When was the last time you heard someone say, “I’d rather clean toilets than do my taxes!” I totally get it. It is one of the least pleasant things anyone has to do, but that’s just it: YOU HAVE TO DO IT. So instead of making it the task that you put off and put off and put off until it becomes herculean and utterly terrifying, why not start now, two months before taxes are due, and plan it out. This way you can spend the next week or two strategizing and then gathering the documents you will need in order to complete your tax returns, either on your own, or with the help of a tax professional.
Although I am not a CPA, I have spent many years having to work on taxes and I have found that even as they have gotten more complicated, following my timeline and checklist has helped me, and subsequently my tax professional, complete what would otherwise be a confusing and difficult task. Here are some of my tips:
Set up a tax calendar
Give yourself a start date and a due date for your material submission to either your accountant, your tax prep company, or for yourself. And give each ample time. Waiting to hand everything over to the accountant on April 13th is just going to lead to mistakes. Yes, you may get an extension, but that won’t get you out of having to make a payment if it’s due so give your preparer and yourself at least a deadline of 4 weeks. They have other clients too, and first come first served.
Put together a tax package
It doesn’t have to be fancy but it should include: wage statements(W2s), investment reports(1099s, K1s, and other like documents), which should have been coming in the USPS in the past few weeks and will keep coming over the next week or so. By law, investment firms are required to get out their end of year statements to clients by February 15, 2019, which is getting a bit late, but be on the lookout. Also, the envelopes will alert you and say TAX INFORMATION DO NOT DISCARD.
Gather deduction documents (receipts, charitable donations, medical)
If you can take deductions this is where the work comes in. You will need to keep the receipts and detailed lists if you have made charitable donations over the past year. There are categories for cash donations, and then those for in kind, such as clothing, furniture or automobiles. You need to be very thorough with your details.
Medical deductions are another area, but with the new tax laws it is very important to check with a tax professional. As of this year you can still list your medical expenses in terms of levels of income. You will need to keep receipts from doctors visits, and from prescriptions.
Organize business expenses
Now the part that I always dread before I begin but once I list the categories it becomes a breeze: business expenses. Obviously, this applies to you if you have a business or a side gig. You want to list your expenses in ways that would seem clear to you, your tax preparer and obviously to someone who is going to ultimately review your return so be thorough but also be realistic. Think about the business you own and then determine if the things you spend money on for the business are reasonable like, supplies, advertising, mileage, meals, travel, and make sure you have receipts and documentation to back up everything. Each person’s business is different, so whereas Kim Kardashian writes off a million dollars a year in cosmetics, I don’t think I’ll be doing that this year (besides, I’m the one who you hire to purge all that stuff, remember?).
After you’ve gathered as much material as you can, present it to your tax professional. Or if you can handle this job yourself, more power to you, fill in the forms.
Just remember, if this gets done in an organized and timely manner, you walk away with a sense of relief that you got what seemed like a daunting job done in plenty of time. Now you can enjoy the spring.
And if you if you have questions or need help before you call a tax pro call The Organizer at (202)253-9619 for an hour or two prep work. It’s ok to ask for help and absolutely worth the piece of mind.