If you haven’t filed your 2020 federal income taxes yet, you're actually not alone. According to a survey conducted by IPX 1031, upwards of one-third of Americans still have to file their taxes. However, now that you’re likely in full-on “tax mode” you can actually start to prepare for next year’s taxes.
The Internal Revenue Service has set up multiple web pages to help you get organized, including “Steps to Take Now to Get a Jump on Your Taxes.” Additionally, the IRS has published a two-page document for tax preparers to offer some tips. This document offers recommendations that taxpayers should consider during life-changing events, including a change in marital status and birth/adoption of a child; and to report changes in circumstances to the Health Insurance Marketplace.
One of the most common reasons people delay filing their taxes is because of lack of organization with records. The IRS has recommended that taxpayers "Establish one location where everyone in your household can put tax-related records during the year. Print and keep a copy of your tax return and supporting records together in a safe place. If you ever need your tax return or records, it will be easier for you to get them."
For many tax filers it is easier to take the standard deductions, but by itemizing you could find additional tax savings. “Use Schedule A (Form 1040 or 1040-SR) to figure your itemized deductions,” the IRS recommended. “In most cases, your federal income tax will be less if you take the larger of your itemized deductions or your standard deduction.”
Tax experts also suggest running “what-if” scenarios for next year, which can determine what you could owe or receive in a return, and to match deductions to high-income years. While it isn't always possible to put off some deductible expenditures, in other cases planning ahead can save you. This can include buying expensive equipment for your small business – and if you buy in December you can apply it to this year's taxes, but if you don't need the deduction, it could be better to wait a few weeks and buy it in January and apply it to the next tax year.
And if the taxes are too much of a burden, shop for a tax preparer and do it now, not when the April 15, 2022 filing deadline approaches for the 2021 taxes. The IRS has reported that more than 80 million taxpayers use paid professionals to complete and submit their tax returns.
Fees will likely depend on the complexity of your return, but most experts agree that you shouldn't pick a firm that intends to take a percentage of a return. Also, it is advised that you ensure the person handling your tax return has a Preparer Tax Identification Number, which shows that they are authorized to prepare federal income tax returns.
The IRS even offers a Directory of Tax Return Preparers tool on its website to help you find someone who can take the burden out of filing your taxes. By filing early you can get your return earlier, or have more time if you owe the government.
Peter Suciu is a Michigan-based writer who has contributed to more than four dozen magazines, newspapers and websites. He regularly writes about military small arms, and is the author of several books on military headgear including A Gallery of Military Headdress, which is available on Amazon.com.