A Financial Prepper That Is ~
Think it’s too early to think about taxes? It’s not. In fact, now is the perfect time to prepare your books for tax season. Get it out of the way before the holidays and save yourself the added stress in the spring.
Prep Your Books
There are lots of simple steps you can take to prepare your books now so they are ready for your tax preparer. You could pay your bills a few days in advance so the checks have cleared before December 31. Offer a small discount to customers who pay before the end of the year so your accounts receivables are low. Make sure documentation for your expenses is complete and accessible. Review your reports to see if anything looks out of the ordinary. Click for more suggestions.
In addition to getting your books in order, I suggest familiarizing yourself with how the the Tax Cuts and Jobs Act will affect you. I know that sounds overwhelming but believe it or not, the IRS has created a handy side-by-side comparison that is easy to understand. A little bit of understanding now will make things easier in the spring. At the very least, you will have some idea what your tax preparer is talking about when they tell you why your getting more/less money back. Even better, you can impress them and ask if the 20% pass through deduction helped reduce your tax liability.
Prep Your Tax Plan
The time for tax planning is in the spring. However, its not too late. There are still things you can do to reduce your tax liability.
- Make sure you have a written accountable plan on record to support a home office and mileage deduction if you work from home.
- Contribute to a qualified retirement account if you haven’t already met the maximum threshhold.
- If you think your tax liability is going to be lower next year, making a necessary purchase before year end. Don’t go crazy though. Several expenditures in the fourth quarter can raise IRS eyebrows and trigger an audit.
- Get a second opinion. A second set of eyes can often uncover tax deductions your regular tax preparer missed. While you are at it, have them review your returns going back three years. If they find new deductions or credits previously missed, you can file amendments and get a refund.
Being a Prepper is a Good Thing
Identifying problems in November means you too get to enjoy the holidays without worrying if your books will be ready for tax season. It also means you have one last chance to estimate your tax liability so you and your tax preparer can make last minute adjustments to benefit your bottom line in 2018 and 2019. Being proactive now means less stress during tax season.
If you need help instituting any of the suggestions contained herein or if you identify problems you are not sure how to resolve, seek the help of a professional as soon as possible.