It’s that joyous time of the year once again. No, we are not talking about Christmas but, instead, tax time. Suddenly the word “joyous” seems ridiculous now. This is the one time of the year in which the Internal Tax Service (IRS) is actually heard about. Typically, at least for most people, preparing taxes is the last thing anybody wants to do. It takes a while, it’s tedious, it’s easy to make mistakes, etc. However, with the proper preparation, organization, and planning, tax time does not have to be as daunting as most people make it out to be.
If you are self-employed, consider establishing Individual K, also known as Owner only or solo 401k Plan, a qualified retirement plan designed specifically with self-employed small business owner in mind. A solo 401k is known as Ultimate Retirement Account for the self employed, due to it’s numerous unique features and benefits not found in other qualified retirement plans, such as high contribution limit up to $55,500 for 2012, ability to take a loan against the plan balance, cost effective administration (no custodian required) and Roth (after-tax) contributions up to $22,500.
Proper planning is first and foremost for those who enjoy doing things as stress-free as possible. The last thing you want happening is realizing that the April 15th deadline is coming around, your nowhere near done (or have even started) with your taxes, and to make matters worse, you do not even know where all of your vital documents are. These documents can include a number of things. Usually though, they involve pay-stubs receipts, W-2s and other important tax forms. Therefore, as soon as you have finished your taxes this year, you should start preparing for next year. Buy an cheap little filing cabinet, or at least a few file folders and start storing your documents there. It doesn’t even have to be neat, as long as you know you have the documents once tax time rolls back around.
For some people, proper organization and planning do not come naturally, actually manifesting into a burden sometimes. If this is the case for you, then maybe you should consider hiring a professional to do your taxes. With a professional, you do not have to worry constantly about making a mistake (although professionals make mistakes sometimes too). Moreover, sometimes, taxes can become tricky and complicated, which is where a qualified professional can be of great assistance. For example, if you are a freelancer, taxes can become abnormally complicated because you do not have the government there ready and willing to take the necessary taxes out of our paycheck. Therefore, you are responsible for paying your own taxes and usually requires a 1099 form. Luckily, no matter what the situation, there are certified tax preparers out there who are prepared to handle it.
A professional is obviously a good choice for tax preparation; however, they can become a bit pricey in the long run. For those who need a little assistance with their taxes, and a lower expense to file them, tax preparation software can be your best friend. Turbo Tax Quicken, eFile, and other major names, have emerged on the market and have made a quite impactful reputation for themselves as making tax time easy. Best of all, most of these programs are cheap (sometimes free), and easy to use. Moreover, there is tax preparation software for just about any situation. There is software for the college student, for the freelancer, for special situations such as residency in another country, there is even special software just for Mac users. A simple online search will reveal everything from basic income tax programs, to elaborate total finance software. More and more people are finding that tax software is an easy, cheap option for filing taxes and are opting to go that route rather than paying a good chunk of money for professional service.
Tax time, by no means, has to be a time of suffering. All you need to do is designate some time to actually sit down and get to work. With proper planning, a good professional or tax software, and an early start, your taxes will be done in no time. There simply is no excuse for filing late or not filing at all. There are so many certified professionals, tax preparation programs, and even free programs implemented by the government. Moreover, a lot of the times, for those lucky enough to receive it, a rather decent refund check may be coming.