Are you scrambling to get your documents together for your looming tax appointment? You’re not alone. Thousands and thousands of households are weighed down with extra paper to sift through this month. When did we make that big purchase? Where are the receipts from our business trip?
I have a big secret for you: tax preparation doesn’t have to be a dreaded time of year. Eeek! Does that feel possible for you? I’m here to tell you it is possible.
You may not be able to change your system when your tax appointment is next week. But, if you don’t want to repeat the stressful, frantic cycle to get prepared for filing taxes, commit to making a few simple changes for next year. And that change starts now.
It’s your choice
Often times we feel like it’s out of our control to be prepared for taxes. We buy into the myth that taxes are a beast and we don’t have the skills to tame it. That is false! You don’t have to know much about finances to be prepared. Take control. You don’t need to be the punching bag in the tax ring. It’s your choice.
Don’t wait until Spring to think about taxes
In my opinion, one of the biggest mistakes people make is that they don’t think about tax prep until it’s underfoot. All year long, everything you do with your receipts, financial software, bills, etc, should be in light of your tax preparation.
Start a tax file folder
Buy a box of file folders and write “Tax” and the Year on the folder tab. (Start a new folder each year, don’t add to the same one.) Keep it in an accessible place. Any documents you receive, such as a donation receipt, should go directly into this file. Now if your finances are simple, you can keep any proof of deductible expenses in this folder. If you have a more diverse portfolio, you will benefit from a more detailed file system. But it’s a great start. Keep your tax returns and supporting documents in the folder once they are filed for future reference.
The shoebox method
A lot of people put all their receipts in a shoebox, label it with the year, and deal with it at tax time. I’ll applaud them for having them all in one place. But, if you don’t have the expenses tracked somewhere before they go into the box, of course it’s going to be overwhelming to go back and figure out what was deductible. The receipts all start to look the same, are faded, and definitely aren’t in sensible order. Only put receipts in a shoebox after you have them logged elsewhere. Which brings me to the next point….
Track your finances
You don’t have to be a Quickbooks expert to track your finances. It’s beneficial if you use some sort of simple software or online program to keep track of what you’re spending. Now, I know everyone has a different philosophy on how to budget and track spending, but looking at your credit card statement, doesn’t count as tracking. You need a way to sort and categorize. Online programs such as Mint, EveryDollar, MoneyDance, etc. are simple tools to help simplify.
Embrace your system
You can have a software in place, a file folder ready to go, and the knowledge, but those items don’t prepare your documents without being utilized. You can pay an accountant to do your taxes, but if you don’t have the info, even he/she can’t make the magic happen. What is going to be your plan to use the tools you’ve put in place?
The best way to consider what needs to be done, is to start at the end and think backwards. What is the final product you need to have in order to complete the forms or give to your accountant? How can I gather the info? When does the info come across my desk for the first time? And keep working backward. Many firms have resources that can help guide you as to what info you need for filing.
Adjust the mindset
Taxes are a four-letter word in some households. I’m married to a farmer, I know, many people aren’t a fan of them. Don’t give into the societal view that taxes are painful. It doesn’t have to be a gashing wound each year. Bandage the wound and determine to heal. A mindset of possibility is a great place to start.
Paying taxes may be painful, but filing them doesn’t have to be deadly.
If you’re reading this and feeling like it’s too late for you, you’re not alone in feeling behind! Do what you need to in order to get the essentials taken care of for this tax season and immediately commit to setting your sites on a new routine for next year!
If you’re not thinking about tax season, it should quickly move to the top of your list!
Note: I’m not a financial guru, therefore this isn’t financial advice. I’m an organizer who is giving ideas as to how to navigate paper work. Not every idea works for ever household. Consult a tax expert for financial advice.
Are your papers exploding and overwhelming you? Contact Michelle, Organizer & Coach, at The Proper Place to help you create a simple system that will help you get and stay organized. Paperwork doesn’t have to be stressful!