Tax season is here. You’ve started to receive tax documents in the mail. This is probably your third year that you’ll meet with your tax preparer remotely, but nobody ever taught you how to prepare for remote tax filing. Keep your tax prep bill low and your stress level even lower. It’s as easy as 1, 2, 3.
How to Prepare for Remote Tax Filing
1. Gather documents
a. Gather paper tax documents
You don’t even have to open them when they arrive the mail because they’ll be stamped “Important Tax Return Document Enclosed.” Just corral them all together in one place in a large envelope or a manila folder or labeled with this tax year: Taxes- 2021. Keep this folder where you handle your mail. Don’t let those documents spread out all over your home. A simple 12-section file system can keep you more organized than you are now. Paper tax documents include (but are not limited to):
- W2 from your employers
- 1099’s from companies who hired you
- 1099’s from your banks and investment companies
- New this year: Letter 6419 documenting the 2021 Total Advance Child Tax Credit Payments if you are a parent
- Statements of government benefits received, including unemployment or housing assistance
b. Gather tax-related physical receipts from earlier this year
These include (but are not limited to):
- Receipts for cash charitable donations
- Receipts for non-cash donations of household goods, like decluttering donations
- Receipts for real estate taxes and school taxes
- Receipts for childcare and camps. These may be deductible.
- If you worked from home this year, you may be eligible to take the home office deduction. Find out which of the three different ways to calculate this deduction is right for you AND what documentation you need. This can include your household utility bills, home insurance bills, and receipts for purchases you made for a home office, like that new desk and comfy swivel chair. Don’t stress if you lost a few utility bills. You can contact your utility companies and ask for a statement for the entire year.
- You might not know if you qualify for a medical deduction until tax time. Taxpayers can deduct qualified, unreimbursed medical expenses that are more than 7.5% of their 2021 adjusted gross income. (The threshold was historically 7%, then went up to 10%, and is now back down to 7.5%, so do the math to see if you qualify.) If you had significant medical events, pay a healthcare/maintenance fee to a senior living facility, or paid COBRA, you probably qualify for this deduction. Check out how the medical deduction works and the types of medical expenses that qualify for deduction. Don’t tear the house apart looking for receipts. Just call your providers, like doctor’s offices and pharmacies, and ask for a transaction statement for the year.
- New this year: If you received more than $600 in business income via online payment apps like PayPal and Venmo (among others), they will send you a 1099. This is not a new tax, just a new reporting requirement. You must include this form to your tax preparer, even if you’ve never bothered to report this income and pay the tax before.
- If you own rental properties, received an inheritance, if you sold a business, or if you lost a spouse, gather the year-end statements issued to you related to these matters.
- Look over a list of other tax documents and forms you might need. If you needed it last year, chances are you’ll need it again this year. Review your filed tax forms from last year (2020).
c. Gather your email tax documents (without printing them)
Some tax documents come via email now. Set up an email folder labeled: Taxes-2021. Drag each email with tax docs attachments into that email folder. No need to look at the attached form just yet. (Note: Gmail doesn’t use folders; it uses tags. Assign a tag to that email: Taxes2021. Skip the dash because it makes it easier to use the same tag consistently. Then you can search for just that tag and find all those emails easily before your meeting with your tax pro.)
d. Gather your business tax records
Business records go beyond the scope of this article, but hopefully you either have a bookkeeper or you use an online accounting program to manage your business finances throughout the year. Pull your receipts, your Profit and Loss statement and your Balance Sheet. If this is a struggle for you, please get in touch.
This ^^^ should take you less than an hour. If it takes you more than an hour to gather all of this in one place, you need a professional organizer. We LOVE this stuff, and will probably help you increase deductions, lower accounting cost, or save you time and frustration…and that, as they say, is priceless.
2. Save Documents to Prepare for Remote Tax Filing
Somehow you’ve got to get your documents to your tax preparer for remote filing, and you have options. You can print all of your electronic documents, clip them together with what you received in the mail, and drop them off to your local tax pro. Or…
You can scan your paper documents, batch them together with your electronic files, and make them electronically available to your tax pro. There are many, many ways you can scan you papers.
Convert your paper documents to electronic using one of these methods:
- Download the digital copy from your bank’s website. Sure, you have the paper copy in hand, but the electronic copy probably exists somewhere already, and you just need to download it. Most downloads will be a PDF, which is perfect. If you receive a word doc or a .CSV file, that can work, too.
- Scan a copy to PDF using your home copier or home scanner. Scansnap and Neat are some scanner brands you might know.
- Scan a copy to your phone using a scanning app. Evernote, Apple Notes, Scannable, and CamScan are among many, many scanning apps. A scanner app cleans up your scans so you can give a crisp, clear, very readable doc to your tax pro.
- Take a photo of the document using your smartphone camera. This is my least favorite option, as it produces the least readable copy, and your tax preparer might ask you to re-scan it if it’s blurry or too dark to read.
This^^^ can take you 10 minutes with a decent scanner. It’ll take you a bit longer with a smartphone.
3. Deliver Tax Documents to your Tax Preparer
Once your docs are all digital, save them all in one folder, re-name them consistently (YourLastName-Taxes2021-FormNameOrNumber.pdf), and then deliver them electronically using one of these methods:
- If your tax pro gives you a link to a secure folder where you can upload documents, use that. Pro Tip: Some invitations expire within days. If yours doesn’t expire right away, you may not be ready to upload tax documents when you receive this link, so put that email in your Taxes-2021 email folder described above.
- Create a Dropbox folder and share it with your tax pro.
- Create a folder on iCloud and share it with other Apple users. This is easy to do from your phone, but works best when sharing with other Apple users.
- Share a folder on Google drive. I don’t like to give all my most sensitive data to Google, but if you are comfortable, it’s pretty easy.
- Put all documents on a USB drive and carry it to their office. It’s called “sneakernet”, but it’ll work.
Do NOT email a year’s worth of documents to your tax preparer. You’ll likely have to send several emails, and they are not going to take that kindly.
This^^^should take you 15 minutes or less. If you’ve never shared an online folder before, it might take a minute to set it up. Always check to make sure that your recipient can get into the folder you’ve set up once you’ve sent it. Don’t assume that they have access, and then have to scramble before the tax filing deadline if something went wrong.
That’s it. 1, 2, 3.
How to prepare for remote tax filing isn’t easy for some. If we can help, please reach out. Every year we have clients who say they filed their taxes earlier and with less stress than ever before. If you HATE having to file an extension, we can have you ready to file in March instead of the fall. If you lose several weekends a year trying to find, sort, and now scan your tax documents, we can do that all for you, either in your office or ours. Have a small business? Yes, we do “bookkeeping prep” appointments so your bookkeeper can close your books and your accountant will smile when they see you.
This Post Has 2 Comments
Great article. Very comprehensive!
Tax time can be complicated so the simpler we can make it, the better it will be.
Thanks, Julie. Feel free to share.
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