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We’re already a few weeks into tax season! For many people with complicated returns, tax prep started well before January. But even if your situation is fairly simple, you would still need to gather documents, review your finances, and account for any big changes that may have happened over the past year.

Are you ready for tax season? What documents do you still need, if any? Are you filing your own taxes or hiring someone to do it?

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Preparing for tax season often seems more like a sprint than a marathon. You receive your W2 forms in the mail in late January, and then it’s time to excavate your receipt shoe box and spend a stressful weekend trying to make sense of your tax return. All in all, it feels like a hurried, overwhelming, and nerve-wracking chore that you dread every year.

But what if filing your taxes didn’t have to be quite so stressful?

The trick to making your tax season a breeze is preparing for it early. As in, right now. If you want an easy and relaxed tax season, here’s what you can do now to get ready.

Make a list of the information you’ll need

One of the most frustrating moments in tax preparation is discovering you’re still missing one vital piece of information after you’ve gathered everything you thought you needed. And it’s even worse if you don’t know how to find the missing information.

So look over the specific info you need to file now, to give yourself time to gather all the items well before Tax Day. Specifically, you’ll need:

• A copy of last year’s tax return
  
• The Social Security or Tax ID number of every member of your household
  
• The income records of every member of your household
  
• Receipts for your deductible expenses
  
• Records of any taxes you’ve paid throughout the year

Putting together your list of necessary information and checking each item off as you gather it will ensure that you’re fully prepared when you finally sit down to file. (See also: The 7 Most Common Tax Questions for Beginners, Answered)

Organize your receipts

Keeping track of tax-related receipts throughout the year is one of the most difficult parts of handling your taxes. Many people throw all of their receipts for work-related expenses, charitable donations, mortgage payments, medical expenses, and interest statements in a single folder or box to deal with “later.”

Now is an excellent time to dig out your receipts and start organizing them according to category. Having your receipts neatly separated now will make it easy to sort the last few that come in as the year comes to a close, and can help you get into the habit of putting them in order as you receive them.

Gather your paystubs together

Though the majority of filers will receive either a W2 or 1099 form from their employer(s), it’s still a good idea to gather your paystubs before the end of the year to get a rough idea of your income. That will help you identify any potential mistakes on your W2 or 1099 forms as soon as they arrive. It’s far better to catch a mistake early rather than find you need to request a corrected form close to the IRS deadline.

Plus, checking over your paystubs all at once gives you a chance to take a look at your federal and state tax withholding over the year, as well as any pretax contributions you’ve made to your 401(k) or IRA.

Review your W4

Another great reason to look at your paystubs now is that it gives you a chance to review your W4 with your employer.

The W4 form determines how much tax withholding is taken from each paycheck. If you expect to receive a large refund this year, you can adjust your withholding allowances now to ensure that more of your paycheck will come home with you in 2020. If, on the other hand, you worry that you may owe money because you didn’t have enough withheld, now is a good time to adjust your W4 to be sure you don’t have the same problem in the coming year. (See also: Are You Withholding the Right Amount of Taxes from Your Paycheck?)

Send more money to your retirement fund

If you have access to a tax-deferred retirement account like a 401(k) or an IRA, now is the time to see how much money you have set aside this year, and try to increase that number.

As of 2019, workers under 50 years old can save up to $19,000 in a 401(k) and up to $6,000 in an IRA. And every dollar you put into these kinds of accounts reduces the amount of income you have to pay taxes on.

Now is an excellent time to try to maximize your 2019 contribution. You have until the end of the calendar year to maximize your 2019 401(k) contribution, but you can continue contributing to your 2019 IRA until April 15, 2020.

Getting into the habit of increasing your contribution now can also help you reach the maximum in 2020, which is going up to $19,500 for 401(k) accounts, although the IRA maximum will hold steady at $6,000. (See also: 8 Tax Return Mistakes Even Smart People Make)

Plan ahead for your refund

If you expect to receive a refund this year, start thinking about the best way to use the money now. We tend to think of a tax refund as “free money,” even though it’s just your own salary being returned to you. But with a free money mindset, it’s very easy to go overboard spending the refund on fun stuff, like a vacation or a new gadget.

There’s nothing wrong with enjoying your tax refund, but taking a hard look at your budget and finances now can help you to determine if having fun with your refund is the best use of the money. Is there some debt you could pay down (or pay off) with the refund instead? Or is there a major goal you’re saving toward — like a down payment on a house — that would benefit from an injection of cash?

Thinking through the best use of your tax refund before you have it in your hot little hands makes it more likely you’ll make good decisions with it. Once you have the money in your possession, it’s very tempting to make it rain instead of saving for a rainy day.

