Staying Organized for the Tax Season
With April 15th behind us and our tax returns filed, it is a great time to begin some basic preparation for next year’s taxes in order to alleviate the stress and administration that goes with preparing your tax return. By systematically organizing your donations, receipts, and records, you’ll save yourself time and stress when the next tax season comes around. Here are a few simple organizational tips that will help you streamline your tax preparation:
- Paper receipts may be the most tedious to organize. The best way to clear your desk and your shoeboxes of paper receipts is to go electronic. Quickbooks, Quicken, Mint, and the plethora of financial electronic bookkeeping tools offer add-on receipt managing apps and software to allow you to scan your paper receipts thus converting them easy to organize file keeping.
- If more than one household member makes payments and purchases that impact your taxes, make sure to have a designated place in your home where receipts can be placed (and not lost) in order to be organized in properly labeled folders either electronically or as hard copies.
- Once scanned, make sure to indicate and organize the receipts by expense like medical, donations, home improvements, etc. This can easily be done in the aforementioned bookkeeping programs but if you have yet to invest in one, you can also simply create designated file folders that are clearly marked with the tax year and expense type.
- Online bookkeeping programs make tax time significantly easier and allow access (with your permission) to your accountant or tax preparer. However, unless you have a designated bookkeeper managing your expenses as they are inputted into the program, tax time will be just as much of a drag as would be if you resorted to the good ol’ shoebox full of receipts. Make sure that when payments are made, you take the time to simply code them to the correct categories and at the end of the year, give your tax preparer a list of those payments.
- It is still smart to save copies of receipts as well.
No one likes an April 15th surprise. So if your income is steady, make sure all of those withholding and estimated payments are made. If your income changes, review those changes to determine if you will need to make a higher payment, or at least know what April 15th will bring. Remember this planning goes both ways, so if your income is falling, make sure you are not giving Uncle Sam an interest free loan.
Remember, a little organization now can save a lot of headaches the following year. In the near future, we will be posting more on income tax planning ideas and tips so stay tuned.