A person's income bracket can have a big impact on how much they owe for taxes. Even the slightest raise in income can increase your tax rate by a whole 2%. It's important to track all of your tax information to make sure you're paying what is owed.
The problem is that handling your tax statements and 1099s is complicated, even for people who don't own a single piece of property. It's all too easy to leave out important information or calculate what you owe and have spent incorrectly.
Here are three tips on how to handle your tax documentation and simplify tax season.
1. Organize Financial Records Throughout the Year
One of the best ways to simplify your tax season is to keep your financial records organized throughout the year. You don't want to scramble to find all of this information at the last minute and fail to find something you need.
Set up a dedicated system, whether it's physical or online. Stay consistent so everything is in the same place, but don't be afraid to make backups.
A good tip for financial record keeping is to separate your rental property finances from your personal finances. Track your rental income and expenses. This includes things like maintenance costs and your insurance.
2. Manage Tax Documents Online
Make use of modern technology to manage your tax documents. There is a wide variety of tools and apps that can help you track your finances and organize your financial records.
The most common accounting software includes QuickBooks and Freshbooks. Both of these programs can connect to your bank accounts and store digital copies of your transactions.
You'll also find that this technology helps immensely with property management. Both landlords and tenants gain access to record-keeping which makes tax season easier for both parties.
3. Consult a Local Tax Professional
The best decision you can make leading up to tax season is to hire a professional. Even with the best organization and technology, taxes are confusing.
Every state and city has its own tax nuances to consider, and things get even more complicated if you own properties in multiple areas. While you can simplify things by keeping your portfolio the same every year, some may find that restricting.
Instead, rely on a professional to avoid common tax pitfalls and ensure that your financial records are in order. You may find that the small investment helps you avoid expensive legal problems later on.
Simplify Tax Statements and 1099s
Managing tax statements and 1099s is a headache for anyone. Doing your taxes becomes much more complex and nuanced when you own multiple properties or have different sources of income. A property management company can help you keep track of all of this as well as take care of your investments.
Residential Equity Management provides property management in the Folsom area. Our services cover rent collection, maintenance, financial reporting, and even eviction protection. Reach out today with any questions about your property taxes and to tell us about your real estate woes.
