It doesn’t seem to matter what circles you walk in, tax preparation and paying taxes might as well be curse words. The bottom line, however, is that it must be done. I have been a CPA (Certified Public Accountant) for several years now and have come up with some tips and tricks to take some of the headache out of this time of year.
My favorite suggestion if you are a tax preparer is to acquire a super supportive spouse that will keep things together for you at home while you work crazy hours. Also, kids that will pitch in are preferable.
For those of you who are not tax preparers, here are some other suggestions you might find helpful.
- Having somewhere to gather your documents to stay organized is key. I would suggest setting up a folder of some kind (it could be anything from a plain old manila folder to a cute, dedicated binder with dividers, etc). As documents come, you add them to the file. It’s not too late to set this up for your 2015 tax return but you might want to set up a 2016 file at the same time so you can gather receipts, etc. all year long.
- In the front of your chosen organizational item, I would add a checklist of items you need to gather before your tax return can be prepared. If you hire a professional and they send you an organizer, you may use that document as your checklist. You may need more than one of each document, depending on your situation. You can add as much or as little detail to the checklist as you want. This sheet can even be attached right to the file. As you add documents to the file, actually check them off your list. Then you know at a glance what you are still waiting for. Some of the most common items to gather are:
- W-2 (If you work for an employer)
- 1099-R (If you have retirement income)
- 1099-Int (For the interest you have earned in your savings, CD, money market accounts
- 1099-MISC (For some self employment income)
- K-1 (If you have ownership in a partnership, S-corp, trust, etc)
- Social Security Income
- Receipts for business income/expenses if you report on Schedule C
- 1098 (Mortgage Interest)
- Any charitable donations: Receipts, donation letters, etc.
- Medical expenses
- 1098-T (Tuition statement for higher education)
- Childcare receipts
Whether you do your own tax preparation or hire a professional, having your receipts summarized will really help. The more you do to organize on the front end, the less headache you’ll have on tax prep day. If you hire a professional, your bill will also go down if they don’t have to summarize all your receipts.