Whether you prepare your taxes by hand, with a computer program, or through a tax professional, you can use the following tax planning steps to save yourself time and money.
Start Your Tax Time Countdown
Two months may seem like an eternity, but not when you consider that it’s essentially the time you have left before personal income taxes are due.
Start by using your day planner to map-out how you will make use of your time. Perhaps you can set aside a weekend to get your filing done. Or, if you’re a bit behind and need more time, break the work down into small tasks you can complete on the weekdays after the kids are in bed.
It starts today when you get out your calendar and schedule these key milestones:
- Monday, April 18: the absolute deadline for filing (unless you request an extension)
- Tomorrow: schedule a filing date some time in the next two months; either call your tax professional or choose a date for preparing your own 1040 form
- Task 1: Collect and sort your expense receipts
- Task 2: Run through your bank statements and highlight potential deductible expenses
- Task 3: List your deductions like work-related mileage and healthcare expenses
- Task 4: Gather all of your necessary documentation
Be realistic about how much time you’ll need to schedule. You may find that six different time blocks over the next six weeks will get you ahead of the game.
Do Your Prep Work
This is a tip that is vital for you whether you’re a seasoned tax filer or a complete novice. Spend an hour online researching what information you need on any new tax laws relating to your current home and work situation.
Many online resources are available, including this useful list of the essential documents you’ll need to assemble, this checklist, and this IRS listing that shows you important tax changes that might affect your individual return.
For starters, here’s a quick summary of information you’ll need to collect:
- Income records: all forms including W-2, 1099-MISC, rental income
- Investment records: includes 1099-INT, year end brokerage statements
- Deduction records: includes mortgage interest, charitable contributions, birth dates/social security numbers of dependents
- Credit records: forms listing retirement savings credit and estimated taxes paid
In your day planner, create a checklist of all the documents that are relevant to your filing, and mark them off as you collect them. Later, you can attach this list to the stack of information you hand over to your tax preparer.
Choose the Right Tools for Organization
A little organization will provide more bang for your buck. Any accountant will tell you that they can’t work as efficiently from a messy shoebox full of receipts. The more time spent getting your act together, the less it will cost you in filing the return
Your tax professional also has better odds of creating an accurate return when you do prep work. And, it’s not any different for those doing their own tax preparation. While software programs do make filing easier, there is no substitute for having your information organized.
A trip to your local office supply store is a simple step you can take to arrange the many different receipts, statements and documents required. Use these great methods for organizing your info and cutting preparation time:
- Choose office supplies that help you visually differentiate your papers and documents
- Categorize documents and statements using clear plastic colored folders. For example, yellow is for charitable contributions, red holds all medical related statements and receipts, and blue holds all your highlighted bank statements
- Sticky notes are useful for labeling categories, expense totals, or notes to your tax professional.
- Binder clips are a great way to keep related documents together
- Mini clear plastic accordion files can be used to house receipts, alphabetized or by category
Remember: tax return filing expenses and fees are deductible, so save all of your receipts for these purchases.
Do you have any tips that help you organize your tax filing? Please share by commenting below.