Make your tax season less stressful

Getting a jump start on your filing chores will not only make tax season much easier, but it can also help you prepare for your finances in the coming year. Start 2020 on the right financial foot by starting your tax season preparation early.

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Editor’s Note: Congratulations to P, Samantha, and Tabathia for winning this week’s contest!

You don’t want to get your taxes wrong, but if your finances are fairly simple and you’re usually pretty organized, it’s pretty safe to file taxes on your own.

Do you file your own taxes? What do you think is the most complicated part of the process? What advice would you give to someone who is filing their own taxes for the first time?

Tell us whether you file or own taxes and we’ll enter you in a drawing to win a $20 Amazon Gift Card!

Win 1 of 3 $20 Amazon Gift Cards

We’re doing three giveaways — here’s how you can win:

• Follow us on Twitter
• Tweet about our giveaway for an entry.
• Visit our Facebook page for an entry.
• Follow @janetonthemoney on Twitter.

Use our Rafflecopter widget for your chance to win one of three Amazon Gift Cards:

a Rafflecopter giveaway

Giveaway Rules:

• Contest ends Monday, February 25th at 11:59 p.m. Pacific. Winners will be announced after February 25th on the original post. Winners will also be contacted via email.
  
• This promotion is in no way sponsored, endorsed or administered, or associated with Facebook or Twitter.
  
• You must be 18 and U.S. resident to enter. Void where prohibited.

Good Luck!

Welcome to Wise Bread’s Best Money Tips Roundup! Today we found articles on tax secrets of the rich, ways to adopt a zero-waste lifestyle, and household chores you should outsource.

Top 5 Articles

9 Tax Secrets of the Rich They Don’t Teach You Anywhere — Learn how to use income and expenses to reduce your tax burden. [Wallet Hacks]

8 Ways to Adopt a Zero-waste Lifestyle — It’s not easy to achieve a zero-waste lifestyle, but it is possible with a little dedication and some really good tips. [No Sidebar]

Stress Less: 6 Household Chores to Outsource — Outsource these time-consuming household tasks and reclaim some much-needed time for yourself! [Everything Finance]

How to Watch ESPN Without Cable: 10 Great Options to Consider — Need your sports fix on the cheap? Here are a few options to follow your favorite teams without ponying up for cable or satellite TV. [Frugal Rules]

Insider Tips For Saving Money on the Great Summer Road Trip — Accidents, construction, and road closures can happen on any route, but you’ll save time, gas, and patience by planning some backup routes just in case. [PopSugar Smart Living]

Other Essential Reading

The 5 advantages of selling your home for fast cash — There are a few benefits to finding a cash buyer to purchase your home instead of listing your home with a realtor. [Disease Called Debt]

How to Stock a Home Bar on a Budget — Booze tends to see the highest markup whenever you go out for food or drinks. If you’re deliberate and patient, you can stock up your home bar for a fraction of the price you would spend at a bar. [Money After Graduation]

How to Write a Professional Work Email — The lack of verbal cues can cause misunderstandings in emails. Use this simple guide to help you handle your electronic correspondences like a pro. [Daily Worth]

9 indestructible houseplants that purify the air — These nine houseplants will continue to purify the air in your space even if you neglect them. [Frugal and Thriving]

Post-crisis banking rules: now altered but not undone — Here’s what you need to know about the state of banking oversight and the economy today. [The Christian Science Monitor]

In 2017, the IRS received 152,235,000 tax returns — and of those returns, more than 73 percent were granted a refund. With the average refund last year standing at $2,895, you might think getting a windfall in the spring is a good thing. But rather than giving the government an interest-free loan all year, wouldn’t you have preferred to have an extra $241.25 per month in your paycheck?

On the other hand, the 27 percent of taxpayers not receiving a refund may be getting the opposite — a big tax bill. They may not be having enough money withheld from their paychecks for taxes.

This is why it’s important to withhold the right amount of taxes out of your paycheck. Let’s review how to cover your projected tax liability while minimizing your refund. (See also: Bigger Paycheck or Bigger Tax Refund — Which Should You Pick?)

Meet the IRS Withholding Calculator

With the passing of the Tax Cuts and Jobs Act, many Americans are still trying to figure out the full effects of this legislation on their paychecks. In an effort to help taxpayers make sense of recent changes to the tax law, the IRS updated its Withholding Calculator on February 28, 2018.

While the IRS recommends that all taxpayers take a second look at how much in taxes they’re taking out of their paychecks, the agency highly encourages the following groups to check their withholdings for 2018:

• Two-income families.

• People with two or more jobs at the same time or who only work for part of the year.

• People with children who claim credits such as the Child Tax Credit.

• People who itemized deductions in 2017.

• People with high incomes and more complex tax returns.

How to use the IRS Withholding Calculator

Here’s your game plan to achieve a “Goldilocks” withholding rate on your paycheck this year.

