Just when it feels like you're finally done with last year's taxes, the next round is fast approaching. The most efficient way to make the upcoming tax season as stress-free as possible is to begin tax planning now. To help you through this process, follow this three-step checklist that covers all the financial documents you need to start organizing now.

An Easy, 3-Step Tax Planning Checklist

1. Record Your Income

The first step in your tax planning process includes recording all of your income. If you only work for one employer, you'll simply need your W-2 and collection of paystubs. If you're self-employed or take on multiple projects throughout the year, it's vital to record every payment you receive. Contractors typically receive 1099 MISC forms from the various companies they work for throughout the year, but it's imperative to keep track of all incoming transactions to ensure you're prepared for a potential audit.

2. Track Potential Deductions

On the opposite end of the tax spectrum lie deductions, so track anything and everything that can reduce your tax liability for the year. The most common deductions are charitable donations and student loan interest, but property taxes on homes and automobiles can also be utilized in most situations.

If you run a home-based business, you might be able to deduct a portion of your electric, internet, and phone bills. You should also measure the square footage of your office space and keep records of your monthly mortgage or rental payments. This will help your accountant find the full range of deductions and credits that match your circumstances.

3. Maintain Investment & Benefits Documentation

You also need to maintain up-to-date documentation for all your investments and employee benefit packages. This includes retirement plans and pensions, as well as stock investments and saving accounts. For most of these items, the banking or investment institution will send quarterly and yearly earnings reports. Keep all of these organized by account so your consultant can easily find gains and losses.

Put all of your tax planning work to use by hiring Bergamo Tax & Financial Solutions. This Watertown, CT, CPA firm will review your documentation during tax preparation to identify all the deductions and credits you qualify for. This will not only reduce your tax liability, but it will also ensure your return is completed accurately. The team can even help you strategize your finances so you avoid large tax bills in the future. Learn more about this local company online, and schedule your consultation by calling (860) 274-1655.