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How to prepare for tax season

With tax season upon us, many are stressed and concerned about filing properly. There are a few things one can do in order to make the process of filing taxes a bit easier and maybe even enjoyable!

First, you must determine your filling date since some small business tax returns are due on March 15 while others are due on April 15. Based on the organizational structure of your business, we can help you find out and meet the applicable deadline for you.

In order to prepare for tax season, it is important to gather the necessary paperwork and personal information. You should have a copy of your last year’s return. Here at Hylen, our CPAs provide a complimentary review of a client’s prior-year tax return. If any changes or amendments need to be made, we can help with that.

If you got married this past year, you should also have a copy of your spouse’s return handy too. If you are claiming any dependents, either children or elderly, you will need copies of their important paperwork as well. Some of these items could include: their social security/tax ID numbers, dates of birth, child care payment records, adoption paperwork, alimony payments, and/or death certificates.

Tracking your income is another important step. There are different necessary forms that you may need to fill out depending on your income. The most common forms are W-2 and 1099. Both of these forms have different variations depending on the source of your income, whether that be employment, receiving unemployment benefits, freelance work and more. These forms and tax laws are often changing, so it is important to discuss it with a professional. For example, consultants or contractors who used to file under the 1099-MISC form will now be required to file under the 1099-NEC as of 1/1/2020. The 1099-MISC still exists, but will no longer be used for those who earn non-employee compensation.

Determining deductions is another important and necessary step when filing your taxes. A deduction is a reduction in total taxable income. Common tax deductions include: charitable donations, state & local taxes, mortgage interest, records of expenses if self-employed, childcare expenses, job-related vehicle expenses and more.

Finally, you must decide in which state(s) you need to file a tax return.  We can help with that as well.

The process may seem overwhelming, but breaking it into small steps helps it become much more manageable.  Seeking out an experienced professional will ease the process even more, as they will provide you with the exact information needed for your unique filing situation.

Remember, Hylen can help.

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