1. Gather your latest pay stub(s) and latest tax return

If you don’t receive a pay stub in the mail, contact your human resources office to get a copy or learn how you can download one online from your company portal. Depending on your unique financial situation, you may also want to find your 2016 return (or your 2017, if you’ve completed it) to more accurately estimate your 2018 income, budget, expenses, and list of tax credits.

2. Provide general information and list potential tax credits

In the first two sections of the IRS Withholding Calculator, indicate your filing status, whether or not anybody can claim you as a dependent, how many jobs you and your spouse (if applicable) have, how many dependents you will claim on your return, and whether or not you or your spouse will be 65 or older on January 1, 2019.

Additionally, you will need to list any applicable tax credits, such as the Child Tax Credit and Earned Income Tax Credit. This is why it’s helpful to have past returns handy to help you estimate those credits. (See also: 8 Tax Return Mistakes Even Smart People Make)

3. Detail your wage income and withholding

Next, enter your gross wages, salaries, tips, and any bonuses you expect to receive in 2018. Using your most recent pay stubs, enter the total federal income tax withheld to date in 2018 and the federal income tax withheld from your last salary payment. Indicate how frequently you receive your paychecks, and, if applicable, when you started this job in 2018, and when you expect this job to end in 2018.

If you receive any other taxable income, make sure to include it as well. The IRS Withholding Calculator is only as accurate as the information you enter, so leaving that income out may result in a higher tax liability.

4. List deductions

Here is one of the biggest changes implemented by the Tax Cuts and Jobs Act. If your standard deduction ($12,000 for individuals, $18,000 for heads of household, and $24,000 for married filing jointly) is more than your total itemized deductions, your standard deduction will be used to calculate your withholding. Otherwise, your total itemized deduction amount will be used. So, this is why it still pays to keep track of all of those deductions throughout the year.

Use your latest return to estimate your 2018 itemized deductions, including medical and dental expenses, paid taxes (up to $5,000 for single filers and $10,000 for married filers for applicable state and local income taxes, property taxes, or sales taxes), gifts to charity, and other itemized deductions. Remember that beginning in 2018, job and certain miscellaneous expenses are no longer deductible. (See also: 12 Things You Should Know About the New Tax Law)

5. Adjust your W4

Once you have entered all the data, the IRS Withholding Calculator will provide you with clear instructions on how to update your W4 with your employer. Depending on your situation, some action items may include changing your filing status, adjusting your number of allowances, and withholding an extra amount every paycheck.

Following the instructions from the calculator, you’ll cover your tax liability just right.

Revisit the IRS Withholding Calculator as necessary

Don’t set it and forget it. If your job (Promotion? Salary bump? Side gig?) or life situation (Married? Baby?) changes, revisit the IRS Withholding Calculator. The calculator will help you make sure you have the right amount of tax withheld from your paycheck at work.

The IRS recommends submitting your updated W4 to your employer as soon as possible. Withholding takes place throughout the year, so it’s better to take this step right away.

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The deadline to file your tax return is quickly approaching, so it’s a good idea to wrap things up and double check for any deductions or credits you might have missed.

It’s extra important to pay close attention and make sure you’re getting the most of deductions this year. The Tax Cuts and Jobs Act eliminates several popular deductions for the 2018 tax year, which means this is the last chance you’ll have to claim them on your return.

To minimize your tax bill and increase your chances of getting your refund, make sure you take advantage of your last opportunity to claim these deductions. (See also: 12 Things You Should Know About the New Tax Law)

1. Unreimbursed work expenses

If you were not reimbursed for required work expenses, such as a job uniform, work-related education, business travel, or union fees, those costs are tax deductible for tax year 2017. The new tax law eliminates this deduction.

2. Job-related moving expenses

If you’ve moved in the last year for work, you may be able to deduct certain expenses like hiring movers or renting a truck. To qualify under the current rules, you must have moved at least 50 miles from your previous address, your moving date must correspond to when you started your new job, and you must work full-time for at least 39 weeks during the first 12 months after your move. This deduction will no longer be available for the 2018 tax year and beyond.

3. Tax preparation

The new law eliminates your ability to deduct tax preparation expenses, such as the cost of using software or hiring someone to do them for you. If you spent money for tax preparation in 2017, this will be your last year to claim that deduction.

4. Casualty and theft losses

Under the current tax law, you can deduct any casualty and theft losses that you experienced during the tax year. For individual taxpayers, you can deduct losses due to a fire, storm, or from theft. Under the new law, you will only be able to deduct casualty losses if the loss is attributable to a disaster as declared by the president, such as a hurricane.

