Get Organized for Tax Time

Are you ready?

Are you ready?

Have you broken out in your usual sweat anticipating tax time? Do you find yourself dreading the hours it’s going to take to round up the papers you’ll need to complete your tax planner? Being ready for tax time is all about having a system for keeping certain paperwork separate from others.

The most simple way to keep your tax paperwork separate from other papers is to create a box or file labeled “TAXES.”  If you want to get fancy, subdivide to create homes for:

  • charitable donations
  • childcare expenses
  • medical expenses
  • proof of income: W-2s, 1099s
  • tax documents

The home can be a file folder, envelope, or even a dedicated box. Anything that is easy to drop things into throughout the year.

If you’re keeping every single receipt and account statement, it’s worth asking your tax preparer to give you a list of documents you actually need to keep. Typically these are only receipts and statements that prove expenses you claim as deductions on your taxes.

For paper organizing, it’s important to understand the difference between a general living expense and an expense you can claim as a tax deduction. For example, gas station receipts are a general expense, but if you use your car for business they could become a tax-deductible expense. There may be other reasons you want to keep every gas receipt – budgeting, MPG tracking, etc. but you may not need them for taxes.

If you are self-employed and unsure what’s deductible, consider this Oakland tax workshop hosted in February by Enrolled Agent and author Jan Zobel. The workshop covers:

  • Which expenses are deductible and what proof you need to have
  • How to make quarterly estimated tax payments
  • Ways to reduce your chances of being audited
  • How to set up a simple recordkeeping system
  • What additional taxes self-employed people pay
  • How tax law changes will affect your return

If you want to take your financial organizing to the next level, consider the following:

  • Use a money management tool such as Mint.com or Quicken® to categorize your expenses automatically so you just need to run a report at the end of the year (still need to keep your original deductible receipts)
  • Use FreedomFiler® to manage your filing
  • Have a professional organizer or bookkeeper come in and triage your 2015 taxes–and having help come monthly or quarterly will help keep things straight

 If it’s too overwhelming to get a system together for 2015, begin now with categories  for 2016!

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Filed under Decluttering, General Organizing, Office, Paper

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