It’s tax time again, and if you haven’t already filed, you might be looking for tax time organizing tips. Here are three tax tips you aren’t reading anywhere else.
Tax Time Organizing and 2 Years of Mail
But before we get there, you might be wondering where to start. Forget that the tax filing deadline is literally days away. What if you are still trying to dig yourself out of the last couple of months or years? You aren’t alone. What does two years of mail look like? It looks like this:
One of our clients has been trying to stay afloat these last two years, and because she couldn’t arrange in-person appointments, we knew that she was overwhelmed with mail. We offered her a solution…we picked up her piles of mail from the floor, her boxes and her bags, and brought it to our office for organizing.
In 2 days we had organized 2 years of mail into categories that will make it easy for her to review, fie, and toss:
- Checks to cash immediately(she had several thousands of dollars in that pile)
- Notes and letters to respond to
- Tax records
- Medical records (might be tax deductible)
- Financial statements (most can be shredded)
- Charity appeals (she has a generous heart
- Trash! All the junk mail, expired coupons, old catalogs, and more junk mail is ready for the client to toss.
We also re-labeled her entire file system, and we re-set her Tickler File system (below in the pretty blue file tote, affiliate link).
Most importantly, we found all of her tax records and organized them into a folder, ready for the handoff to her accountant. Whew!
Ok, if this is you, you have some sorting to do (or you can call us and we’ll do it for you). But the ideal situation is to not get overwhelmed with this much paperwork to begin with. Here are three tax time organizing strategies to start NOW so taxes are easy breezy by next year.
Tax Time Organizing Tip #1
By the start of each year, ensure you have TWO labeled folders ready to catch any potentially tax-related documents. Tax years overlap, so at the start of each year, you’ll have a file for last year, and a file for this year. This will cost you nothing, but could save you hundreds, even thousands of dollars and countless hours!
Tax Time Organizing Tip #2
Give your important files a home. Too many people end up with a mess of papers because they don’t want to bother with a file cabinet at home. They feel like it will make their home look too industrial. Your “file cabinet” can be whatever you want it to be. It can be a plastic crate in a closet. It can be a storage ottoman made to store files. I was in Staples recently and saw a cute file cabinet that would be a perfect bedroom nightstand. See those black guides on the bottom drawer?Those are made to hold hanging folders. For about $100, your nightstand could be your safe place for tax files. Brilliant!
Tax Time Organizing Tip #3
Learn what’s deductible and what’s not. Taxes are more complicated than they need to be, but without becoming an accountant, you can learn what documents you need easily enough. The easiest way is to look to last year’s taxes and pull out the exact same documentation that you used last year. This works in most cases.
Of course, when things change, you’ll need to check with your tax advisor. Retired? Receive an inheritance? Have a new baby? Move for a job? Start a new business? Affected by a natural disaster? Those situations all will change your tax documentation, but you shouldn’t be surprised by this on January 14, right?
If you don’t know where to start, try the IRS.gov website on record keeping. If you’ve recently taken over taxes from your spouse, you don’t have to wonder if you are doing it right. A half hour of reading (or a single appointment with us) can help you learn what paperwork is important to your filing…and what isn’t.
Tax Time Organizing Bonus Tip
Here’s a bonus tip on filing. Did you know that you can get a tax filing extension for free? The process is a tad bit confusing because the extension request is without penalty BUT you must pay any expected taxes due before the April deadline, otherwise you risk having to pay penalties when you file your forms with the IRS.
How do you know how much do you owe if you aren’t filing? The forms or your accountant will help you with this. If you file the extension, you have until October 15 to complete your filing. I don’t recommend relying on this, but it’s a good option if you (or your accountant) needs a bit more time to get organized.
Tax filing is a needlessly complex bit of American life, but it’s not a surprise. It happens every year. If you find yourself overwhelmed every year, put these tip into place NOW to get your March and April (and May through October) back next year. And if you need help, please call for an appointment. You don’t need to suffer, and you aren’t alone.