5. Alimony deductions

If you’ve gone through a divorce and you pay alimony, the money you pay your former spouse under a divorce or separation agreement is currently tax deductible. Depending on how much you pay in alimony, the tax deduction can be significant.

Under the new tax plan, alimony payments will no longer be deductible. The change will apply to any divorce or separation that occurs after December 31, 2018.

6. Personal exemptions

With the current tax structure, you can claim a personal exemption of $4,050 for yourself, your spouse, and each of your dependent children. The new tax plan eliminates personal exemptions.

Instead, the plan increases the standard deduction from $6,350 to $12,000 for single filers, from $12,700 to $24,000 for married filing jointly, and from $9,350 to $18,000 for heads of household. Although some people will benefit from the change to a higher standard deduction, the elimination of the personal exemption could hurt families with multiple children, lower incomes, or single parents.

7. Mortgage interest deduction

Currently, you can deduct the interest you paid on a mortgage or home loan balance as large as $1 million. For mortgages that originate after December 15, 2017, the limit is lowered to $750,000. Although that number is still high, it could affect homeowners in areas with sky-high real estate prices.

8. State and local tax deductions

Current law allows you to deduct the full amount of either your state income taxes or state and local taxes. You can also deduct property taxes. For those in areas with a high cost of living, this deduction is a significant help.

The new tax law merges the three taxes together and caps the deduction at $10,000. With a smaller deduction available for state and local taxes, some families could face a higher tax bill.

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A recurring question each tax season centers on financial gifts; what they are and how they are taxed. Gifting money, property, or valuables to your friends and loved ones can be complicated if your gift exceeds certain monetary limits. Once your gift has exceeded these limits, it becomes subject to gift tax.

Understanding gift tax can be enormously beneficial to you and the receiver of your gift. Whether you are trying to pass on money or expensive items to a family member or friend, understanding the gift tax can help you save over the long run.

What is the gift tax?

The gift tax is a tax on anything with a tangible value that is given to someone without receiving anything, or less than the item’s full value, in return. The gift tax is paid by the donor in most situations. The point of such a tax is to prevent people from gifting away all of their assets before they die in an attempt to avoid estate taxes.

For example, if a loved one gifts you their old car for less than its fair market value, it could be subject to the gift tax. For the purposes of gift tax, the IRS defines fair market value as “the price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”

How the gift tax actually works

Only gifts that exceed a certain tangible value in a year are subject to the gift tax. For tax year 2017, that exclusion was $14,000. In 2018, the federal gift tax exclusion will rise to $15,000. For a couple, these exclusions are per person. So, a married couple in 2018 could gift an adult child $30,000 to buy a home without being subject to gift tax, so long as the gift is deemed to be split between the two parents.

If your gift is more than the exclusion amount, you will need to complete IRS Form 709: U.S. Gift (and Generation-Skipping Transfer) Tax. You must complete this form every year you make a qualifying gift.

When you actually have to pay gift tax

To make matters confusing, you don’t actually have to pay gift tax until you surpass the lifetime gift limit. (It’s the same amount that’s exempt from estate tax, by the way.) That limit was $5.49 million per person for tax year 2017, but was increased to $10 million, indexed to inflation, with the passage of the new tax law in December 2017. The IRS recently announced the recalculated lifetime limit for decedents who pass in 2018 has been set at $11.18 million. Any gifts that fall under the annual exclusion limits do not count against that lifetime limit. Regardless of whether or not you have to pay up, you still have to file Form 709 each year you gift more than the exclusion amount.

If you have three children, and you give each of them $18,000 in 2018, you have surpassed the exclusion by $3,000 per child, or $9,000 total. That $9,000 will count against your lifetime tax-exempt gift limit of $11.18 million.

What isn’t subject to gift tax?

A number of gifts are exempt from the gift tax. Exempt gifts include:

• College tuition. If you are willing and able to pay the tuition for your child, grandchildren, relatives, or friends, you do not have to pay the gift tax.

• Political contributions. Political contributions, as long as they remain within the legal limit, are tax exempt. Be sure that you still file the required tax documents to record any political contributions.

• Medical bills. Like tuition, payments made directly to a medical institution to cover the cost of care or medical bills for a loved one are exempt from the gift tax and do not need to be declared on your taxes.

• Gifts to your spouse. If you buy your spouse a gift, such as an expensive piece of jewelry, that gift is not taxable.

• Charitable donations. Any gifts you make to a qualifying charity, including cash or valuables, are not subject to the gift tax.

Be sure to speak with a tax expert, wealth management firm, or estate manager if you have more complicated questions or concerns in regard to gifts and the gift tax. (See also: How to Choose the Best Tax Preparer)

[Editor’s note: An earlier version of this article incorrectly reported the lifetime gift tax exemption. The exemption is $11.18 million for 2018, and not $5.6 million.]

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