– Keep track of everything, don’t estimate. Save every receipt, canceled check, and credit card statement that represents money spent or income received. If you are buying something for future use(e.g., clothes), you can still document it by keeping the receipt or other proof of purchase. Be sure it isn’t reported as income until you start using it so that way there is no confusion about what should have been included in taxable income for this year versus next year.
– The best place to keep all of this documentation is in a file folder or envelope that’s easy to access at tax time because, let’s face it, it’s not the most organized thing to do.
– Keep track of any changes in your income, deductions, or credits throughout the year; you might need it when tax time comes.
– If your situation is straightforward and there are no exceptional circumstances that will affect what you have to report on your taxes, using a tax software program can be very helpful.
– The tax forms that you need will be labeled as something like “1040”. These are the primary forms where you report information about yourself and any dependents, calculate your taxable income, and figure out how much tax you owe.