Spring Cleaning Your Finances: How to Avoid a Tax Nightmare
As the flowers bloom and the days get longer, many of us take the opportunity to refresh our homes, our goals, and even our wardrobes. But what about our finances? Spring is the perfect time to do a deep clean of your financial health — especially when it comes to taxes.
A Cautionary Tale: The Importance of Getting Taxes Right
Imagine walking into tax season with a burden you’ve been carrying for years — an unresolved tax issue that has only gotten worse over time. That was the case for a new client I recently met. She hadn’t filed her taxes since 2018 because of a disastrous return that left her owing the IRS $58,000. The culprit? A tax preparer who either didn’t know what they were doing or simply didn’t care.
As a self-employed truck driver, she made $125,000 that year, but her tax preparer claimed a staggering $106,000 in expenses. Essentially, they told the IRS that she only took home $19,000 — an obvious red flag that led to an audit. Now, years later, she’s stuck fighting an uphill battle to fix it.
This story is more common than you’d think. But the good news? You can avoid becoming the next cautionary tale by taking proactive steps now.
Spring Cleaning Your Tax Situation: Where to Start
Review Your Past Returns
If you haven’t looked at your tax returns in a while, now is the time. Go back at least three years to ensure everything was filed correctly. If you see anything suspicious or have concerns, consider getting a second opinion from a reputable tax professional.
Work with Qualified Tax Professionals
Not all tax preparers are created equal. When choosing someone to handle your taxes, make sure they have the credentials and experience to back up their work. A Certified Public Accountant (CPA) or Enrolled Agent (EA) is ideal for complex tax situations, especially if you’re self-employed.
Understand What You’re Signing
Never sign your tax return without reviewing it thoroughly. Look at your reported income, deductions, and credits. If something doesn’t make sense, ask questions. A reputable tax professional will be more than willing to explain everything to you.
Keep Proper Records
If you’re self-employed or a small business owner, maintaining accurate records is crucial. Save receipts, track mileage, and document expenses properly. The IRS doesn’t just accept numbers—you need proof to back them up.
Address Any IRS Issues Now
If you’ve received letters from the IRS or suspect that something may be off with past filings, don’t wait for the problem to escalate. The longer you wait, the worse it gets. A tax professional can help you navigate the situation before it turns into a financial nightmare.
A Fresh Start for Your Finances
Spring is all about renewal, and your finances deserve the same attention. Whether you’re catching up on overdue tax filings, correcting past mistakes, or simply making sure your finances are in order, this season is the perfect time to take action.
A little financial “spring cleaning” now can save you thousands of dollars — and a lot of stress — down the road. Make this the year you take control of your taxes and build a more secure financial future.
Shanice Love is a journalist, COO of Hope Magazine, Press and Media Editor, Career and Money Editor, Established Corporate Executive, and Owner of Loyalty Enterprise. She is a passionate advocate for neurodiversity and financial literacy in the Black community, using her platform to empower and uplift others on their journeys to success, health, and wellness.