As Benjamin Franklin wrote in 1789, “In this world, nothing is certain except death and taxes”. This is an insightful observation and reminds us that it is never too late to plan ahead on both.
Like most of us you must have expressed a sigh of relief either when you got a 3 month extension on getting your taxes done this year due to COVID-19 or when you finally turned in all your tax records to your CPA so that they could do all the heavy lifting and complete your tax return and file with the IRS on time.
But now that it is all over for this year, unless of course you really did procrastinate and had to file an extension (we will leave that discussion for a future blog) it is time to plan for 2021. Assuming our COVID-19 crisis has finally come to an end and life is back to normal you will face a tax filing deadline of April 15, 2021.
Steps to prepare for filing your 2020 tax return.
- Use your 2020 tax return as a guide
- Keep track of your tax-deductible expenses on a daily and monthly basis. Prepare a file for storing all these receipts throughout the year so you do not have to spend hours scrambling to find them next year.
- The more organized you are with keeping good tax records the less time it will take your CPA to complete your return leading to a lower fee for you. Every delay in locating a missing document can create more billable hours to you.
- If you do itemize your deductions, be sure you have written confirmation for any charitable contributions. Thank you for your donation!
- During the year, if you buy or sell property you will need to have records for the amount you originally paid, and how much you received from the sale.
- Be sure to take advantage of any contributions to a tax deferred retirement account throughout the year. Check for IRS contribution limits for 2020
- Make an appointment early in 2021 with our CPA to discuss any issues that may have an impact on your tax obligation for next year.
Next year will be a breeze when tax time comes because you will be organized. The sooner you get it all turned over to your CPA, the sooner you can get your refund and take that long overdue vacation.
