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You have emerged from the tax fog of April and the mad rush to get everything filed with the IRS by the ominous deadline of April 15 (give or take). In that mad rush, you promised yourself that next year will be different. Next year you will be organized in your tax preparation so that your home will not look like a paper bomb went off and you will not need to beg and plead with the mailman to wait another five minutes to take your mail. Now is your chance to make good on your promise.
1) Know what you need to have. This seems obvious, but the sheer amount of documentation and information that is required to successfully complete your taxes each year is varied and impressive. You will need to become familiar with what information you likely need to keep. For example, what were some of your deductions last year? If you deducted mileage for your home business, you need to be keeping track of it. Similarly, some medical expenses are tax deductible, so you should be keeping track of those, too, if applicable.
2) Gather your documents. We’re already halfway through 2017 which means you have six months’ worth of documents and information to start collecting to be caught up. Once you have gathered your documents and information, sort them into the different categories that you have identified in Step 1. For example, you can have withholdings forms, income statements, tax-deductible donations, home office deductions, professional fees, etc.
3) Make files. We mean paper and electronic files. The information you have stored electronically is sometimes even more important than what you have on paper, so you will need to have an electronic storage cabinet in addition to the physical one. It may be worth investing in a separate, connectible hard drive with plenty of space for backup. Again, here is where the categories of information and documentation you identified in Step 1 are critical because you will now be creating the files for these categories. Once you have created these files, real and virtual, it’s time to start populating them with the information and documentation that you have gathered for the last six months. If you haven’t been keeping that information or those documents for the last six months, do not panic. Again, now is an excellent time to be gathering these things. It’s never too late.
4) Use your files. Take a moment to look at your beautiful files that are full of important tax information that you can lay your hands on within seconds if need be. Notice the lack of paper everywhere or how unstressed you feel about taxes. This is wonderful, but if you abandon the system after this point and wait—again—until next April to complete the task for the year, you will have only saved yourself half the pain of last year. It is crucial to be consistent in using the files throughout the year to save information and documentation as it comes in. You spent all of that time making the files, now enjoy how easy it is to simply file away the information or document until next spring.
5) Enjoy your next April. Since you implemented your new organizational system and used it throughout the year, your time handling your taxes next April should be significantly reduced. You may also become a favorite client of your CPA since you will be handing them all of the information and documents they need to get your taxes filed and done.
If you have questions about organizing your taxes, deductions, and related issues, contact the attorneys at Weisberg Kainen Mark who have lots of experience with tax organization and who believe that anyone can get their taxes organized, with a little or a lot of help. Call us today to get started.
Weisberg Kainen Mark, PL
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