Simplify Tax Preparation

Tax season often brings a sense of dread and confusion for many individuals. The myriad of forms, deductions, and deadlines can be overwhelming. With a simple, step-by-step approach to preparation and organization, your task will be less stressful and less time-consuming. Here are some practical tips and strategies to streamline the tax preparation process.

Start planning with a calendar

Tax season is officially in progress. There are two deadlines, the April deadline and the October deadline. If you know yourself to be a procrastinator, set your deadline. That deadline should be earlier rather than later.  Tax forms and information have been coming in since January, so set a deadline of April 1. Reward yourself for getting this done sooner rather than later.

Gather personal information

Create a document you can use each year with basic information, including Social Security numbers and employer information, for each person on your return. Create a folder on your personal computer with this information or have a red folder for this information on paper.

Tax preparation in action

The best way to manage a big project is to manage it in chunks. Tax preparation is best done in multiple steps. In the best case, you can choose two segments for your preparation or you can choose many one-hour time blocks to complete taxes.

• Write your two (2) time blocks on your calendar to hold the time for this work and give you accountability to do this.
• Use a checklist from reputable sources or your tax preparer. This way you know the specific information to include. This may include income statements (W-2s, 1099s), investment statements, mortgage interest statements, property tax records, charitable contribution receipts, and any other documentation related to your finances. Create a designated folder or digital file to keep everything in one place, making it easier to access when needed.
• There are many strategies to work in manageable chunks for tax preparation.
  • Gather your tax documents by category of income or deduction. For income, you might need to access your payroll account online or in your online accounts for retirement, savings, banking, or credit union. For deductions (expenses) you can find these in medical portals, mailed paper statements, and emails.
  • Segment your work by finding documents in the mail and finding documents online.
  • Work on individual categories of deduction one at a time, such as charity or medical.
  • Review your checking accounts, bank statements, and credit card receipts in separate time blocks to gather information.
• Once you have completed the preparation steps, be ready to answer questions on your documentation and finalize the return. Ensuring correct information keeps your tax return from being delayed.

Shortcuts to make tax preparation easier

This year tax preparation might have been more difficult than you like. Here are some ways to improve your system.

• Keep track of documents as they arrive. Have one folder to place these documents.
• Use Genius Scan to document all your paper receipts. This free app helps you create a PDF of any documents and categorize receipts. Creating a digital copy helps you keep track of the document.
• Automate taxes being withheld to be sure you are paying in an amount that will match what you owe. Use a W-4 form with your employer or pay quarterly estimated taxes each year.
• Seek assistance. You can utilize tax preparation software, such as TurboTax, H&R Block, or TaxAct. Bookkeepers and CPAs are an asset in helping you know all the right answers and supporting you as you work on your taxes.
• Life transitions are happening more than ever. Be sure to keep up with the tax solutions as a result.

By following these steps and utilizing available resources, you can simplify the process of completing your tax return. Give yourself a big reward when your taxes are complete and plan ahead for next year!