Tax Tips: Get Organized

It’s that time again: tax season. The better organized you are, the better able your tax professional will be to prepare your taxes. The ability to put your hand on a specific document this instant is a good gauge of how organized you currently are. Hopefully, you are already set to rock your taxes this year but, if not, here are simple ways to get organized for tax preparation.

Create a Tax Planner

A spreadsheet works great for this task because you can quickly organize large amounts of data into separate worksheets within one workbook. We also recommend that you define what your process will be for tax preparation. You can insert this in its own worksheet or at the top of an existing worksheet; the process can be written and/or a visual diagram.

In your new tax planner, you will list:

All of your financial accounts (bank accounts, savings accounts, credit cards, etc.);

All of the information returns you expect to receive this year. For example, W2s – Will you receive one or multiple? If more than one, from which company or organization will you receive those?

All of the personal information for everyone on the tax return. This means not only your tax ID, date of birth and address, but your spouse and dependents as well, if applicable.

Your goal: All of the necessary information collected in one place for quick reference.

Establish a Landing Zone

Compile the documentation needed to prepare your taxes – all in one place. If you haven’t already, establish a “landing zone” for all incoming tax information and documents. These documents will include information returns such as W2s and 1099s, receipts, medical bills, acknowledgment letters for charitable donations, and/or invoices from your childcare provider.

Create two folders: one physical and one digital. When you receive paperwork needed for tax preparation, file it in the physical folder.

Keep things neat and tidy by grouping similar documents; e.g., information returns together; tax notices together; receipts together.

When you receive a tax document by email, file it in your digital folder. When you’re ready to visit your tax preparer, either scan all the paper documents to your digital folder or print out all your digital files to paper and add them to your physical folder.

Hint: If you’re using the physical folder option, print out your new tax planner, namely the checklist of information you’re expecting, and staple that to the front of the folder. Then, when you receive each document, you can mark it off the list.

Don’t forget last year’s return(s). Your tax preparer, if using the same one as the last year, will likely have this on file, but it’s better to have more information than not enough. Or, if you’re using a different preparer than last year, it’s recommended to have the last three years’ returns on hand.

Your goal: All of the necessary documents filed in one place in an easy-to-understand order. And keep an eye on email for paperless documents!

Make a Date with Your Tax Preparer

It’s never too early to set an appointment with your tax preparer. This is their busiest time of year, so you’re better off setting the appointment now.

Your goal: Lock in your tax preparation date and put it on your calendar.

Remember, the key to smooth, accurate tax preparation is to get organized as soon as possible: create a tax planner, establish your landing zone, define your process, and make an appointment with your tax preparer.