The holidays are upon us and that means it’s time to get your end-of-year ducks in a row for some smooth sailing through the upcoming tax season.
Here are five tips to help you get organized so that your 2016 tax filing is as easy as floating down the lazy river:
- Small biz owners: Gather your income and expenses for the year. We’re pretty sure you’re already already doing this, but if you haven’t or if you’re just not quite sure how to get organized, be sure to ask your tax preparer for a handy-dandy tax client organizer. That document will help you gather all the receipts and paperwork you need to report income and expenses on your taxes.
- Mileage log and other unreimbursed expenses: On top of usual income and expenses, update your mileage log. Check your odometer readings, gather your gas receipts and write down all the trips you made for work or volunteering. If you have other out-of-pocket expenses from your job that haven’t been reimbursed, pull those together, too. For example, when I was teaching in a public school I spent nearly $3000 a year out of pocket. I couldn’t claim it all, but every bit helped.
- Tax-loss harvesting: Talk to your investment advisor/broker about tax-loss harvesting. If you own securities that have experienced a loss, consult with your investment/tax advisor about how harvesting your losses may offset taxes on both income and gains. Often the sold securities are replaced by similar securities to maintain optimal returns and portfolio asset allocation.
- Rental property: If you own rental property, gather all your expenses from the past year, including advertising, maintenance and repairs, mortgage interest, insurance, legal fees, and any commissions paid to rental agents. These can be deducted from your rental income to reduce your tax burden.
- Moving and medical expenses: Did you move this year for a job or did you have significant medical expenses? If so, then gather all the receipts that show what you paid for those moving vans or doctor visits. Mileage counts, too, so don’t forget to document your miles traveled.
Getting organized will make tax filing season so much easier for you and your tax preparer. If you aren’t sure which documents to gather, just ask us. We’re here to help get you down that lazy tax-filing river faster and smoother. Quack, quack.