Photo / Courtesy of the Swanson Group
Nathan Pike
Updated: 0 sec ago
How To
Tips and tricks to avoid headaches during tax season
By Nathan Pike, Swanson Group
Tax season can be, well, taxing on everyone involved. Whether you file your own taxes or work with a tax professional, this time of year can be stressful, hectic and confusing.
Here are a few tips and tricks that you can use on your individual return to help avoid feeling the pressure of tax season.
Gather your thoughts and documents
Some of this may be out of your control if you are waiting for a 1099, a K-1, or a brokerage statement, but one of the keys to a better prepared return is being better prepared yourself. Collect documents and sort them out, perhaps by categories such as income, deductions, and credits. This can help you or your preparer not only know what you have, but what you are missing or waiting on.
Be timely
If you file your own taxes, it will save you stress down the road to stay ahead of things. If someone else prepares your return, getting them a complete record of all documents can speed up the filing process. Most accounting firms use a “first in, first out” approach, meaning that your return is in a queue based on when you came in (think first come, first served).
An earlier filing means you can get your refund sooner, or have more time to pay any tax due. If you or your preparer have everything needed for your return and do not procrastinate, everything will run more smoothly.
Ask questions
If you’ve been on a road trip, you know that the worst question you can ask is, “Are we there yet?” This applies to tax return preparation as well. Tax preparers are doing their best to help all of their clients as best as they can while upholding quality service and maintaining a high standard for their work.
Asking for a rough timeline or for an update is absolutely ok, but if asked too frequently, these simple requests can bog down a preparer, as they will need to take time to answer instead of working on a tax return. Do not be afraid to ask if something should be included or discuss tax issues with your preparer, as more helpful information and communication is always better than none.
Other aspects
Now that we have covered some basics for a less stressful tax season, here are a few more specific things you can do that may affect your tax preparation and potential tax liability.
Many individuals are concerned with the energy efficiency of their home, and are looking for ways to cut down on ever-increasing heating and energy costs. There are multiple federal energy credits that can be used, as well as Maine-specific incentives through Efficiency Maine.
Sports gambling has become a mainstream hobby in Maine. It is important to note that losses are not allowed unless you itemize or are in the business of gambling (a difficult threshold to reach). Maine imposes a 7.15% tax on gambling winnings (24% federally).
Be wary of day trading. If you have a host of micro-transactions throughout the year, you will end up with a very large 1099 at year-end, which can be cumbersome and tedious, adding complexity and potentially cost.
If you have a side hustle or second job, it’s important to document your revenue and expenses throughout the year for accuracy on the return.
Be wary of piles of receipts. Give yearly totals by category or use spreadsheets to detail things like contributions, business expenses, etc.
Tax season doesn’t need to be overwhelming or stressful with the proper preparation — and no procrastinating!
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