Tax Organization Compared to Packing

You would think packing for a trip would be fun- why do I hate it so much? I feel the same about organizing my papers to prepare for my tax return. Here are a couple of helpful hints 

1. On Jan 1 put a large envelope somewhere near where you look at mail. Anything marked tax- shove it in the envelope. Make your family commit to this, helpful family members can inadvertently mess you up! Don’t let this important pieces of information go anywhere else but straight into the envelope. 

2. Also on Jan 1, start a new tax folder for the current year. Put in those receipts from charities, tax bills such as excise and property tax, and anything else that you think you will need to file that years return

3. After Feb 1st, sit down with your previous years tax return or a tax planner document provided by your CPA or tax software. This is an excellent checklist for the documents you will need. A trick I learned many years ago in public accounting, change is a good sign something is wrong. We would review financial records one year compared to another, if we found a significant change, that was an alert that maybe something isn’t right. If you find a number to be lower or higher, dig here, you might be missing something. Hopefully between your big envelope and folder you will have everything you need to start filing your return. Most likely you won’t so start filling in the holes. Don’t forget some documents like brokerage statements and K-1’s trickle in over time. Also my town lets me pull real estate taxes from the town website, that always seems to be my hang-up. Every year I promise to save the receipts in my tax folder. 

Anyone else have helpful tips? Would love to hear them! Happy to help in any way! I love taxes, well not paying them just like figuring them out!