16 Steps to Get Organized Before Tax Season

woman doing taxes


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woman doing taxes

Tax Time

With tax season just a few months away, it's time to start getting organized in order to make the filing process as painless as possible. From gathering all of your relevant financial documents to making last-minute moves to nailing down deductions in order to reduce your 2019 tax burden, here are some housekeeping tips to consider courtesy of tax preparation and personal finance experts.

Related: 20 Crazy-Sounding Tax Deductions That Are Actually Legit

Update Contact Info

Update Contact Information

Did you move, switch jobs, or start working for yourself in 2019? Make sure former employers have your current mailing address and contact information. "The deadline for many forms to be sent out is January 31st, but if you moved or changed your email" without informing anyone, "those forms may be sent to the wrong place," says Watson.

tax documents
Darylann Elmi/istockphoto

Gather Important Documents

First and foremost, collect all of your required documents. "Make sure you have any applicable financial documents, like a W-2, 1099, or 1098," says Derek Silva, tax expert at Policygenius. "By law, companies must mail these to you by January 31, but opting for electronic delivery could help you get it sooner." You should also gather things like receipts, details on other income you made during the year such as rental income or lottery winnings, along with documents for any taxes you've already paid.

Tax Files

Create a Place for Documents

As forms start arriving, create somewhere in your home to store them for safekeeping and organize them into broad categories such as income, charity, childcare, and miscellaneous, says Ben Watson, CPA and personal finance expert with DollarSprout. "If you get forms electronically, print them off or save them to a specific file on your computer to keep them from getting lost in your inbox," he adds.

Related: Why Warren Buffett and Other Billionaires Pay Less Tax Than You

Couple doing taxes

Determine Filing Status

One of the best ways to maximize tax refunds is to consider your filing status, says Ryan McInnis, founder of Picnic Tax. "Around 96% of married couples file joint returns, but some may want to consider opting for married filing separately status," he adds. "By choosing to file separately, each partner may have a lower adjusted gross income, used to determine eligibility for some credits. Taxpayers should take their own eligibility into account when deciding which option is best."

Tax Deduction

Identify Deductible Expenses

If you have enough deductible expenses, you can elect to itemize deductions on your returns and potentially get a bigger overall deduction than the standard deduction might provide, says McInnis. "There are several expenses that are eligible for deduction, including mortgage interest, state taxes, miles driven for medical care or charity, and dollars spent on charity work or donations," says McInnis. The standard deduction under 2019 tax law is $24,400 for those who are married and filing jointly, and for single taxpayers and married individuals who choose to submit tax returns separately, it is $12,200. For those who file as head of household, it is $18,350. Any itemized deductions would need to total more than the standard deduction amount in order to be worth claiming.

Retirement Plans

Maximize IRA Contributions

It's not too late to optimize your tax refunds by making contributions to certain eligible retirement plans, says McInnis. An IRA, for instance, can be contributed to or opened for the previous tax year until April 15 of the following year. "By contributing to an IRA, you directly reduce your taxable income and save for your retirement at the same time," adds McInnis. The total contribution limit for traditional and Roth IRAs is $6,000. If you are 50 or older, it's $7,000.

Tax Consultation

Research Tax Law Changes

Tax laws change frequently, so be sure you know the facts and how they affect you, suggests Saundra Davis, MSFP, a SaverLife financial coach. In particular, the 2018 Tax Cuts and Jobs Act ushered in a variety of changes, including lowering U.S. tax rates. "While the number of tax brackets remained at seven, the rates were lowered, and the income thresholds were increased, mostly for high-income earners," says Davis. This is just one of many changes brought about by the law, which also included elimination of personal exemptions and increased standard deductions, she adds. To sort through all of this, it may be a good idea to reach out to a tax professional.

