They say that the only certainties in life are death and taxes. It is our hope that both will be rather uneventful, quick and painless. Considering we are not doctors, but financial planners, let’s keep our focus where our strength lies and delve into some tips to help you get through the tax season.
Organization is truly the key to a successful tax season, and the earlier you can get organized, the easier it will be. We suggest using a folder system which can be adapted whether you like to use paper or prefer to work digitally.
For Paper Lovers:
- Buy an accordion file
- Label the Tabs as follows (and as appropriate to your situation):
- Business or Investment Real Estate
- As you receive your tax documents, review them and file them in the appropriate folders
For Digital Fans:
Replicate the system above but with folders and subfolders on your computer. Scan or save your tax documents and receipts to the appropriate folders as you receive them.
Nothing elicits procrastination like filing taxes, but April 14th is not the time to bring back the all-nighter of your college days. Circumstances out of your control like system crashes, computer glitches, and unforeseen emergencies can arise, preventing on-time filing and leading to unnecessary penalties and interest. Save yourself the stress and aggravation… and potential costs by filing early.
Accuracy is Key
Even if a tax professional is completing your return, give it a once-over to make sure all of the figures are accurate. Compare your W-2 to your final paystub to make sure the figures match. Be certain to use the most recent documents and any corrected tax forms, if applicable. Compare your new return to the one you filed last year to see if you might be missing anything. No matter who completes your taxes, it is your signature at the bottom, and you will be the one held accountable.
Be Security Conscious
Tax Season is notorious for bringing out creative and costly scams. Be sure to use secure passwords on all sensitive information and avoid public Wi-Fi. When storing paper files, choose a secure location. If you are working with digital files, make sure you frequently update your passwords and have up to date cyber protection. Do your research before selecting an accountant or tax planning software. Do not provide sensitive information over email or the telephone.
Know the Tax Deadlines
Last but not least, there are many dates and deadlines that you should be mindful of as you plan for this season and the year to come. We have broken them down below.
Deadline: Most Tax Documents Must Be Mailed
What it means to you: Employers must postmark all employee W-2s by 1/31. Businesses must also provide most 1099s and 1098s by this date. You should have all information on your income from salaries, other compensation, investment income, interest, dividends and distributions, as well as on interest paid, very early in February so you can begin to prepare to file your taxes.
Deadline: Remaining Tax Documents Must Be Mailed
What it means to you: Employers must postmark all 1099-B, 1099-R and 1099-MISC forms by this date. If you sold any stocks, bonds or mutual funds through a brokerage account, or had any real estate transactions, you will have to wait for these forms to prepare your tax filing.
Deadline: Last Day to Use 2018 FSA Money
What it means to you: If you have a flexible spending account through your employer, you may be allowed to carry over the balance to the next year. If you did, you must use those funds by March 15th, or you will lose them.
Deadline: Tax Filing
What it means to you: Your taxes must be filed by April 15th, unless you’ve requested an extension, to avoid penalties.
Deadline: Last Day to Make 2018 IRA, SEP IRA, Roth IRA or HSA Contributions
What it means to you: If you did not yet maximize your contributions for 2018 and are eligible to do so, you may continue to make contributions for 2018 up until the 15th of April. Note: if you are in this position, don’t wait until the last minute. This is a very high-volume time for financial services, and you don’t want to miss out on the opportunity.
Deadline: Last Day to Recharacterize a 2018 IRA or Roth IRA Contribution
What it means to you: If you made a contribution to a Roth IRA but some or all of it was not eligible per the Roth Guidelines (For example, you fall into the income thresholds), you have until April 15th, to correct the contribution and assign it to a traditional IRA. Note: it is prudent to do this well before the deadline as it can take some time.
Deadline: Tax Filing for Extensions
What it means to you: If you requested an extension, your 2018 taxes must be filed by October 15th to avoid penalties. Note: you will still be required to pay interest.
Deadline: Last Day to File Electronically
What it means to you: If you are on extension, you will not have the ability to file electronically if you miss this deadline. You will be required to file a paper return.