How to Prepare for Next Year’s Taxes

Whew! You filed your taxes and are completely exhausted. Now you’re thinking it’s time to kick up your feet and relax. Well, think again. Why not get a head start on next year’s returns and avoid all the unnecessary stress that seems to take over your life each April? We consulted with Suzanna de Baca, vice president of wealth strategies for Ameriprise Financial, about how to ease the yearly burden and here’s what she had to say:

Create a Filing System for Documents

Save and organize necessary documents including bank statements, pay stubs, mortgage statements and paperwork for large purchases like a car or home. (If you donate clothing or give to a charity, be sure to document the value.) An easy way to do that is digitally. Begin by scanning what you already have into an electronic document, then shredding the original copy. Make sure to password-protect your computer and documents. 

Set Up Online Billing

You may also want to set up online bill payment and electronic statement delivery with your bank. E-statements are convenient, secure and allow you to track your payment history without digging through stacks of old records. Online bill payment is usually free and can be set up to make single or recurring payments and regular transfers to your savings account, which is an easy way to make saving a priority. 

Know Your Tax Credits and Deductions

Do your research to see what kinds of things are relevant when it comes time to filing your taxes. Things like being enrolled in college full time or using green appliances that save energy may affect your tax credits and deductions. 

Read Up on Changing Tax Laws

Recognize how tax law changes may affect you. Often with a presidential election come new or modified tax laws. Make sure you know how these may affect you, and plan for any changes in your overall financial plan. 

Keep Your Finances in Order Throughout the Year

If you don’t have a specific budget, this is a great opportunity to make one using old receipts and bill statements as a guideline. You should also review your income and expenses on at least a monthly basis to make sure you’re on track for your financial goals and to adjust your budget if needed.