The mad rush up to April 15th is finally over! We’re past tax season and having to worry about our income tax return. No more worries until next year, right? That is until next April when you start to panic about the past year’s taxes again and you start racing around looking for all of your tax documents hoping you can organize yourself by the 15th! Ughh!
Kinda stressful isn’t it?
Well it doesn’t have to be so stressful. In fact one way to make it less stressful is to make tax season last the entire year!!
“The entire year? Way to go making it easier” you say with a sarcastic smirk.
What I’m talking about is keeping track of all of your tax documents and tax related information throughout the year. Doing a little bit throughout the year will save you a ton of stress come income tax time.
How do you do this?
Keep track of any and all expenses that may be even remotely tax related. Better to have the info and not need it than need it and not have it.
Collect receipts in a large envelope. Put together a folder to hold tax information. Set up a simple spreadsheet to list out expenses and accounts you will need tax documents for.
Doing some simple preparation now and throughout the year will make your tax preparation process so much smoother next year!
And let’s face it, when you are rushing to put everything together it’s too easy to forget something important.
Here are some items to consider tax planning now:
- Charities: Plan out how much you would like to contribute to various charities for the year. Instead of making one big donation at the end of the year make more smaller donations to meet your goal.
- 401 (k) Plan or similar options: These tend to be automatic deductions from your salary. But think about the effects they have on your taxes. Adjust your contributions now.
- IRA’s: Again, plan out your total contributions and decide how you can divide that into the year.
- 529′s: Ditto!
- Flexible Spending plans: Keep track of eligible expenses so you have a good guide to allocate funds when you need to decide next year’s allocation.
Do it as you go throughout the year and make next year’s income tax return easier!
What else can you think of to make next year’s taxes easier?
{ 8 comments… read them below or add one }
Being organized all the time has always been a challenge for me, and not just with taxes either. I need some kind of organizing guru to come to my house for an intervention. Really – it’s BAD!
Jennifer @ Money Saver 101’s last blog post..Economy vs. Commerce: Funny Financial Comic
@ Jennifer – I know how you feel! Before we went to our accountant this year I had o race around trying to account for everything and get copies of all my receipts and such. I’m trying to do better this year by keeping an envelope/folder for receipts and track things on a spreadsheet. For you, I’d suggest you start small and try organizing one thing for a while. Once you get that down work on another area that needs organizing.
@ Miranda – When we see our accountant we talk to him about what we’ve done the past year and what we can do for the coming year. We’ve also shot him questions from time to time when we needed some advice. One huge benefit of going to a CPA!
I think it is very important to be organized with your finances. I try and do my tax planning for the year with my accountant when he prepares my taxes. That way we’re both on the same page.
Miranda’s last blog post..Book Review: Oblivious Investing
My wife is very organized, thankfully. But I need to learn to work on the same aspects of organization. Thanks for some great ideas on keeping things organized all year long, so that the stress level is low when tax season comes again next year.
Steve’s last blog post..5 Guaranteed Ways to Change the World This Week
After filing our taxes this year (I did them in February, go me!) I realized that though we might have been able to itemize and get more money back, we didn’t have the receipts to do it.
I have filed receipts based on budget categories. So all things related to home repairs are in ‘house,’ while things like gas and tags are in ‘car.’ That way if I am looking at my options for deductions I can see how much we paid for car taxes and how much we spend on energy efficient upgrades or property tax without going through a pile of papers.
Rebecca i.e. thefinancefiend’s last blog post..Consumer Ed 101: So you want a car
My husband does our business taxes and is meticulous about saving every receipt, reading all the current blogs and the like. Being prepared really does make a difference.
Barbara Ling, Virtual Coach’s last blog post..Agonizingly CRUCIAL – When Your Blog Suddenly IMPLODES, Banish Panic (troubleshoot and deactivate plugins instead to find the hang)
Pleased to say I’ve been doing this for several years now. There will always be that one stray slip, however…. but it really helps to know you’ve got everything in one folder. I was able to file my taxes online this year and spent just about 4-5 hours doing it myself.
MoneyEnergy’s last blog post..Canadian Equivalent of the Roth IRA – The Tax-Free Savings Account, or TFSA
Don’t forget to keep track of the medical expenses. If you decide to itemize your deductions, those hefty medical bills are often overlooked.
TaxForum’s last blog post..Federal Income Tax Return
{ 3 trackbacks }