Guest blog by Julie Starr Hook of Five Starr Organizing and Design and author of “From Frazzled to Freedom”
It's tax time once again and if this is your most dreaded time of year, make it easier and less stressful next year with these 15 tax prep tips.
- Put reminders on your calendar for tax deadlines now! April 15th is the most important date, however W-2, 1098 and 1099 forms should be mailed out by January 31.
- Group all statements and documents together. This would include all statements of income including W-2 forms, 1099s, interest income and the like.
- Fill out a tax organizer. If you have an accountant, he or she should be sending you a tax organizer packet. Filling it out ahead of time will save you time and money in preparation fees.
- Collect it all. Designate an area to collect incoming tax information as it arrives in the mail, such as end-of-year mortgage statements or investment statements. If you make an appointment to see your CPA in person, be sure to bring all the necessary documentation with you.
- Group all deduction information. This may be records of charitable giving, business expenses, property taxes, mortgage and savings account interest documentation.
- Decide how you're going to file your taxes. If you are hesitant, check with an accountant to determine the best way to file. For example, if you have a 20-year old child, you’ll want to know whether you can claim her as a dependent.
- Avoid e-file rejection notices. Make you know who is claiming whom. Communicate with your family members ahead of time. If there is a name change, make sure you have already gone to the Social Security Division to let them know.
- Make a decision on which method you file. Will you purchase software and prepare your taxes on your own or use an accountant? There are benefits to each, but if you want to hire an accountant, don't wait until the last minute.
- Be aware of new taxes laws. If you are going to file on your own, make sure to do your homework, it can save you time and money. Changing tax law is another reason you may want to consider hiring a professional to help you.
- Determine one place to store your tax documentation. This may be a filing system, accordion folder or manila folders. By keeping them in one place, it will be easier when it’s time to gather your information.
- Retain records for seven years. Keep your tax records that support items on your tax return for at least seven years after the date the tax return has been filed. This varies if you file as an individual or a business. Check your local accountant or www.irs.gov for what taxes to shred or keep.
- Maintain all year. Create a system for organizing your tax documents throughout the year to make tax prep easier going forward.
- Use banker’s boxes. Standard banker’s boxes are perfect for storing tax returns and supporting documents, and shred past taxes when IRS allows. I use a black Sharpie to write on the box the tax year.
- Purge your folders. As long as you’re getting your tax documentation together, purge your files of outdated and no longer relevant papers. Make sure that your files contain only current year and pertinent information.
- File on time. Avoid penalties and interest by preparing early and filing on time. Enough said?
Julie Starr Hook resides in Salem, Oregon, with her husband, three children and two step children.