Preparing for Taxes
We are three months into our newest series: Twelve Months To Financial Fitness. Each month we feature a new topic and challenge. We have already covered analyzing spending and budgeting. Don’t worry if you are getting a late start on the challenges—you can always go back and start from January or just pick up here.

This month, we focus on preparing for taxes. The tax deadline is almost here (IRS moved the deadline to May 17th for 2021), and you should have been receiving tax documents from your employers, financial institutions, and vendors. If you haven’t started yet, this is the perfect time to get organized, get going, and get your taxes filed. After all, if you have a refund coming, the sooner you get your refund in, the sooner you will see that money.

Challenge Tip: You can download and use the IRS app for iOS and Android to easily check your refund status.

Preparing Your Taxes

Even if you are not preparing your taxes on your own, there is certain information you will need for your accountant or another tax preparer. If you are planning on preparing your own taxes, there are many online or software options, but you will need to be a bit more organized. The deadline for filing your tax return for 2020 is April 15th. If you aren’t quite there yet...Don’t panic! You can generally get an automatic four-month extension to file.

Below are some basic tips on getting your return in before the deadline:

  1. Know what you need. Tax preparation is widely different depending on if you are regularly employed, self-employed, own property, have children, or other investments. If you have an accountant or tax preparer, they should provide you with a checklist of necessary forms, receipts or other information they will need to complete your return. If you are preparing your own taxes, you can easily find checklists online particular to your individual situation. Plus, most tax preparation software programs or apps provide you with this information as well.
  2. Triple Check For Deductions. Any tax preparation software or your accountant can guide you through deductions available to you. However, it is always important for you to know what types of items can be deducted and what information to keep to support those deductions. Some common deductions include:
  • Interest paid on student loans
  • Child and dependent care tax credits
  • Charitable contributions
  • Retirement or education fund contributions
  • Medical expenses
  • Self-employed income
  1. Save your records. In general, you should maintain any tax records, including your returns, tax forms, and receipts for three years as an individual, or seven if you are self-employed or are a business owner. Keep in mind, there are longer periods of time for special situations, such as if you report a loss from securities. An accountant can help answer any questions about maintaining and destroying tax records.
  2. Be smart with any refund. If you are lucky enough to receive a refund this year, rather than spending it all, dedicate a portion of your refund to saving or paying down debt. That doesn’t mean you can’t enjoy yourself, but it does mean you are taking another important step to financial fitness.
  3. Need help with tax prep? Check out our tax resources page. We also offer a discount to members for TurboTax.
The Challenge: This month we are challenging you to get organized and get your tax return filed before April 1st. By getting your return in early, you will have all of April to focus on the next Challenge - Paying Down Credit Cards. As an optional challenge - pledge a portion of any tax refund to pay off those credit cards.


Make Informed Decisions About Your Finances

We recognize that mastering money and finances is a continuous journey. That's why we want to provide you with the tools to create a bright financial future. No matter where you are in your financial journey, there is always room to learn. Visit our Financial Wellness page for more articles and resources on a variety of financial topics.

Financial Wellness Resources