I’m really excited to introduce Janet as a guest blogger here on Girl, Organized today! I met Janet in a Facebook group for entrepreneurs, and when I found out about her adorable office supply company Paper+Spark (& she’s a CPA), I knew she would be a great fit to share with us “How to Get Organized for Tax Time!”
“Janet lives in Houston as a mom, wife, blogger and serial creative entrepreneur. Her chaotic new life as a stay-at-home mom and her search for the perfect “brain dump” notebook inspired her to create Paper+Spark in 2014. She’s also a Certified Public Accountant and passionate about helping other creative biz owners succeed.”
How to Get Organized for Tax Time by Janet Leblanc
It’s tax season! If you’re like most people, you probably dread this time of year. As the tax deadline approaches, you might be frantically scrambling to find receipts, download forms, and get all your financial paperwork in order. Here are a few tips to get organized for tax time now and over the course of the year (to make next year’s filing process a lot less painful for you!).
Keep all financial paperwork in one place over the year.
As you receive any financial documents or receipts during the year, house them in one central location. The location can be as simple as a manila file folder, a drawer in your desk, or a set of categorized folders, as long as everything goes to the same place. The key is to avoid having to hunt through your entire house to find the papers you need come April 15th.
Know what you need and what you don’t.
If you’ve been doing your taxes for a few years, you are probably more familiar with what paperwork you do and do not need to complete your tax return. A lot depends on whether you do the 1040EZ form or the regular 1040 (i.e., whether you use the standard deduction or itemize your deductions). If you itemize your deductions, you need to hold on to more documentation to record those expenses.
You generally don’t need documents like credit card bills, bank statements, or utility bills to complete your taxes. To get you started, here’s a short list of the most important documents to hold onto for your personal tax return:
- Any paperwork having to do with your wages or self-employment income (that being said – you don’t need to save every single pay stub from your employer if they send you a W2 each year)
- Investment paperwork
- Donation and charitable contribution receipts
- Medical expenses
- Education and tuition documents
- Mortgage paperwork
- Receipts for unreimbursed expenses you paid out of pocket related to your job
- Any documents pertaining to your home business if you are self-employed (mileage expenses, home office expenses, sales invoices, business expense receipts, etc.)
If it isn’t something necessary to file your return, don’t store it in your special “tax documents” area or folder. You don’t need the extra clutter and too much paper might confuse you when it comes time to file.
Pay attention to the mailbox.
Once mid-January rolls around, you may start to receive many of your needed tax forms in the mail. Between now and early March is a good time to pay close attention to your snail mail. You will probably receive a hardcopy W2 from your employer (this is the form that lists your annual wages paid and taxes withheld from your paychecks), along with other important tax forms that might apply to you, like 1099s if you received any interest or dividend income from investments or savings accounts this year.
You need all these forms in order to completely and correctly fill out your return, so make sure you’re keeping an eye out for them. To make things more confusing, some brokerage firms and banks only release their tax forms, electronically, so you will need to remember to log into your account to download them yourself once they become available.
Sort your tax documents by category.
The easiest way to organize your tax paperwork is by tax categories that correspond to the different areas of your tax return – income, investments, and deductions. You can then break the deductions down further into the categories that make sense to your situation – house/mortgage expenses, job expenses, medical expenses, education expenses, and charitable contributions are the most common deductions.
I’ve created a set of folders for exactly this purpose over at Paper+Spark. I keep these on a nearby shelf in my office during the year so that anytime I receive a financial document I’ll need for tax time I can easily file it away and keep things organized.
Make a checklist.
Other than keeping all my paperwork organized in one place, the most important thing I do at the beginning of tax season is make a checklist. I write down all the tax forms that I know I’ll need to complete my return and check them off as I receive them in the mail, download them online, or find them around the house (if I’m off my game!).
This checklist keeps me from prematurely filing my return before I have everything I need. The best way to do this is to consult your prior years’ returns (and applicable paperwork) to see what all you used in the past. There is always one company that mails me a tax form I need one month later than everybody else.
Set aside a morning or afternoon to file your taxes.
If you file your own taxes online and you have your documents nicely organized, you can easily knock out your return in one morning or afternoon. The most challenging part of doing your tax return is usually just finding all the papers you need, so if you’ve stayed organized over the past few months you’re already good to go in that respect.
You can now grab a cup of coffee and take a seat and file your return! With online filing programs like TurboTax, you basically just input the info from your pile of tax documents while the program does the work and calculating for you. Easy peasy!
Make sure you hold onto your tax documents for at least 3 years. It also might be a good idea to print or save a PDF copy of your return after you file so you can reference it next year. I like to consolidate a copy of my completed return and all the supporting paperwork in a single folder labeled with the year when I’m done filing.