Preparing for Tax Time, Are You Ready?

Judith Guertin Posted in Getting Organized

The right system will make this job much easier!

Preparing for Tax Time, Are You Ready?

Preparing for Tax Time, Are You Ready?
It is that time of year again, the tax man cometh. Are you feeling anxious, frustrated and afraid about how difficult this process will be? Well, you have plenty of company. Pew Research report stated that 30% of us dislike doing our taxes and 26% of us hate doing our taxes (I know that will come as quite a shock to many of you!) They cite everything from it being a boring chore, to the convoluted tax structure as reasons why. Especially notable were the responses about the hassle of collecting and putting together the tax time documentation.

Are you dreading tax time?
In my experience with clients, those who dread it the most have a few common problems:
• Don’t know what documentation they need.
• They think it will take too much time.
• They are afraid to ask for help
• They are afraid of what they might owe.
• They feel ashamed they do not know what to do next.
• They don’t know where the important papers needed for completing them are located.

First of all, forgive yourself for what is in the past. If you don’t have a system, that can be fixed, but don’t let that get in the way of completing this important job.
Make some appointments with yourself to do the work to get your taxes completed. When the scheduled time arrives, set a timer and work your way through these tasks one at a time. Take regular breaks to keep yourself fresh during the process. When your timer rings, ask yourself if you want to continue and do more in this session, or make another appointment at a later time to continue your work. Remember, one step at a time!

Need some help with your process?

Here, steal this one I share with clients…

Step 1  Make a list of what documents you need. Start with the physical paper documents. Where are they likely to be? In my years working with individuals and businesses, we have found documents in their offices, the front hall closets, the kitchen or dining room tables, in bags and boxes in basements or attics or under their beds, and the trunks of their cars... Think back to when people were coming over to your home or office and you needed to do a quick clean up. Where did you put that stuff?

Step 2  Ask for help collecting the papers you need, divide the list and get started (think - business partners and spouses). Check all those places you identified for valuable documents.

Step 3  Now that you found all the paper, don’t forget to check your online resources for things you need to download, or that you scanned and saved for tax time.

Step 4  Set up a secure storage location for your downloads so you have a local copy. You may find if you don’t download now that getting access at a later date may be more difficult than a simple log in and download. Think of this as your Plan B.

Step 5  Create an area to sort these documents into the proper categories; this could be a table top file, a table top, a filing cabinet or an accordion file.

If you itemize your deductions, some examples of sorting categories might include, mortgage interest, home mortgage points, real estate taxes paid, excise tax payments, safety deposit box rentals fees, charitable contributions, and medical expenses. For a comprehensive list of deductible items for individuals and businesses visit the IRS website.

Step 6  Once all the documentation is ready, you can move on to the preparation method of your choice: CPA, Enrolled Agent, Online or Boxed Software, or completing them yourself. Which one is right for you? Only you can decide the tight method for your personal situation.

Remember the professionals are there to help you, the tax code is complicated and the time and headaches you save yourself by hiring a professional may just save you enough time to help you land that next big contract.

Step 7  Now that you have thought out your process, it’s time to set up a system you will use this year to make filing next year much easier. The time to start the process for the tax season is NOW.

Many happy returns of the day! You got this!

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