Related: 50 Interesting and Fun Facts to Lighten Up Tax Time


Do Your Own Bookkeeping

If your tax returns are somewhat complex and involve rental income or a business, you can drastically cut down on your tax professional's work by providing them an income statement for these activities, says tax analyst Timothy Yoder of Fit Small Business. "I highly recommend using a bookkeeping software that will print both a balance sheet and income statement."

Woman on phone at home

Consult a Professional Early

Don't wait until your tax filing appointment to speak to a tax professional about questions you have or steps you should take to optimize your return, says Ric Sinordo, founder of Modern CPA Group. "Contact them before tax season begins to ask as many questions as possible. They'll also have a lot more time on their hands to consult with you."

Related: 11 Situations Where It's Probably a Bad Idea to Do Your Own Taxes

Student Loan Debt

Find or Request Student Loan Paperwork

If you're among the 44 million Americans who have student loan debt, you may be able to claim any student loan interest you paid in 2019 as a tax deduction, says Joe DePaulo, co-founder and CEO of College Ave Student Loans. "Look for Form 1098-E. Your student loan servicer should send you this form by early February if you paid $600 or more in interest last year," says DePaulo. "If you paid less than $600 to any given servicer, you may need to ask them about the document."

Couple with baby looking at computer

Review Significant Life Events

Life changes and events that happen during the course of a year can have repercussions on your tax filing status and potential return, says Michael Micheletti of Freedom Debt Relief. These include things such as getting married, earning a job bonus or commission, and taking on a part-time job. "Whether you earned money from yard work, babysitting, tips, or consulting, if you earned enough, you will need to pay taxes on that income," Micheletti says. "If you're working as an employee, you should have completed a W-4 form with your employer who will withhold taxes. If working as an independent contractor, be sure to take time to understand how you'll handle self-employment taxes."

Mortgage Documents

Don't Overlook Mortgage Insurance Premiums

The cost of mortgage insurance premiums on a qualified personal residence can be deducted as an itemized expense, says Lee Reams of Tax Buzz. "The premiums are deducted as home mortgage interest on Schedule A. Taxpayers should have proof of payment," said Reams.

doctor writing

Calculate Medical Expenses

It's no secret that health care in this country is extremely expensive, even if you have health insurance. The good news is that tax law allows for deducting some medical expenses not covered by insurance. Under 2019 tax laws, taxpayers can deduct unreimbursed qualified medical care expenses that are above 7.5% of your adjusted gross income. "Medical deductions for 2019 were scheduled to be limited to those that exceeded 10% of taxpayer's adjusted gross income," says Reams. "However, the law changes reduced that to 7.5%, meaning there's now a better chance of qualifying for a medical itemized deduction. Prepare by reviewing your medical expenses to see if they exceeded 7.5% of your income."

Woman explaining to client

Find a Qualified Tax Professional

If you prefer to have assistance filing your return or have a complicated return, be sure to find a qualified professional. "Make sure your tax preparer has a Preparer Tax Identification Number, which indicates they're authorized to prepare federal tax returns," says Steve Sexton, financial consultant and president of Sexton Advisory Group. It's also a good idea to check the online reviews for a tax professional to make sure they have a solid reputation, adds Sexton.

Woman looking at taxes on computer

Find out Whether You Can File for Free

If you make $69,000 or less each year, the IRS offers Free File products to use, says Leslie Tayne, author, financial attorney, and founder of Tayne Law Group. Free state income tax filing options may also be available. "Check your state's website to identify income requirements for free filing, since it varies by state and program," Tayne says. The IRS offers a free file online look-up tool here.

Related: What You'd Be Paying in Taxes in 34 Other Countries

Tax Refund Envelope

Make Plans for Your Refund

If you expect a large refund, decide what to do with it before it arrives so it doesn't slip through your fingers and get wasted, says DollarSprout's Watson. "Use it to pay off a credit card or boost your retirement account instead of letting it disappear into miscellaneous online shopping," he adds.

Related: 20 Fun and Smart Ways to Spend Your Tax Refund