Preparing for tax season is always top of mind for me by the time February arrives.
It may sound nerdy, but I love tax season. It’s not just because we have always received refunds, either (although I can’t lie: that’s a big plus).
Tax preparation, to me, is all about organization. And heaven knows I love a good organization task.
Are you thinking about your taxes yet? If not — might I suggest that you should be?
When it comes to filing your taxes, I really do believe being prepared is important. Here are some benefits I see to starting to prepare for tax season now.
Reasons to start preparing for tax season now
The tax deadline is still a couple months away, but that doesn’t mean you have to wait to start getting your ducks in row.
Here are four reasons I think it’s a good idea to start preparing for tax season now.
It means more time to get up to date on any changes
Before you file your taxes, it’s a good idea to make sure you’re up to date on any changes that have been made since the year prior.
For example, one significant change for 2020: the basic personal amount Canadians can earn before being subject to federal income tax has increased.
The Financial Post recapped some other changes, which you can find here. As you begin preparing for tax season, it’s a good idea to take a look and see if there are any changes that will impact you.
It gives you more time to gather any documents you need
One thing I have found to be true is that the older you get, the greater the odds are that you’ll have more than a couple documents you need for your taxes. That has definitely been the case for me.
Gone are the days when filing my taxes was just a matter of printing a single T4 slip. My tax return is much more involved as a 30-year-old — which means preparing for tax season involves a lot more time tracking down documents.
When you start preparing for tax season early, you naturally have more time to do this. As a result, you have a better chance of actually capturing everything you should be including on your return.
Preparing for tax season early means less stress on deadline
The 2020 deadline for filing your 2019 tax return in Canada is April 30. If you start preparing now, you have a lot of time to take your time — a luxury you don’t have when April 25 rolls around.
This point really came to life for me last year. I’ve been doing our taxes on my own for a couple years now, but last year, I decided to try a new software (SimpleTax. It was awesome, if you’re wondering).
By beginning the process well in advance of the deadline, I not only had ample time to track down everything I needed, but also to experiment with the software. By the time I was ready to file, I felt confident in what I was doing — and totally relaxed.
Even if you’re not planning to file early, taking steps to prepare for tax season now can make for a more relaxed process in general.
Preparing for tax season early puts you in a better position to file early
Of course, so much depends on the nature of your tax situation, but the more prepared you are when filing opens, the more likely it is that you can file sooner as opposed to later.
Whether you get a return or end up owing, I would suggest filing early is a good thing.
In the case that you end up owing, filing early lets you know that sooner as opposed to later. As a result, you have more time to come up with a game plan for how to handle it.
On the other hand, if you’re getting a return, the sooner you file, the sooner you’ll have that money in your hands.
Preparing for tax season early is one of the best things you can do to make filing your taxes quick and easy.
By starting early, you give yourself more time to become familiar with changes and gather your documents, while eliminating the stress of trying to get it done on a tight deadline. Plus, it also allows you to get it out of the way faster — for better or worse.
Do you file your own taxes? Why or why not?