by Taylor J. Kovar

–Hey Taylor – Happy April 15th! Just kidding, I don’t really love this day. I filed late last night and spent the whole time wishing I’d done more work last year to ease the burden. How can I make filing my taxes less of a nightmare?

 

–Hey Colin – Sorry to hear about your tax season pains. Truth be told, it’s not my favorite time of year either. I’ve got systems that help keep me prepared, but it’s always a bit of a hassle. For next year, here are three things you should focus on to make the process a little more manageable.

 

  1. Learn from the past. What was it that caused the biggest headache this year? Did you have to pay on capital gains, or untaxed freelance earnings, or the sale of property? When I first started my own business, I was blindsided by all sorts of tax payments I wasn’t ready for. I learned from those early mistakes and made sure to adjust accordingly. The biggest mistake I see my clients make is to struggle through tax filing and then repeat all the same mistakes the following year. Whether it’s tracking your business mileage or keeping better receipts, you need to remember the things that stressed you out this year so you can do a little better next round.
  2. Give more. I don’t enjoy paying taxes at all. One of the things that motivates me to file is watching my bill go down after I declare my donations. Tithing is really important to my family and is something we would do even without the tax benefits, which makes it an absolute win-win to have donations cut down our tax liability. If the money you owe stresses you out every April, start making quarterly contributions to a nonprofit. Not only will you owe less to the IRS, you’ll also get the opportunity to support a cause that means something to you.
  3. File earlier. If you start the process in February, you leave yourself some time to really comb through the details and make sure you have all the information you need to maximize those deductions. When you’re staring at your computer just before midnight on April 14th, you’re probably more willing to pay too much just to make it all stop. If you file online, you can start early and do a little bit of work every week until it’s done. If you work with a CPA, set up the initial meeting as early as you can and get yourself organized. Even if you don’t have all the information you need, you can always get started and then amend your return later on. The worst thing you can do is postpone filing because you dread it and then end up paying more because you filed hastily.

 

You should already be preparing for next year’s taxes, as painful as that might sound. Fortunately, you learned some lessons this year you can hopefully apply to the next round. Take a proactive approach instead of procrastinating the inevitable, and everything will be a lot easier. Thanks for the question, Colin!