The IRS says now is a good time to start reviewing tax information. The main reason for the early start is to avoid problems later on. Here’s more on what to consider in tax preparation.
Most tax forms won’t come in until after January first. But keeping track of receipts and other records throughout the year can help you avoid problems at tax time.
Daniel Livesey is an enrolled agent and office manager at H&R Block in Presque Isle who says, ”most frequent problem is that most people have worked multiple jobs and they forget about one of the jobs and forget to bring in that W2 and they file their taxes we end up having to do an amended one for that.”
That’s one common problem found according to Livesey. He also says another common error happens when people change jobs within the year.
Livesey says, ”they’ll forget they had a retirement plan cashed out, and then they’ll get a form after they’ve already filed their tax return and they’ll end up either getting a letter from the IRS or having to correct their return.”
Unemployment compensation is usually taxable, so unemployment forms will need to be brought in come tax time. The most common credit people forget when filing is Education credits. Tax agents needs to know how education expenses were paid for. Also throughout the year, it’s a good idea to keep track of those receipts, invoices, mileage logs and more.
Livesey, “if you own a small business it’s a good idea to make sure that your record keeping is in good order, you’re bank accounts are reconciling.”
The IRS says tax records should be kept for three years, while some documents like a home purchase or stock transaction should be kept longer. All are ways to keep organized and stay problem free come tax time. For more information on specific forms and necessary records, you can always visit IRS.gov.