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No one likes tax season. Even if you don’t owe money, it’s a headache to pull together all the random documents you need and fill out and file your taxes. Just imagine: say you changed jobs during the year from a part-time hourly to a full-time salaried job, all while keeping your side gig doing freelance and contract work. On top of that, as a responsible professional, you have a new 401k as well as your own IRA. Plus, with the extra cash you’re pulling in from your freelance gigs, you’ve got enough spare change to invest in some of your favorite companies.
You’ve also got a few tens of thousands in student loan debt, which you’ve been diligently paying down, and you’ve donated to the charity your sister volunteers at. You were also extremely lucky and won a few hundred from that video game tournament you entered. For many Americans, that’s a pretty normal situation on a given year. It also is an absolute nightmare once tax season rolls around.
This year, 2020, taxes aren’t due until July 15 – the government pushed the deadline due to the coronavirus pandemic. So, you’ll have a little extra time to do what you need to do to finish your taxes smoothly. Here’s my guide.
Prepare in advance
The single most important thing that you can do to make your tax season as simple as can be is keep everything that’s even potentially tax related together in one, comprehensive place. Whether that’s a folder on your private computer (password protected, I hope!), or in a filing cabinet if they’re paper records, try to have it all in one place.
If you haven’t been keeping things together throughout the year and you’re missing a few W2’s (those are your earnings statements from your employers) or other tax documents, you luckily have a couple months to hunt them down. Don’t wait. Call up your present and past employers from this year, email your bank, reach out to your broker; make sure you get all the documents you need before it really comes down to the wire.
Consider a tax filing service
Tax filing services can make the tax process simple and painless – for a price. Whether you simply need help filing or you’re in dire need of tax debt relief, finding the right service can help you sort through all the info you need to get your taxes done right.
Let’s consider some pros and cons.
- Higher likelihood that your tax documents will be filled in and filed correctly
- Painless process handled by professionals
- Help with more complicated situations like tax debt, audits, and special circumstances
- Can be costly, which, if you owe money to the IRS, adds to your expenses
- Difficult to know which service is right for you: online, or in-person
- Possibility of sensitive information compromise; if you don’t go to a reputable tax preparer, your identity could be in danger of theft
A large percentage of Americans actually overpay in taxes throughout the year, and so are owed a refund from the IRS once they file. If you think that might be you, it’s much easier to afford a tax preparation service. They will likely simply take a portion of the money from your refund to pay for the cost of the service.
Take care of yourself
Tax season stress is just like any stress. A little might be helpful to make sure you are on top of your responsibilities, but it’s easy to get carried away, and soon that stress might be so consuming you can’t even think about getting your taxes done without getting an ulcer.
If taxes stress you out in a serious way, it’s smart to take care of yourself. Start by taking small steps to prepare for tax season so you feel that you’re more in control. Then, turn inward, and focus on self-care. Take a bubble bath, go for a long walk, listen to your favorite songs. These small things can make a huge difference, so you’re more relaxed and focused and can complete your tax burden without getting overly stressed out and making small mistakes.
With the right tax prep and mental prep, your taxes will be filed before you know it. Good luck this tax season!