Many taxpayers cannot wait for the tax filing seasons to end. Once you hit the Submit button or put your return in the mail box, you are ready to enjoy the rest of the year, knowing that you have filed your taxes successfully.
While you are entitled to every bit of relief that you feel after tax season, you should not delay in preparing to file your returns next year. You can start your prep work now by following a few simple and fast tips.
Did you end up owing the IRS money this year? If so, you might want to reexamine how much money you have taken out of your paycheck for taxes.
If your withholding rate is too low, you could end up owing the IRS quite a bit of money at the end of tax season. If your tax bill is taking a hit to your household's bottom line this year, you might increase the amount that you have withheld for federal taxes. In fact, you may find that the IRS owes you a refund next year.
You can also lower your tax bill next year by investing more money in tax-favored accounts this year. The IRS may allow you to claim exemptions for money that you put into funds like:
If you plan to claim these new exemptions, you should be ready to provide proof of them when you file your return. You should save receipts for all of these costs in case the IRS asks for verification of the expenses next year.
As you explore new ways to save money on your tax bill next year, you still must deal with the amount that you owe now. If you cannot pay the IRS everything that you owe the government this year, you can set up a payment arrangement by going to IRS.gov.
The installment agreement lets you make payment each month on your IRS debt. The payments are based on your household's current income and designed to be affordable and avoid causing financial hardship to you and your family.
Finally, you should hang onto your tax records and returns from this year for at least a year if not longer before filing them away. The IRS may audit you in the next three years.
You also will need to refer to your records if you set up a payment arrangement and plan to make monthly installments on your debt. You can keep track of how much you have paid off by referring to the balance on this year's returns.
You may be happy to see the end of this year's tax season. However, next year's season is just around the corner. You can start preparing for filing and paying your taxes next year by utilizing these straightforward suggestions today.