2. Start tax planning as early as possible

While tax planning one need to invest both time and thought, but it is seen that most postpone and wait until the last minute. As a result, the portfolio will be insurance schemes and investment decisions made in a hurry.

By investing a little time and effort you can achieve your financial goals and avoid stress at the last minute. Investors usually fail to give due attention to their tax planning until the last moment when the financial year is at its fag end. Tax planning should be considered as an ongoing process rather than a financial year-end activity.

3. Set up your tax file

Tax file could be an electronic file in which you scan documents and transactions throughout the year and also that will affect your tax return or a folder or bin that holds the information. The best thing of an electronic file is that at tax time you can simply e-mail it to your tax professional, who will likely also maintain the file in the event of an audit. The only thing you should make sure is that you have sufficient back up of your data in case something goes wrong.

Some of the documents that you should store for tax purposes include W2s, 1099s, K-1s, escrow papers for purchase, sale of refinance of properties, receipts for property tax and vehicle registration fees, receipts for other tax deductible items, and acknowledgement letters from donations made to qualified nonprofit organizations.