4 Helpful Tax Practices to Use Throughout the Year

April 8, 2021

Whether you filed your taxes already or will soon, the right preparation is key. Tax prep doesn’t just concern the weeks before April 15th, as there are numerous practices to implement throughout the year. Help your 2021 filing by utilizing these tips from your Encino tax consultants

Make Digital as Well as Paper Copies

Scan receipts and tax documents so you have digital and paper copies. Digital backups save hours of time and stress if the paper versions get damaged or lost. Dedicate a folder on your laptop to all of your tax documents for the year and back them up on an external drive. You’ll have years of documents for easy reference in case of any future IRS inquiries or errors. 

Max All Retirement Contributions

Get in the habit of maxing out all applicable retirement contributions during the tax year. For example, if you have a traditional IRA, you can add up to $6,000 in contributions to decrease your taxable income. If you are 55 or older, you can make a contribution up to $7,000. It’s also possible to increase 401(k) contributions to lower your tax bill; however, this benefit does not apply to Roth IRAs. 

Document Expenses Regularly

Take pictures of your receipts for convenient digital backups throughout the year, such as while on business trips. Keep a journal of expenses instead of trying to think what you spent on this and that while doing your taxes. There’s also budgeting apps that offer receipt storage for extra digital backup convenience. Do the same for all charitable contributions so you aren’t searching your phone or folders for receipts at tax time. 

Protect Yourself From Scammers

Remember that the IRS corresponds with taxpayers one way: through the mail. No legitimate IRS employee will ever email, text, call you, or use a messenger app. Scammers use these means to scare people into sending money to supposed IRS accounts, and steal thousands annually. If you want to work with tax pros to streamline the preparation process, ensure they have the credentials, such as the CPAs at your Los Angeles accounting firm. Non-registered professionals often claim they can help you get bigger tax breaks but make serious mistakes that can result in perjury charges. 
Enjoy quality tax help from Wallace and Associates, your Los Angeles accountants