastinators come out of the woodwork every April.
Perhaps you are one of those procrastinators. Maybe you are thinking, after an especially troubling 2019 tax season, that perhaps next year you will use a CPA. That’s not a bad idea. In the meantime, there are some things you can do to make everyone’s life easier next year.
Organize Your Paperwork
Perhaps you are among those people who procrastinate because you are naturally disorganized. You have eight months to do something about that. Start by coming up with a logical means of organizing all of your receipts, bills, bank statements, etc. Then implement that strategy and stick to it through the end of the year.
Something as simple as putting all of your bank statements in a single folder, in the order you receive them, makes a significant difference to a CPA. Categorizing your receipts according to expense is another tremendous help. The less organization your CPA has to do, the easier it will be to handle your taxes. And guess what? You will not be charged extra for having someone in the CPA’s office organize the paperwork for you.
Check Documents for Accuracy
You can make your CPA’s life easier by checking your documents for accuracy. For example, let’s say you were turning to Gurian CPA to handle your personal taxes. Every month you receive a statement from your mortgage lender detailing the status of your escrow account. Make sure the statement is accurate. If it isn’t, your CPA could run into problems next year when trying to figure out mortgage interest as opposed to money contributed to escrow to pay taxes and insurance.
If you notice that some information on your W-2s this year was incorrect, don’t wait until next January to correct it. Get with your employer now. The sooner you get it corrected, the less likely you’ll have issues next tax season.
Income reported on W-2s and 1099s is pretty straightforward. If you have other income not reported on the standard forms, that doesn’t mean it’s free money on which you don’t owe taxes. You still have to report it. And in order to do so, it needs to be documented.
If you derive hobby income, keep track of it on a spreadsheet or inside the same software package you use to manage your bank account. If you run a small business that earns some extra money on the side, make sure receipts are generated for every payment. If you win at the casino, keep a record of your winnings – yes, gambling winnings are taxable.
Procrastination is never a good idea when it comes to taxes. If you are a procrastinator by nature, maybe next year you should consider taking your taxes to a CPA. Do yourself a favor and start taking the steps necessary to make for an easier 2020 tax season. You and your CPA will both be better off.