Getting Those Tax Records Organized
By Sherril Steele-Carlin
It's nearly that time again. Those of you who are extremely organized already have your tax records organized and nearly ready to be submitted to the IRS. The rest of us are always struggling to get our receipts together, so we can get them to our accountant, or run the numbers ourselves.
Why is it such a fight to stay in control of our records every year? It doesn't have to be. You can keep your records organized every month, and when tax time rolls around next year, doing your taxes will be a breeze. Just follow these simple tips, and say goodbye to tax time woes!
1. When you prepare your taxes, make a note of all the areas where you have deductions. Set up a file folder for each area, such as "Meals & Entertainment," "Mileage," "Publications," "Dues," "Utilities," and "Expenses." Whenever you spend money in one of those areas, make sure you put the receipt in the file folder right away. That's the first step in making sure you have everything you need at tax time.
2. Invest in a computer program that you can use to prepare your taxes, or set up a database for your expenses. If you enter a few numbers every month, rather than a whole lot of numbers at the end of the year, you'll have less work at tax time. You'll also have a much better idea of how and where your largest expenses are occurring. That can help you make better purchasing choices throughout the year, and get your taxes done a lot more quickly at tax time!
3. Make sure you keep all your 1099s and income statements in one place. Each year I take a large envelope, and keep every income statement and interest statement I will need to prepare my taxes in it. It helps keep me organized, and it's a central place for the records, so the rest of the family knows where the information is, and where to find it.
4. Keep a running balance of your income as you receive it. If you're like me, you like to know right where your income does (or doesn't) stand each month. I enter every check as I receive it. Then, I have an accurate statement of my income on December 31 each year, and the biggest step in preparing my taxes is ready and waiting.
5. Make sure you check with your accountant and find out exactly what records he/she needs. My accountant sends me a workbook every year. I fill out the workbook, he does his magic, and my taxes are done. The workbook gives me exactly what items to look at for income and deductions, so I don't forget anything. If you don't have a workbook, use last year's taxes as a guide for what to add up and deduct, but don't forget, tax laws change all the time. I find it worth every penny to work with a good accountant, who keeps up with the laws so you don't have to.
6. Don't panic! If your records are a mess this year, just dive in and do it. You'll feel much better after you get everything organized and ready to submit to your accountant or the IRS. Then, make a vow to get organized for next year, and you won't dread filing your taxes, you'll just dread paying them!