10 Easy Steps to Get Organized for Tax Time
If you’re like me (and most Americans), taxes can be a bit more involved than a simple click, click, add, add and poof done! – like some of these crazy tax solution commercials might lead you to believe. Instead, tax time probably includes bang, bang, kick, kick, face palm and phew done! I may not be able to make tax preparation your idea of a fun Friday night, but I can offer some tips that will help you get organized and make filing your taxes that much easier. Ready. Set. Here are 10 easy steps to get organized for tax time:
1. Get your hands on a tax organizer Yes, these really do exist and for different types of filings you may have to do. You may be filing Form 1040 ES for Individual tax returns and you can download the questionnaire and forms you need right on the AICPA’s (American Institute of CPAs) website right here. This will walk you through all the information you need to answer and have supporting documentation for.
2. Have last year’s tax return handy Having last year’s tax return on hand will help you fill in the previous year’s information that is needed for this year’s return. It will also help you see examples of what paperwork you need to include with your tax return.
3. Mark your calendar Aside from just marking your calendar for the tax filing deadline, mark your calendar for other important deadlines and set aside time to prepare your tax documents throughout the year! Sorting through and reorganizing your expenses on a monthly or quarterly basis will save you a lot of time when you’re preparing your taxes and it’s also just a great habit to get into in order to understand where your money is going!
4. Pick a tax space When it’s time to get to work on your taxes, pick a space in your home that’s going to be tax central. Clean it up so you have plenty of room to bring all your documents and spread out.
5. Get color coded Whether you use different colored filing folders, clips, post-it notes or labels – organize your filing system by color. Once you color code your tax system initially, you’ll be all set for years to come. This will make it easier and faster to find what you’re looking for and to file things away in their appropriate categories.
6. Bust out your receipts and credit card statements If you have other expenses that can be counted as deductions, you may not have formal documents, but you will need to have receipts and statements. I recommend keeping your deductible expenses organized monthly and electronically, but if you don’t – it’s time to pour yourself a glass of wine and surround yourself with paper piles. It may take a few hours to sort through everything. Keep the receipts and statements for anything you’re claiming as a deduction.
7. Make sure you have your W-2, 1098s or 1099s You should receive these by January 31, so if you didn’t get one from your employer or for work you completed – contact the companies you need them from. These report on your income and wages and you’ll want to have them before you file.
8. Print out / assemble deduction documents Things like your mortgage insurance, property taxes, charitable gifts and medical bills are all deductible and you will need to provide the evidence for these deductions in your return.
9. Count your contributions You’ll receive end of year statements providing you with all the contributions you made to your 401(k), Traditional IRA, Roth IRA and/or SEP, Simple and Qualified plans. Keep these statements with the other important documents you’ve gathered so either you or your tax preparer can make any necessary adjustments to your income.
10. Clear out what you don’t need Finally, before you close out the books for another year, destroy old receipts and documents you no longer need to hold on to. The general rule of thumb is to keep records for 3 years from the date you filed. So anything you no longer need, say “buh bye” and clear the clutter from your life. What are some ways you keep yourself organized for tax time? Tweet me or tag me in a picture on Instagram @marybstorj!