Get organized to reduce tax-time stress

Do you feel just a little (or a lot) frenzied when Tax Day looms? Many of us do. But you can regain some calm by getting organized so you can make tax filing faster and less frustrating. These simple steps can help. 

Start early
You add to the stress if you try to complete your taxes start-to-finish the day before they’re due. Instead, give yourself at least a couple of weeks so you can tackle the job in smaller pieces.

  • Reminder: We think of Tax Day as April 15, but some years that date changes due to holidays and weekends. Check the IRS website for the current year’s due date. 

Choose your organizational system
Ideally, you’ll file your tax-related papers throughout the year. If you don’t already have a system for organizing them, it might take a little longer to prepare your taxes this year. But if you keep using the system, you’ll make next year’s filing easier.

There are many different types of filing systems, from folders and envelopes to computer records. Choose whatever you find easiest, so you’ll stick with it. 

  • Security tip: Protect your personal financial information. Keep paper records in a locked drawer or cabinet. Password-protect and/or encrypt digital files. Shred old paper records before throwing them out and wipe your drive if you dispose of or sell an electronic device. 

Collect necessary information
If you’re filling out your tax return and have to repeatedly stop to search for missing documents, you’ll waste time and become frustrated.  Instead, rely on your organization system: Label folders (physical or electronic) with the categories listed below. Then collect the information described before you start working on your taxes.

  • Personal information. Gather the Social Security numbers and birth dates for yourself, your spouse, and any dependents. If you’re expecting a refund and want it paid directly to your bank account, have that account number and routing number handy.
  • Income. Collect documents that show your income, including W-2s, Social Security benefit records, evidence of alimony received, and 1099 forms for things such as unemployment income, state or local tax refunds, freelance work, IRA distributions, income from a property sale, Health Savings Account (HSA) withdrawals and interest income. 
  • Deductions. You may want to break this category into sub-sections, such as health, home, education, and charity.  If they apply to you, include here Form 5498 for IRA or HSA contributions, and Form 1098 for home mortgage interest deductions, student loan interest paid, and tuition paid. 

    For other deductions, you might need to collect receipts or statements, rather than IRS forms. This might include documentation for qualifying childcare costs, charitable donations, medical and dental expenses, property taxes, business expenses, vehicle license fees, and estimated tax payments you’ve already made.
  • Don’t forget: Speaking of deductions, remember that you have until this year’s tax filing deadline to fund your IRA — and those contributions are potentially tax deductible!

Compare to last year
You’re almost ready. As a final prep step, review your tax returns from the past year or two. This can help you remember unusual or easily overlooked items, such as dividends earned, capital losses you’re carrying forward, or potential deductions. 

Last but not least, a qualified tax advisor can be an invaluable asset in helping you organize your paperwork and complete your return accurately.

We can help take the stress out of Tax Day.

© 2020 Customer Communications Group, Inc.