Soon you will have the information you need to file your taxes, it’s time to be proactive and get things done! Showing up at your accountant’s office on April 14th with a shoebox full of receipts is not going to do you any favors – in fact, it could cost you a lot of money. If you want to save headaches and cash, you should make tax season a year round planning event.
When I set up my paperwork files every year, my first order of business is to set up three folders for taxes:
- Income: This folder should be the repository for every documented that is income-related, like paycheck stubs and interest earned statements.
- Expenses: This folder should contain the documentation for:
– Charitable Contributions over $250
– Any home sales
– Capital improvements
– Real estate and property tax payments
– Tax preparation and legal fees
– Tax related receipts
- Tax Preparation: This important folder should contain tax forms for yourself and any employees, such as:
– Notices from the IRS
– Quarterly estimated payments
– 1099s, 1098s and K-1s
– Receipts or letters of acknowledgement for charitable donations of fair market value or of donated stocks or properties
– Health insurance records; this year the Affordable Care Act requires you to prove your health insurance coverage or face tax penalties
For instance, if you put off gathering all of your relevant information to the last minute and your accountant starts looking for missing paperwork, you may find yourself racing to meet the April 15 deadline.
Another proactive thing you can do every month, and which could end up saving you money, is to examine your statements for accuracy. Banks make mistakes all the time and when combined with a little healthy procrastination, the conditions are set to produce the perfect storm.
You also want to make sure you’re getting the tax credits you’re due, like childcare, if you qualify. I have found that Certified Public Accountants, Enrolled Agents or Tax Attorneys are the best at finding deductions and saving money for their clients. The important thing is to be confident that you’re not trusting your future to just anyone who hangs out a shingle during tax season.
Who is doing your taxes this year? What are you doing to make their life easier and save yourself money?